MARKET PULSE Q2 2016 OPPORTUNITIES IN A VOLATILE MARKET
GLOBAL GROWTH REMAINS SLUGGISH, EAST ASIA & PACIFIC IS EXPECTED TO EASE MODESTLY Real GDP % Growth Growth prospects weakened throughout the world economy. World Bank projects global growth for 2016 at 2.4%, unchanged from 2015 USA 2015 2016f 1.6% 1.6% East Asia & the Pacific 2.4% 1.9% 2015 2016f MENA 6.5% 6.3% #: Increase vs. 2015 #: Decrease vs. 2015 #: No change vs. 2015 LAC 2015 2016f -0.7% -1.3% Euro Area 2015 2016f 2015 2016f 2.6% 2.9% Note: Europe & Central Asia only includes Developing Countries in the region, Euro Area refers to countries with high income Source: Global Economic Prospects - World Bank Group (June, 2016) Country 2015 2016f China 6.9 6.7 Thailand 2.8 2.5 Indonesia 4.8 5.1 Philippines 5.8 6.4 Vietnam 6.7 6.2 2
10 8 6 4 2 MODERATE GROWTH DUE TO IMPACT OF UNFAVORABLE WEATHER CONDITIONS, BUT SERVICE SECTOR IS THE STAR 6.3 GDP % GROWTH Y-O-Y 6.7 5.5 2016 Target: 6.7% KEY HIGHLIGHTS INDUSTRY & CONSTRUCTION 33% GDP Mining industry experienced the deepest plunge MINING 2.2% driven by CRUDE OIL & NATURAL GAS 3.7% SERVICES 41% GDP 6.1 6.1 5.8 5.9 6.4 Services recorded the highest growth in the last 5 years RETAIL & WHOLESALE 8.1% 0 Source: GSO H1'15 2015 H1'16 Total GDP Agri-forestry and fishery Industry & Construction Services AGRI-FORESTRY & FISHERY 16% GDP 1 st time in many years experienced negative growth (-0.2%) Impacted by the most severe drought in Vietnam in 90 years and salinity intrusion in SCC & MKD. AGRICULTURAL OUTPUT 0.7% vs. YA in H1 16 Forecast: Rice output 1.5% Rice exports 10% Coffee exports 25% 3
INFLATION SLIGHTLY UP TICKED BUT REMAIN MODERATE Higher CPI growth vs. H1 15 but still low 6.8 6.0 Driven by Healthcare & Education fees, while Food & Beverage remain low Inflation Composition CPI 1.7 CPI H1 16 +1.7% vs. YA 1.8 0.6 1.7 2012 2013 2014 2015 H1'16 Medicine & Healthcare Education Beverages & Cigarette Food & food stuff Clothes & footware Transportation -9.4 2.4 2.0 4.1 2.5 17.7 CPI inflation is expected to remain moderate mainly due to soft commodity prices and stay well below 5 percent mark the authorities are aiming for this year World Bank (June, 2016) Source: GSO, World Bank (June, 2016) 4
VIETNAMESE CONSUMERS STILL SHOW POSITIVITY BUT STILL CAUTIOUS CONSUMER CONFIDENCE INDEX (CCI) 104 105 108 109 107 Concern about The state of Economy jumped +4 pts vs. last quarter BUT THAT DOESN T MEAN THEY WILL HESITATE TO SPEND Where do Vietnamese consumers channel their spare cash? Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 41% 37% Consumer Confidence Index Calculation Perceptions of local job prospects Perceptions of state of personal finances over the next 12 months Perceptions of good/bad time for people to buy the things they want and need over the next 12 months Source: Nielsen Global Survey Consumer Confidence Section (Q1 16), Retailer Sentiment Report Q1 16 HOLIDAY/ VACATIONS +5 *compared versus last quarter OUT OF HOME ENTERTAINMENT +3 5
IN 6 KEY CITIES, FMCG SURGED IN 1 ST HALF OF 2016 DRIVEN BY UPLIFT IN Q2 Fast Moving Consumer Goods dynamics - Total 6 cities 7% 6.3% 6% 5% 4% 3% 2% 1% 0% 2.8% 1.5% 1.3% 4.8% 4.6% 4.0% 3.9% 3.7% 3.0% 0.9% 1.0% 0.9% 3.2% 1.2% 2.0% 2.0% 0.7% 1.4% 4.3% 3.7% 0.6% 1.5% 4.7% 5.4% 4.6% 3.8% 2.9% 2.3% 0.6% 0.9% 0.9% 0.8% 0.6% 5.2% 1.1% Unit value change Volume change Nominal growth Source: Nielsen Retail Index Versus year ago 6
FOOD SEES STRONG PICKUP POST-TET WHILE MILK-BASED SUSTAINS MOMENTUM Super Category Contribution and Growth - Total 6 Cities 41% 15% 15% BEVERAGE FOOD MILK BASED 8.3% 9.9% 10.4% 10.2% 9.4% 7.0% 8.9% 9.2% 7.0% 8.3% 8.9% 5.0% 7.5% 7.4% 7.1% 6.9% 4.7% 3.0% 4.0% 1.7% -1.2% -4.9% 5.6% -1.9% -0.9% 0.7% -3.5% 3.0% -0.4%-0.0% -2.3%-2.9% Unit Value Change Volume Change Nominal Value Growth Source: Nielsen Retail Index Versus year ago; % is value contribution to Total FMCG MAT TY 7
OTHER CATEGORIES HAVE ALSO BOUNCED BACK IN Q2 Super Category Contribution and Growth - Total 6 Cities 6% 8% 13% 3% HOME CARE PERSONAL CARE CIGARETTE BABY CARE 4.5% 4.6% -0.7% 0.4% -0.5% 6.1% 3.9% -1.5% 5.4% 3.8% 7.5% 2.3% -0.1% 2.2% -0.8% -5.6% -2.7% -4.8%-3.5% -2.8% 3.1% 8.1% 6.4% 4.6% 0.7% -6.0% -10.1 % -11.5 % 3.3% 2.7% -4.7%-4.1% Unit Value Change Volume Change Nominal Value Growth Source: Nielsen Retail Index Versus year ago; % is value contribution to Total FMCG MAT TY 8
FOR THE FIRST TIME, NON-ALCOHOLIC BEVERAGE GROWTH IS SLUGGISH, SHOWING OPPOSITE TREND WITH BEER Super Category Contribution and Growth - Total 6 Cities 22% 19% BEER NON-ALCOHOLIC BEVERAGE 14.1% 8.7% 10.3% 4.6% 13.9% 14.3% 11.7% 10.6% 7.3% 8.1% 7.1% 6.5% 10.5% 10.0% 5.4% 6.8% 4.9% 5.0% 3.8% 1.5% 9.9% 9.7% 3.9% 3.2% 14.2% 12.0% 9.5% 8.7% 8.7% 8.3% 9.1% 11.7% 14.4% 8.6% 8.7% 8.1% 3.7% 4.1% 3.1% 3.4% Beverages (Soft Drink, Energy Drink, Packaged Water, RTD Tea, Sport Drink, Fruit Juice, Coffee, Tea Bag and Healthy Food Drink) Unit Value Change Volume Change Nominal Value Growth Source: Nielsen Retail Index Versus year ago; % is value contribution to Total FMCG MAT TY 9
IN URBAN & RURAL AREA, FMCG SOFTENS THIS YEAR AND SHOWS MUCH VOLATILITY TO BE PREDICTABLE Fast Moving Consumer Goods dynamics - Urban vs Rural 10% 8% 6% 4% 2% 5.6% 4.4% Total Urban 46% 4.9% 5.2% 5.5% 5.9% 6.3% 4.3% 4.6% 3.1% Rural 54% Urban 10% 7.6% 8% 6% 4% 4.0% 2% Total Rural 9.3% 6.0% 3.8% 3.9% 2.2% 9.8% 6.0% 5.6% 0% 0% -2% -2% -4% -4% -6% -6% Unit Value change Volume change Nominal growth Source: Nielsen Retail Index Versus year ago Note: This slide only includes Feminine Protection, Hair Conditioner, Shampoo, Toothpaste, Toothbrush, Personal Wash, Dishwashing Liquids, Fabric Softener, Laundry Products, Bouillon-MSG, RTDM, Soft Drink, Packaged Water, Energy Drink, RTDT, Cigarette, Sport Drink, Sweet Condensed Milk, 11 Fruit Juice, Household Cleaners, Beer, Instant Noodles, Household Insecticide
FMCG SOFTENS PARTICULARLY IN NORTH, CENTRAL & MKD DUE TO UNFAVORABLE WEATHER CONDITIONS FMCG Nominal Value Growth vs. YA by regions NORTH 25% 6.2% 2.9% Cold Winter 4.7% 4.1% 1.0% 6.3% 7.5% 6.8% 3.7% 2.1% Val % SOT FMCG YTD TY CENTRAL 28% SOUTH 47% 6.4% 6.2% 1.0% 6.2% 6.5% 6.1% 4.6% 4.5% 8.3% 5.5% 3.4% 2.5% 6.9% 7.2% 6.7% Drought 7.8% 9.0% 5.5% 5.6% 7.5% Salinity intrusion S.East (33%) 7.0% 8.3% 8.4% 7.8% 8.6% 3.3% 7.4% 8.7% 6.4% 10.3% MKD (14%) 2.8% 3.2% -1.8% -5.2% -3.4% -1.5% 7.7% 9.7% 3.9% 2.3% 12