Wave 3 1st Half 2010

Research Design
Methodology
Online interviewing

Target Respondents
Senior leaders of manufacturers & suppliers in Vietnam

Sample Size
Total sample N=57

Fieldwork
March to May 2010

1st Half 2010

Executive Insights
Senior business leaders predict dynamic changes within Vietnam
Moving from a premiumization trend to promotional-junkie behavior within 2009 Now a buy Vietnam products trend is occurring

TVC is still the dominant media platform, but the internet could be the next major investment from manufacturers

The multiple concerns of both Vietnamese consumer & business leader are very much in sync
Mainly cost- or price-related

1st Half 2010

Setting the Scene

1st Half 2010

Key Issues Faced By You & Your Industry Peers

1. External Economic and Social impacts 2. Consumer Behavior 3. Corporate strategic direction & plans

1st Half 2010

Growth in Vietnam has stabilized ~ but is still there to capture.

GDP Growth
2007 2008 2009 2010E
+ 8.5%

Inflation
2007 2008 2009 2010E
+8.5% +23% +6.9%

Unemployment
2007 2008 2009 2010E
5.1%

Wage Growth
2007 2008 2009 2010E
+11.2 +4 +10 +12.3

+6.2% +5.3% +5.5%

4.3 % 2.9 % <5 %

+10%

FMCG Volume Growth

Consumer Confidence

+15% + 10% + 4% + 9%

+15%
118 106 97 109 85 101

2007 2007 2008 Feb-09 Aug-09 Apr-10

1st Half '08

2nd Half '08

1st Half '09

2nd Half '09

1st Half '10

12pt

9pt

12pt

24pt

8pt

1st Half 2010

Sources: Wage growth, 2007 Economic Intelligence Unit , 2008-9 HRBS Asia-Pacific Pay Increase Guide 2009 (Survey Period: Jan 6 to Feb 6, 2009); 2010E by Vietnam government ; Consumer Confidence, Nielsen Global Online Survey 2007-10; GDP Growth ; Inflation, 2006-2007 data from IMF; And CIEC: 2008-2010 IMA Asia Brief December 2010; Asia Development Bank Outlook 2010 , 2010E by Vietnam government; ; FMCG Growth, Nielsen; Vietnam Retail Audit.

What are the top concerns of senior leaders?

2009 1st half
1) Competitive pressure / activity / growth (40%) 2) Global Economic Crisis (38%) 3) Price increases (37%) 4) Low GDP Growth (33%) 5) Inflation (24%) 6) Labor force skill shortage (18%) 7) Wage Growth (13%) 8) Foreign Investment Slowdown (12%)

2009 2nd half

1) Competitive pressure / activity / growth (68%) 2) Ability to pass on price increase (45%) 3) Inflation (42%) 4) Low GDP growth (31%) 5) Global Economic Crisis (26%) 6) Labor force skill shortage (24%) 7) Petrol prices (16%) 8) Others (Exchange rate, policies) (13%)

2010 1st half

1) Competitive pressure/ activity / growth (68%) 2) Ability to pass on price increase (59%) 3) Inflation (56%) 4) Labor force/ skill shortage (29%) 5) Petrol prices (22%)

6) Wages growth (12%) 7) Global Economic Crisis (10%) 8) Others (Government regs, currency depreciation (10%)

1st Half 2010

Q12: Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three (3) issues that concern you where 1=most concerned, 2= second most concern and so on.

Source: Nielsen Business Barometer Base: All respondents

How do these concerns compare with consumers concerns?

Top 5 supplier / mfr concerns
1) Competitive pressure / activity / growth 2) Ability to pass on price increase

Top 5 consumer concerns

1) Health

2) Increasing food prices

3) Inflation

3) Increasing utility bills (gas, electricity, water) 4) Job security

4) Labor force / skill shortage

5) Petrol prices

5) Increasing fuel / petrol prices

Which of the following issues concern you in terms of the impact they may have on your business? Rank the top three issues that concern you where 1=most concern, 2=second most concern, etc...

Source: Nielsen Business Barometer & Nielsen Omnibus 1st Half 2010

Business Conditions

1st Half 2010

So far in 2010, manufacturers have mostly performed at least on parity with their targets. Significantly stronger than 2nd half of 2009 ~ 70% vs. 86%.
Business performance compared to overall target
100%

14 23
80%

Significantly better

26 23
60%

Somewhat better

On par with target 30

40%

40

Somewhat worse than target

20%

25 12
0%

Significantly worse than target

4
2009 2nd half

2
2010 1st half

Q5: Looking back at the first few months of the year, how well do you think your business has been doing compared to your overall targets? 1st Half 2010

Business conditions in Vietnam have been improving well since 1 year ago.
Business Conditions in Vietnam (Now vs Year Ago)

100%

5 Improved significantly

21 80%
15

41 54
Improved somewhat

60%
Remained the same

40%
49

30 Deteriorated somewhat 30

20%
24 Deteriorated significantly

11
0%
2009 1st half

3
2009 2nd half

2
2010 1st half

Q6a: Compared to the same time last year, do you think business conditions in Vietnam have improved or deteriorated? 1st Half 2010

Although, business conditions in own industry are perceived to be far more stable.
Business Conditions in your industry (Now vs Year Ago)
100%
12

11 Improved significantly

80%

23

28 32
Improved somewhat

60%
32 33 39 Deteriorated somewhat Remained the same

40%

20%

29

30 19 Deteriorated significantly 2010 1st half

0%

4
2009 1st half

3
2009 2nd half

Q6b: Compared to the same time last year, do you think business conditions in your industry have improved or deteriorated? 1st Half 2010

Looking ahead, senior leaders believe that both Vietnam & own industry business conditions will improve, but not as strongly as the 2nd half 2009 peak.
Vietnam
100% 3
4

Your Industry
5 8 11 5 Improved significantly

80%

32 33 58 46 37 Improved somewhat

60% 28 40%

72 Remained the same 35 40 25 20 9 23 37 Deteriorated somewhat

20%

31

16 7
2009 2nd half

0%

7
2009 1st half

Deteriorated significantly

1
2009 2nd half

4
2010 1st half

1
2009 1st half

2
2010 1st half

Q7, Q8: Over the next 6 to 12 months, do you believe that business conditions in Vietnam & your industry are more likely to improve or deteriorate? 1st Half 2010

Key Issues Faced By You & Your Industry Peers

1. External Economic and Social impacts 2. Consumer Behavior 3. Corporate strategic direction & plans

1st Half 2010

Dynamic changes in Vietnam are afoot. After premium trade-up & promotional-junkies, a purchase Vietnamese trend will occur.
2009 1st half
Trade up to more premium/indulgent products Change channel to save money Buy smaller packs of the same products Buy bigger packs to save money Purchase more on promotion Trade down to cheaper products Not buy some 'nonessentials'

2009 2nd half

57
Purchase more on promotion Trade down to cheaper products Not buy some 'nonessentials' Buy bigger packs to save money Buy less / smaller packs of the same products Change channel to save money Trade up to more premium/indulgent products

2010 1st half

Purchase more local/ Vietnamese brands Buy bigger packs to save money Purchase more on promotion Change channel to save money Not buy some 'nonessentials' Trade up to more premium/indulgent products Trade down to cheaper products

48

49

54 51

31

44

27

41

39

24

37

36

21

22

23

16

22

16

22

Q16: Do you anticipate that Vietnamese consumers will change their purchasing behaviour next 6 to 12 months? 1st Half 2010

Beverages, health & beauty, and HH products are the more likely categories to be impacted the most.
2009 1st half
Health & beauty Confectionery Household products Beverages Frozen food Tobacco products Dairy Dry grocery OTHERS 7 15 14 12 37 37 37 44 51
Health & beauty Confectionery Household products Dairy Beverages Frozen food Dry grocery Tobacco products OTHERS 4 22 22 28 35 35

2009 2nd half

44 43 39

2010 1st half

Beverages Health & beauty Household products Confectionery Tobacco products Dairy Frozen food Dry grocery OTHERS 3 14 22 19 28 36 44 44 50

Q17: Which industry do you think will be impacted the most? 1st Half 2010

Key Issues Faced By You & Your Industry Peers

1. External Economic and Social impacts 2. Consumer Behavior 3. Corporate strategic direction & plans

1st Half 2010

Tracked vs. 1 year ago, the workforce numbers are expected to increase to a good degree; which has a knock-on effect upon the manufacturers current concern of skilled labor shortage.
Over the next 6 to 12 months, how do you anticipate your company's work force numbers to change?
100%

4
11 Increase significantly (5)

80%

31 Increase somewhat (4)

60%

46 Remain the same (3)

40%

53

Reduce somewhat (2)

20%

30 11

Reduce significantly (1)

0%

1
2009 1st Half

2010 1st Half

1st Half 2010

Nearly 9 out of 10 senior leaders confirm they currently conduct some social responsibility initiative ~ consumer health & charity. Could be a key PR area for further focus?
89

%
Consumer health benefits

67
Charity

63

Education

Yes

53 45 39 29 0
Top 3 Box Priority

Energy saving

Environmentally- friendly packaging

Control or reduce carbon-dioxide emission Wildlife protection

1st Half 2010

Q20: Does your company currently have any initiatives relating to social responsibilities such as: the environment, local charities, education...? Q21: Which social responsibilities initiatives does your company prioritize?

Rural Vietnam remains on the radar as a key area for further growth.
100%

13
80%

17

18

Increase significantly

Increase somewhat 60% 51 58 53 Neither increase nor decrease 40% Decrease somewhat 20%

32 25 26
Decrease significantly

0%

4
2009 1st half 2009 2nd half

2
2010 1st half

Q22: In the next 12 18 months, to what extent will you look to rural Vietnam areas to drive your company growth? 1st Half 2010

2010 seems to be the year where manufacturers look for more contribution from MT.
Modern Trade Contribution to Sales Revenue

2009 1st half

Mean score 13%
8 13

2009 2nd half

13.8%
13 13

2010 1st half

13.3%
2 15 27

14.9%
8 17

14.8%
15 15

16.4%
10

25 38

23

21

46 29

35 23 18

25

30
12 15

26
13

20

22

17

Now

End of '09
Less than 5% (2.5)

Now

End of '09
5% - less than 10% (7.5) 20% - less than 30% (25)

Now

End of '10

10% - less than 20% (15) 30% or greater (35)

Q18: How important is the modern trade to your business today (as a % of your businesss revenue)? Q19: What do you expect MT (as a % of your revenue) to be worth by the end of the year? 1st Half 2010

Growth Expectations

1st Half 2010

2010 GDP growth expectation is just under 6%, whereas own industry growth expectation is double this level
14

13.6

12

11.3 10.2

10

8 % 6

5.7 5.0 4.9

0 Est. Next 12 months GDP growth rate All industry est growth rate

2009 1st half

2009 2nd half

2010 1st half

Q9: What do you think GDP growth rate will be for the next 12 months? Q10: What do you think your industry growth rate will be for the next 12 months? 1st Half 2010

..with more senior leaders claiming their projected company growth rate in 2010 to be even stronger.
100%

21
80%

31 17

25%+

21% - 25%

60%

11
16% - 20%

20 23
40% 11% - 15%

17 12
20%

6% - 10%

17
0%

14

Less than 5%

2009 2nd half

2010 1st half

Q11: What do you think your company growth rate will be for the next 12 months?

1st Half 2010

Thank you
For any questions, please contact: Tam Nguyen Manager, Marketing Communications tam.nguyen@nielsen.com

1st Half 2010

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