RISING UPTO THE CHALLENGE · 2020-06-14 · services and deliveries, to their credit they have...

This artwork was created using Nielsen data.

Copyright © 2019 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

RISING UPTO THE CHALLENGE Q1 2020 DASHBOARD (APRIL UPDATE)

Nielsen, Sri Lanka June 2020

2 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Gaurav Singh Market Leader, Nielsen Sri Lanka

[email protected]

The optimism and buoyancy in macro economic indicators, FMCG growth in general trade, the high consumer and business confidence during the first 2 months of 2020 in Sri Lanka pointed towards a path to growth in 2020. However instead, COVID -19 became the headline for the first quarter of 2020. The unprecedented situation has forced businesses as well as consumers to redefine and adapt to the “New Normal”. All businesses are still in the process of getting the adaptation right and are still far from reaching the same levels of optimization in services and deliveries, to their credit they have experimented with agility instead of waiting for “normalcy”. Nielsen in Sri Lanka too has worked to adapt to this unprecedented situation with a belief that going data dark at such times and not having any navigation guide to help our clients bounce back would be counterproductive in Rebounding, Rebooting and Reinventing. We adopted the best practices from our global learnings in order to be able to provide the best possible read of the markets which we capture. The disruptions in the channel portfolio, consumption baskets, behavioral as well as attitudinal changes and the responses which might be a short term coping mechanism with potential of becoming a long term strategy are not something to be ignored. With this principle in mind we continue to get the read from the general trade apart from undertaking new ways of reaching out to consumers in Sri Lanka even during COVID times. I take this opportunity to convey our sincere thanks to clients, our associates and our panelists who have withstood the difficult times and are future ready in the new normal. Please be safe and take care.

3 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Closing thoughts Macro Economic Outlook

1 4 3 2

FMCG Snapshot Covid-19 Exit Scenarios

WHAT’S IN STORE



THERE’S A BATTLE TO BE WON

5 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

CONTINUOUS GDP DROP OVER THE YEARS

3.2% 3.6% 3.2% 3.7% 4.0% 3.9% 3.5% 1.8%

3.7%

1.6% 2.7% 2.0%

10.3% 10.6%

15.5%

11.0% 9.6% 9.1%

7.5%

4.8% 3.8% 3.7%

9.1%

2.5%

Q1

'17

Q2

'17

Q3

'17

Q4

'17

Q1

'18

Q2

'18

Q3

'18

Q4

'18

Q1

'19

Q2

'19

Q3

'19

Q4

'19

Constant Prices (2010) Nominal

GROWTH RATE AT CONSTANT PRICES – 2010

SRI LANKA TOTAL GDP GROWTH RATE % (VS SAME QUARTER LAST YEAR)

GROWTH RATE AT CONSTANT PRICES – 2010, FIGURES IN BRACKET INDICATE CONTRIBUTION OF SECTOR TO GDP IN THE PERIOD JAN-DEC 2019. REMAINDER IS ‘TAXES LESS SUBSIDIES’

SRI LANKA GDP GROWTH RATE BY SECTORS % (VS SAME PERIOD LAST YEAR)

3.6%

-0.4%

4.7%

3.6% 3.3%

6.5%

1.2%

4.6%

2.3%

0.6%

2.7% 2.3%

Total GDP Agriculture (7%) Industries (26%) Services (57%)

2017 2018 2019

GDP percentage change has declined for the third consecutive year with higher impact coming from Agriculture & Service sectors in 2019

6 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

DROP IN EXPORTS & IMPORTS

Source: Various sources

Total Exports & Imports have dropped for the third consecutive year. On Exports, Tea has entered into a recovery phase in 2019 while Garments witnessed a continuous rise. Decline in Imports was led by Investment Goods & Fuel and Trade in Services was impacted from decline in earnings from Tourism & Workers’ Remittances.

Source: Central Bank Statistics, Figures in bracket indicate share to total exports

SRI LANKA EXPORTS GROWTH %

Source: Central Bank Statistics, Figures in bracket indicate share to total imports

SRI LANKA IMPORTS GROWTH %

Source: Central Bank Statistics

TRADE IN SERVICES GROWTH %

10%

21%

3% 5%

-7%

5%

0%

-6%

5%

Total Exports Tea (11%) Garments (47%)

2017 2018 2019

9%

-2%

38%

6%

-4%

21%

-10%

-2% -6%

Total Imports InvestmentGoods (23%)

Fuel (20%)

2017 2018 2019

12%

-1%

12%

-2%

-18%

-4%

Earnings from Tourism Workers' Remittances

2017 2018 2019

7 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

TOP NEWS HEADLINES IN SRI LANKA

SRI LANKA CELEBRATES 72ND INDEPENDENCE DAY

ENGAGEMENT WITH IMF WILL CONTINUE WITH CHANGES IF NEEDED: CBSL

GOVERNMENT WITHDRAWS VOTE ON ACCOUNT

MATARA-HAMBANTOTA EXTENSION OF SOURTHERN EXPRESSWAY DECLARED OPEN

SRI LANKA WITHDRAWS FROM UNHRC RESOLUTION

ORDER CANCELLATIONS INCREASE COVID-19 IMPACT ON APPAREL INDUSTRY

CURFEW RELAXED IN ALL DISTRICTS; HEALTH GUIDELINES TO CONTINUE

ELECTION POSTPONED OVER COVID-19 IMPACT

COVID-19 COMMUNITY SPREAD, CONTAINED: HEALTH MINISTER

PRESIDENT UNVEILS RELIEF MEASURES, APPEALS FOR UNITY TO FIGHT AGAINST COVID-19

SRI LANKA TO REPATRIATE 40,000+ SRI LANKANS STRANDED OVERSEAS: CABINET SPOKESPERSON

8 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

SRI LANKA DURING THE PANDEMIC

9 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

EXCHANGE RATE HITS AN ALL TIME HIGH


Sri Lanka is back to square one after a quick revival in tourist arrivals post Easter attacks. Post Q1’20, LKR will be highly influenced by the inflow of foreign aids & restrictions to import of luxury goods. The government expects Commercial Banks to provide concessionary credits to identified sectors while directing loans to newly identified priorities.

Source: Central Bank Statistics Data is available only upto March’20

COMMERCIAL BANK RATES

Source: Month end Exchange Rate, Central Bank Statistics

EXCHANGE RATE USD LKR

14%

11%

14%

11%

14%

11%

14%

10%

13%

10%

AWLR AWFDR

Mar'19 Jun'19 Sept '19 Dec'19 Mar'20

176 177

182 182

189

193

31stMar'19

30thJun'19

30thSept'19

31stDec'19

31stMar'20

30th Apr '20

Source: Central Bank of Sri Lanka, Sri Lanka Tourism Development Authority, Department of Census and Statistics, Frontier Research

TOURIST ARRIVAL IN ‘000

244

63

109

242

71

0

Mar'19 Jun'19 Sept'19 Dec'19 Mar'20 Apr'20

10 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.


Sri Lanka’s food inflation dropped after a two year high value in Feb’20. This was supported by the decline in prices of food categories, seasonal supply of vegetables & government’s relief measures. Non-food inflation dropped further on account of restricted living conditions. The government intends to save upto LKR 200 billion by maintaining fuel prices constant amidst crash in global oil prices.

Source: Department of Census & Statistics, Colombo Price Track, week 1 prices of each month Data is available only upto March’20

LARGE COCONUT PRICES IN COLOMBO

89 89 94 90 88 88 84 81

73 71 71 72 64 64 60 60 60 59

54 54 55 55 59 61 66

73 75

Jan

'18

Feb

'18

Mar

'18

Ap

r'18

May

'18

Jun

'18

Jul'1

8

Au

g'18

Sep

'18

Oct

'18

No

v'1

8

Dec

'18

Jan

'19

Feb

'19

Mar

'19

Ap

r'19

May

'19

Jun

'19

Jul'1

9

Au

g'19

Sep

'19

Oct

'19

No

v'1

9

Dec

'19

Jan

'20

Feb

'20

Mar

'20

Source: Ceypetco

CYPETCO PETROL LP 92 PRICE PER LITER

117 117 117 117

137 137 145 145 149 155

140 125 123 129 132 132 135 138 136 138 137 137 137 137 137 137 137 137

Jan

'18

Feb

'18

Mar

'18

Ap

r'18

May

'18

Jun

'18

Jul'1

8

Au

g'18

Sep

'18

Oct

'18

No

v'1

8

Dec

'18

Jan

'19

Feb

'19

Mar

'19

Ap

r'19

May

'19

Jun

'19

Jul'1

9

Au

g'19

Sep

'19

Oct

'19

No

v'1

9

Dec

'19

Jan

'20

Feb

'20

Mar

'20

Ap

r'20

Source: Department of Census and Statistics

YoY INFLATION - NCPI

-0.3% 0.5%

-4.2% -3.9%

-4.8%

-2.3% -0.4%

-2.5%

4.9%

8.6%

13.7%

16.3%

14.1%

12.2%

3.0% 4.2% 4.7% 5.2%

6.5% 7.1% 6.7% 6.1% 5.1% 4.2%

3.0% 2.1% 1.8%

1.1%

Ap

r'1

8M

ay'1

8Ju

n'1

8Ju

l'18

Au

g'1

8Se

p'1

8O

ct'1

8N

ov'

18

Dec

'18

Jan

'19

Feb

'19

Mar

'19

Ap

r'1

9M

ay'1

9Ju

n'1

9Ju

l'19

Au

g'1

9Se

p'1

9O

ct'1

9N

ov'

19

Dec

'19

Jan

'20

Feb

'20

Mar

'20

Ap

r'2

0

Food Inflation Non-Food Inflation

HEADLINE INFLATION DROPS FURTHER

11 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

DROP IN SENTIMENTS IN Q1 ‘20

*BCI is based on survey of 100 Managers/Senior Executives or above in the city of Colombo carried out by Nielsen and is compiled through series of questions on business conditions and expectations *CCI is based on survey of 100 respondents every month. From 2011 onwards Nielsen tracks the consumer confidence index every month among 100 consumers in Western, Central and Southern provinces. Index is

developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. Due to the Coronavirus (COVID-19) outbreak and subsequent curfew that was imposed, the fieldwork methodology was changed from telephonic interviews to online self-completion survey for the month of April 2020. The quotas that were previously imposed to ensure the distribution of the sample to reflect the scales of organizations (small, medium & large) were not enforced in the April 2020 wave of the study as data was collected through an online survey.

112 117 119 115 134

121 99 106

119 122 127 128 117 98 106 102 101 95 87 85

110 90 101

115 90

77 62

81 74 94 90 102 111

186 174 153 145

93

54 57 61 61 61 58 52 52 53 54 58 60 58 51 51 45 46 41

50 46 54 50 53 51 49 46

37 36 33 39 41 48 53

71 80 79

67

Mar-

17

Ap

r-17

Ma

y-1

7

Jun

-17

Jul-1

7

Au

g-1

7

Se

p-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan

-18

Fe

b-1

8

Mar-

18

Ap

r-18

Ma

y-1

8

Jun

-18

Jul-1

8

Au

g-1

8

Se

p-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan

-19

Fe

b-1

9

Mar-

19

Ap

r-19

Ma

y-1

9

Jun

-19

Jul-1

9

Au

g-1

9

Se

p-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan

-20

Fe

b-2

0

Mar-

20

Ap

r-20

Source: Nielsen Lanka CCI and BCI Surveys CCI was not conducted in the month of April’20

BUSINESS CONFIDENCE INDEX TREND, CONSUMER CONFIDENCE INDEX TREND

BCI – Primary Axis

CCI – Secondary Axis

After a spike in Business & Consumer Confidence levels during Presidential Elections, sentiments witnessed a gradual drop in the following months largely driven by Covid-19.

12 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

FOR BUSINESSES, ECONOMIC CONDITION TOPS THE LIST OF PRESSING ISSUES Taxes, Inflation, Interest Rates & Political Interference continue to be the pressing issues. However, the magnitude of economic conditions becoming a pressing issue for businesses has increased in March ’20.

68%

52%

18%

32%

53% 58%

11%

51% 54%

21% 9%

27%

71%

46%

24%

47%

62% 57%

52% 48%

Taxes Inflation Interest Rates Political Interference

Mar '19 June '19 Sept '19 Dec'19 Mar'20

Source: Nielsen Business Confidence Index Survey, Frequency: Monthly; Base : All respondents n=100 per month

PRESSING ISSUES FOR DOING BUSINESS (% respondents mentioning each issue)

13 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Source: Nielsen Lanka BCI Survey & Nielsen survey among 100 small, medium and large businesses

COVID-19 MAKING AN IMPACT BEYOND Q1’20

2

21

73

16 11

55

Feb'20 Mar'20 Apr'20

A pressing issue for businesses in Sri Lanka today

A pressing national issue today

COVID-19 AS A PRESSING ISSUE FOR DOING BUSINESS (% respondents mentioning Covid-19 as an issue)

Due to the Coronavirus (COVID-19) outbreak and subsequent curfew that was imposed, the fieldwork methodology was changed from telephonic interviews to online self-completion survey for the month of April 2020. The quotas that were previously imposed to ensure the distribution of the sample to reflect the scales of organizations (small, medium & large) were not enforced in the April 2020 wave of the study as data was collected through an online survey.

BCI :153 BCI : 145 BCI : 93

“Lotus tower lit up on 11th April in honour of those combating Covid-19”

Source: Nielsen Business Confidence Index Survey, Frequency: Monthly; Base :All respondents n=100 per month

14 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

73% says actions taken by

the government to mitigate the negative impact of COVID-19

outbreak is somewhat/extremely

sufficient

GO

VER

NM

ENT

RES

PO

NSE

87%

says level of negative impact COVID-19

outbreak has caused businesses is high/very

high

59% feel that it would take more

than 6 months to recover

Major concerns are the loss in revenue and

difficulty to commence or maintain operations

75% feel that Sri Lankan economy

would go into a recession following the COVID-19

outbreak

68% feel that Rupee will

depreciate against the US Dollar in the next three

months

IMP

AC

T O

N E

CO

NO

MY

FUTU

RE

PR

OSP

ECTS

WHAT BUSINESS LEADERS THINK

Source: Nielsen survey among 100 small, medium and large businesses, Survey was conducted in the first week of April ‘20

15 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

CONSUMERS ARE NOT AS HOPEFUL AS THEY USED TO BE

Source: Nielsen Consumer Confidence Index Survey, Frequency: Monthly; Base : All respondents n=300 per quarter

Job Prospects, State of Personal Finance and Time to Buy are gloomy for the consumers in the coming year.

% consumers calling Job Prospects Good or Excellent in the next 12 months in Sri Lanka

JOB PROSPECTS IN NEXT 12 MONTHS (GOOD OR EXCELLENT)

% consumers calling state of Personal Finance Good or Excellent in the next 12 months in Sri Lanka

STATE OF PERSONAL FINANCE IN NEXT 12 MONTHS (GOOD OR EXCELLENT)

% consumers calling time to buy things they need Good or Excellent in the next 12 months in Sri Lanka

TIME TO BUY IN NEXT 12 MONTHS (GOOD OR EXCELLENT)

8% 9% 3%

59%

38%


11%

3% 7%

50%

13%


6% 3% 7%

37%

10%


16 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

MORE SAVING, LESS SPENDING Households will focus more on saving in future, however, children will remain the priority. Consumers will spend less on non-essential goods and activities.

22%

44%

9% 4%

13% 14%

4% 2% 7% 8%

4%

42%

29%

12% 5%

14% 16%

6% 2% 4% 3% 3%

Q1 2019 Q1 2020

Source: Nielsen Consumer Confidence Index Survey, Frequency: Monthly; Base : All respondents n=300 per quarter

WAYS IN WHICH CONSUMERS ARE UTILIZING SPARE CASH (% respondents mentioning each option)



IMPACT ON GENERAL TRADE IN SRI LANKA

18 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

A REVIEW ON RETAIL LANDSCAPE DURING THE CURFEW

Western Province had the highest impact due to longer lockdown period.

Puttalam, Kandy and Jaffna were the other districts to experience a higher impact.

Home delivery of goods was a popular and convenient choice for consumers.

This became possible through Supermarkets, Manufacturers, Online Platforms, Travel Partners and Vendors with curfew passes.

A disruption to the regular channel mix was observed during the pandemic period.

General Trade had a higher impact compared to other channels.

In General Trade, Chemists had a higher flexibility to operate during the lockdown period.

General Trade Grocers had the flexibility during curfew relaxed hours.

Restaurants & Cosmetic shops had the highest impact.

19 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Source: Nielsen Sri Lanka, RMS Data, for All FMCG (40 Categories including Carbonated Soft Drinks), from General Trade, Q1 2020 and MAT March 2020

57 Billion LKR

FMCG Value Sales in General Trade for Sri Lanka, Q1 2020

264 Thousand

FMCG General Trade Universe in Sri Lanka, March 2020

-11% FMCG Value Sales Growth in Sri Lanka, Q1 2020 over Q1 2019

249 Billion LKR

FMCG Value Sales in General Trade for Sri Lanka, MAT March 2020

264 Thousand

FMCG General Trade Universe in Sri Lanka, March 2020

-2% FMCG Value Sales Growth in Sri Lanka, MAT March 2020 over MAT March 2019

Q1’20 MAT MAR’

2020

GENERAL TRADE DROP, ACCELERATED BY CHANNEL DISRUPTION Drop in March’20 led to an underperforming quarter in General Trade, reflecting a de-growth in MAT comparison.

20 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

VOLUME LED DE-GROWTH IN Q1 ‘20

Source: Nielsen Sri Lanka, RMS Data, for All FMCG (32 Categories including and excluding Carbonated Soft Drinks), from General Trade, Q1 20)

Price impact was stagnant whilst volume led de-growth was visible in General Trade. Covid-19 might have impacted the source of purchase and the composition of shopping basket. FMCG GROWTH TREND IN SRI LANKA, GENERAL TRADE,

INCLUDES CSD FMCG GROWTH TREND IN SRI LANKA, GENERAL TRADE, EXCLUDES CSD

8.1% 7.2% 6.7%

4.0% 4.3% 4.5% 5.0% 3.6%

-14.0%

-8.0%

-3.1%

4.1% 3.7%

-4.2%

-7.4%

-14.4%

-5.8% -0.8% 3.6% 8.0% 8.0% 0.3% -2.4% -10.8%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Price change component Volume change component

Overall growth

3.4% 3.4% 3.3% 3.8% 5.0% 5.2% 5.9%

4.5%

-7.5%

-2.2% 0.9%

4.5% 2.6%

-5.3%

-8.1%

-15.6%

-4.1% 1.3% 4.2% 8.3% 7.6% -0.2% -2.2% -11.1%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Price change component Volume change component

Overall growth

21 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

F&B TOPPED THE SHOPPING LIST

Source: Nielsen Sri Lanka, RMS Data, for F&B categories including and excluding Carbonated Soft Drinks, from General Trade, Q1 20

F&B had a comparatively lower impact among FMCG Super Categories, however recorded a de-growth in General Trade.

AVERAGE PRICE PER KG/LTR INDEX FOR F&B, GENERAL TRADE, PRICE BASE PERIOD Q2 2017

FOOD & BEVERAGES

Darker bar: Price led change Lighter bar: Volume change Overall Growth

100 119 121 125 122 120 123 127 119

Q2 17 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

100 103 104 106 105 106 106 110 103

Q2 17 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

9.3% 8.4% 7.8%

4.4% 4.6% 4.5% 5.1%

3.1%

-16.0% -9.9%

-4.3%

2.3% 3.0%

-3.4%

-6.9%

-12.8%

-6.7% -1.6% 3.5% 6.7% 7.7% 1.1% -1.8% -9.7%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

GROWTH WITH CSD

2.6% 3.1% 3.0% 4.2% 5.7% 5.5%

6.5%

4.3%

-7.0%

-1.8%

1.4% 2.6%

1.3%

-4.9%

-8.0%

-14.2%

-4.3% 1.2% 4.4% 6.8% 7.0% 0.6% -1.5% -9.9%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

GROWTH WITHOUT CSD

With CSD

Without CSD

22 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

HIGHER IMPACT ON PERSONAL & HOUSEHOLD CARE

Source: Nielsen Sri Lanka, RMS Data, for Personal Care and Home Care Categories , from General Trade, Q1 20

Purchase of Personal & Household Care categories were de-prioritized over Food & Beverages. Hence, they have witnessed a higher decline in General Trade.

AVERAGE PRICE PER KG/LTR INDEX BY HC & PC BASKETS, GENERAL TRADE, PRICE BASE PERIOD Q2 2017

100 107 108 109 111 108 109 111 113

Q2 17 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

PERSONAL CARE

100 103 104 104 105 109 109 109 110

Q2 17 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

HOUSEHOLD CARE

Darker bar: Price led change Lighter bar: Volume change Overall Growth

5.8% 4.1% 4.2%

2.5% 2.0% 3.2% 3.1%

4.2%

-8.5%

-2.7%

0.6% 9.2%

7.1%

-6.3% -8.7%

-17.8%

-2.7% 1.4% 4.8% 11.7% 9.1% -3.2% -5.6% -13.7%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

PERSONAL CARE

3.8% 4.9%

3.3% 3.7% 6.5%

6.8% 7.7% 6.6%

-9.4%

-3.6% -2.0%

7.7%

2.1%

-6.7% -8.5%

-20.2%

-5.6% 1.3% 1.3% 11.4% 8.6% 0.0% -0.8% -13.6%

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

HOUSEHOLD CARE



BEYOND COVID-19: THE THREE HORIZONS

24 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

THREE COVID-19 EXIT SCENARIOS

PR

OLO

NG

ED

DEL

AY

ED

EAR

LY

REBOUND

REBOOT

REINVENT

An early return to normal living conditions (schools, workplaces, stores, restaurants etc. re-open) at some point in the third quarter of 2020.

A medium term scenario that is positioned in the fourth quarter of the year.

A longer term view that places the world in a general return to normal living conditions at some point in the first half of 2021.

Nielsen has identified three distinct time horizons for global market regeneration beyond COVID-19 and attached likely scenarios to each.

Source: Nielsen, Scenarios Beyond Covid-19, May 2020

25 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

REGENERATION STRATEGIES Shift from restrictions to precautions

EMER

GEN

CE

MU

LTIP

LIER

S W

ILL

ENTR

ENC

H

AC

CEL

ERA

TO

RS

& B

EHA

VIO

UR

AL

SHIF

TS

SURVIVE - REACT | RESPOND (ADAPT, ADOPT ► INGRAINED)

RE-STIMULATE, REPRIORITISE, RECONSIDER ► REBALANCE, REPOSITION

ENDURE

ENDURE

ENDURE

INTENSE SHOCKS

►REINVENT

PARTIAL IMPACTS

►REBOUND

EXACERBATED CONSEQUENCE ►REBOOT

Q3 ‘20 Q4 ‘20 Q1 ► Q2’21

* Determined by common, typical event markers (political, economic, environmental, social, legal/governance)

EMERGE

EMERGE

EMERGE

26 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

HORIZON 1: “REBOUND” FROM PARTIAL IMPACTS

LIMIT TOUCHPOINTS

DEMAND MORE PRECAUTIONS, EVERYWHERE

24/7

AUTHENTICATE INFORMATION

VALUE PERSONAL

S P A C E

VALUE VIRTUAL BEFORE

PHYSICAL

LOCAL PATRONAGE

CONFINE

PROXIMITY

EXERCISE

FINANCIAL RESTRAINT

OPT FOR .…OPEN…. CONFINED

PLACES

APPRECIATE ESSENTIALS

<3 months restricted living: In horizon No. 1, “Rebound,” a series of health indicators, actions by governments and business and market conditions point to a rebased “normal” that has some of the following as a societal response.


27 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

HORIZON 2: LIFE IN REBOOT

LIMIT TOUCHPOINTS


24/7



PHYSICAL

CONFINE

PROXIMITY

[MICRO] LOCAL RELIANCE

SOCIAL SOLIDARITY

FINANCIAL CONSTRAINTS

RELIANT ON ESSENTIALS


PLACES

MORE SIGNIFICANT IMPACT

VALUE PERSONAL

S P A C E

Up to 6 months of restricted living: In horizon No. 2, “Reboot,” the societal response has a different set of focal points and positions the economy for meaningful regeneration toward the end of the year.


28 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

HORIZON 3: LIFE IN REINVENT

LIMIT TOUCHPOINTS


24/7



PHYSICAL

CONFINE

PROXIMITY

[MICRO] LOCAL DEPENDENCE

SOCIAL BACKLASH

FINANCIAL DESPERATION

SURVIVE ON ABSOLUTE BASICS


PLACES

VALUE PERSONAL

S P A C E

MORE SIGNIFICANT IMPACT

Over 6 months of restricted living: “Reinvent,” as the name suggests, a complete reinvention is required and may not play out until the first half of 2021. The consumer behaviors and characteristics are sharply amplified compared to horizons No. 1 and No. 2.


29 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Consider the emergence time horizon (Rebound, Reboot,

Reinvent) based on the Environmental Indicators

Explore the Lifestyle Adjustment implications and Consumption

Changes within the relevant time horizon

Dig deeper into the findings to make relevant recommendations

based on the changing consumption dynamics

WAY FORWARD FOR BUSINESSES Businesses need to proactively read the headwinds and tailwinds of the country, as economies re-open in the coming months in a phase-out manner. This is critical to determine which horizon they are headed for as well as to help them navigate the new world.



WHAT’S AHEAD?

31 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

TIMELINE OF RESUMPTION

TRADE Source: Advocacy brief on resumption of public activities during gradual exit from existing restrictions for COVID-19 in Sri Lanka, Ministry of Health (May’20) *Recommended health guidelines to be followed during every stage.

32 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.


INSTITUTIONS Source: Advocacy brief on resumption of public activities during gradual exit from existing restrictions for COVID-19 in Sri Lanka, Ministry of Health (May’20) *Recommended health guidelines to be followed during every stage.

33 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.


LIFE STYLE

Source: Advocacy brief on resumption of public activities during gradual exit from existing restrictions for COVID-19 in Sri Lanka, Ministry of Health (May’20) *Recommended health guidelines to be followed during every stage.

34 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

FUTURE OUTLOOK*

Small and Medium Enterprises will struggle

Sharp jobs and earnings losses; informal workers will be the worst affected

Export earnings, tourism, remittances, private consumption and investments will suffer

Reduction in oil prices and a deceleration of imports will ease the budget deficit to a certain extent

In 2020, Sri Lanka’s GDP growth is expected to drop to a value around -0.5% to -3.0% Yet, the country is to recover & record a modest 0.2% to 1.2% growth in 2021

* Source: World Bank, South Asia Economic Focus Spring 2020, The Cursed Blessing of Public Banks, April 2020

35 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

Source: Nielsen CXO survey on COVID-19 from Apr’ 2020

OPPORTUNITIES IN 2020

36 Cop

yri

gh

t ©

20

19

Th

e N

iels

en

Com

pa

ny (

US

), L

LC

. C

on

fid

en

tia

l a

nd

pro

pri

eta

ry. D

o n

ot d

istr

ibu

te.

CLOSING THOUGHTS

“There seem to be light at the end of the tunnel as Sri Lanka has more or less managed the virus effectively compared to other countries and we are almost coming to the end of the ordeal. The country has to now count the losses, as this merciless virus has affected every sector, every individual and every fiber of society. As we look forward to opening up to business as usual, it would be interesting to see how people have adopted in terms of their habits, perceptions and inclinations and Nielsen Consumer Insights is geared to understand this new panorama of how people have weathered this pandemic.”

Therica Miyanadeniya Director - Consumer Insights, Nielsen Sri Lanka

“Economic and Social aspects of Sri Lanka were under pressure due to the prevailing situation while Political and Legal landscapes are heating up on account of General Election. The country expects a new norm with a reinforced domestic economy focused on food security, price controls and new priorities related to agricultural sector. While the country sets in for a new norm alongside the threat of COVID-19 still in sight, the future of Sri Lanka will be shaped by the combined efforts of all sectors.” Jinendra Kothalawala Director - Social Research, Nielsen Sri Lanka

“There are signals that consumers may change their way of shopping & eating habits beyond the ‘lockdown’ period. Reduced outdoor activities & gatherings, cutting on eating out, cooking own meals at home may be a few to mention. The changed retail landscape where Supermarkets, Wholesalers, Large Groceries, Ecommerce Operators as well as Manufacturers reaching out to consumers directly will still be relevant in the long run. In addition, work from home, online learning for students, etc. will change shopping priorities skewing towards convenience and online as a platform will emerge as a key influencer on sales than before.“ Waruna Kathriarachchi Director - Retail Measurement Service, Nielsen Sri Lanka

RISING UPTO THE CHALLENGE · 2020-06-14 · services and deliveries, to their credit they have...

Documents

Transcript of RISING UPTO THE CHALLENGE · 2020-06-14 · services and deliveries, to their credit they have...