Bcg google press event. english

BCG_Google_Digital_Consumer_in_Vietnam.pptx 1

Draft—for discussion only

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Agenda

Vietnam's recent economic growth and rise of MAC's

Digital consumer engagement and implications for marketers



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Vietnam is defying emerging market slowdown

5.26.0

7.3

5.55.4 5.6

2.8

4.76.0

5.0

0.9

6.06.7

4.7

2.8 2.8

7.36.7

8.4

7.1

8.7

6.1

8.5

5.8

0

2

4

6

8

10

Indonesia Myanmar

Real GDP YoY Growth Rate (%)

Thailand Malaysia Philippines Vietnam

2012 2014 2015E 2013 Note: 2015 GDP Growth figures for Indonesia, Thailand, Malaysia, and Philippines are estimates from World Bank Source: EIU; World Bank Data



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Vietnam experienced consistent growth for the past 20 years

Note: 2015 GDP Growth figures for Thailand and Myanmar are estimates from World Bank Source: EIU; World Bank data; Press search

(20)

(10)

0

10

20

99 98 97 96 95 94 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00

Real GDP Growth (%)

4.7

6.9

9.5

Thailand Vietnam Myanmar

ASEAN Economic Community and Trans-Pacific Partnership

Agreement signed



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Consumer economy has high potential

250 50 0

248

66

51

89

Myanmar

Indonesia

Thailand

Vietnam

0.9%

1.0%

0.9%

0.4%

Population CAGR

('12-'20) 2012

Population (M)

1. In 2005 USD 2. In 2012 USD 3. Annual disposable income per cap Note: 2012 Exchange rates used: 1USD=31.09THB; 854.6MMK, 20,862VND; 9645.3761IDR. 1961-2001 Myint (official govt estimates); 2002-2010: IMF; 2011 onwards: EIU. We use IMF estimates for 2002-2010 due to IMF's concerns over the accuracy of reported GDP numbers during that time period Source: BCG CCI models, EIU; Euromonitor

80 10 0

79

14

5

12

8.0%

13%

8.3%

5.2%

MAC Population

CAGR ('12-'20)

2012 MAC Population

(M)

5,000 0

2,576

3,439

773

1,435

2012 Annual Income per

capita (USD) 2

7.4%

6.7%

4.6%

6.3%

Income per capita CAGR

('12-'20)

...with a rapidly growing MAC population...

Vietnam: Second largest country...

...and a growing wallet size



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What you should know about Vietnam's Middle and Affluent Consumers (MAC)

They will grow 1.7X in size by 2020

They will drive spending on comfort and lifestyle

products

They will disperse rapidly from key

provinces

They will lead evolution into the digital era

They will lead a shift towards modern trade



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10.2

22.5

16.2

20.8

26.4

4.6

28.0

17.9

25.3

14.1

We expect Vietnam's MAC to grow 1.7x by 2020! 20

15

2020

Poor

Aspirant

Emerging

Established

Affluent

1. MAC (Middle Income & Affluent Consumers) defined as Established + Affluent for Myanmar & Vietnam, and Emerging + Established + Affluent in Indonesia, Thailand, Philippines & Malaysia Source: BCG CCI models; BCG analysis

= Total MAC1

Poor

Aspirant

Emerging

Established

Affluent

2015-2020 MAC CAGR

110.1

49.1

52.4

31.0

13.2

76.2

50.5

68.2

49.3

23.4

12.5

18.1

16.1

7.2

1.3

16.6

16.8

13.2

4.9

0.9

40.5

26.4

23.8

7.4

2.0

34.3

27.2

31.2

12.1

4.2

12.4

13.1

24.7

7.4

9.2

10.5

28.4

8.2

11.2

10.5

14.7

3.9

5.0

3.4

3.6

3.5

2.7

16.2

6.3

4.3

11.8%

Vietnam

97M

141M

7.8%

Indonesia

7.8%

Myanmar

Philippines

33M

47M

7.4%

40M

49M

4.1%

Thailand

19M 6M

33M 9M

Malaysia

23M

27M

3.0%



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MAC Non-MAC 0

20

40

60

80

100

% of respondents

MAC Non-MAC

MAC Non-MAC

0

20

40

60

80

100

% of respondents

0

20

40

60

80

100

% of respondents

MAC consumers will upgrade to adopt comfort and lifestyle consumer durables

From basic needs... ...to comfort... ...to lifestyle

Refrigerator Washing machine Motorcycle

Air conditioner Laptop/PC

Smartphone Microwave Car

Note: Urban data Source: BCG Indochina consumer survey, BCG analysis



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Agenda

Vietnam's recent economic growth and rise of MAC's

Digital consumer engagement and implications for marketers



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The Vietnamese consumer goods market is attractive and offers significant future promise

•  Vietnamese are the most optimistic people in the world and most willing to spend

•  Annual GDP growth of 6%+ put Vietnam among the leaders in developing nations

•  Personal wealth is growing rapidly



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Vietnam is becoming an online nation, internet penetration is already at 53 percent and is rising fast

•  Vietnamese are taking advantage of low data prices and highly competitive smart phone markets

•  3/4G mobile broadband targeted to cover 95% of households by 2020

•  Speed of mobile internet already 1.5 to 3 times faster than those in some regional peers

25

61

36

71

343539

69

56

84

5953

0

20

40

60

80

100

Number of internet users per 100 population

Philippines

Singapore

Indonesia

Vietnam

Thailand

Malaysia

2011 2015



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Digital eco-system driven by videos, social media, and music continuous to drive engagement and screen time

•  Local media creators flourish on YouTube and local websites

•  Vietnamese publishers like VTV, THVL, Yeah1, and others have made huge strides over the last year

•  Slow but steady shift from network TV observed



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Vietnam experiencing disruptive growth in e-commerce sales

•  Recent E-conomy report from Temasek and Google shows Vietnam e-commerce sales moving from 0.4 Bn USD to 7.5 Bn by 2025

•  Digital sales are still low, but digitally influenced sales are high and growing

•  Vietnamese consumers are increasingly turning online to find ideas for purchases, research products and brands, check product availability, etc.



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Online households account for almost 70% of all FMCG spends in Vietnam

•  Connected households are younger, larger, and more affluent

•  Digitally connected households are not restricted to urban centers – close to half of rural households are already connected

•  Total spend on digital ranges from 0-25% across everyday categories, 2.5-3x lower than the value of contribution from online households

0%

20%

40%

60%

80%

100%

Population FMCG $ Diapers $

Offline HH Online HH

53%

47%

33%

67% 83%

17%



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Consumer companies that believe digital media is "for the future" will see dwindling returns on their marketing investment

•  Marketers should see the leveraging of digital as the only way to survive the market changes we are experiencing

•  We expect digital advertising spend to triple by 2021

•  Moderating spend growth with a scientific basis will be critical – e.g. online investment needed in a noodles brand vs. diapers is quite different



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As companies adapt to digital reality we believe there is a set of questions that should guide them

•  Is there a scientific basis for how much of your spend is online versus offline? Is it tailored to the category and consumer?

•  Do you have a deep understanding of the path to purchase for the consumer (where they research, what influences their preferences and ultimate choices)?

•  Does focus on digital allow significantly higher reach in your most valued segments?

•  What skills do we need to build within our functional teams to support this change?

•  How do you operationalize these choices – How would you approach a media plan today if you had never engaged in such planning in the past?

Reaching fact based answers to questions like that will help to build a foundation for a digital marketing strategy that takes full advantage of Vietnam's digital revolution

Thank you

bcg.com | bcgperspectives.com

Bcg google press event. english

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