Macroeconomy and FMCG Update - Nielsen - May 2021

Macro-economy
and FMCG Update

Recovery trend continues
27th May 2021

Advanced Trade Marketing Workshop
© 2021 Nielsen Consumer LLC. All Rights Reserved.

The number of new covid-19 cases is still relatively high, with the
tendency to getting lower
Indonesia COVID-19 New Cases
PSBB PSBB
PSBB Transisi PSBB 2 Transisi 2 PPKM PPKM 2
Copyright © 2017 The Nielsen Company. Confidential and proprietary.
10-Apr 5-Jun 14-Sep 12-Oct 11-Jan 23-Feb
Source: covid19.go.id 2
This causes our economy to decline by 2%
2020 GDP
Growth 2.9%
2.3%
-2.1%
-3.5%
-5.8%
-6.6% -6.4%
-9.5%
Phillipines Thailand Euro Singapore USA Indonesia China Vietnam

Source: BPS, Bank Indonesia, Ministry of Finance 3
BPS
Economy is still in a recovery process, it keeps showing progress

Inflation is still relatively slow up to Mar’21, yet controlled
GDP growth (%) Annual inflation (%)
2012-2019 2020 2021 2012-2019 2020 2021
FY 2020: -2.1
8.4
5.0 4.8 5.0 5.1 5.2 5.0

3.0
-0.7
-2.2
-3.5 3.6
3.4
3.0 3.1 3.0
-5.3 2.7
2.0
1.7
1.4 1.4
FY FY FY FY FY FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 DEC DEC DEC DEC DEC DEC MAR JUN SEP DEC MAR JUN SEP DEC
14 15 16 17 18 19 20 20 20 20 21 21 21 21 14 15 16 17 18 19 20 20 20 20 21 21 21 21
Source: BPS, Bank Indonesia 4

BPS
Consumption was also moving positively

Govt. spending was showing good drive, while investment managed to stabilize
2021 – GDP contribution by expenditure (%) GDP expenditure growth

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Export/GDP Import/GDP Net export 2014 2015 2016 2017 2018 2019
’20 ’20 ’20 ’20 ’21 ’21 ’21 ’21
19.2% 18.1% 1.1%
Household consumption
5.1 5.0 5.0 5.0 5.1 5.0
2.8
HH Consumption 56.9
-4.1 -3.6 -2.2
-5.5
Gov. Spending 6.7 Government spending

9.8
5.4 4.8 3.3 3.7
2.0 2.1 1.8 3.0
Investment 32.0
-0.2
-6.9
Net Export/Import 1.1 Gross-fixed capital formation

5.1 6.2 6.7
4.1 4.5 4.5
1.8
Others 3.3 -0.2

-8.6 -6.5 -6.2
Source: BPS 5
Bank Indonesia
Overall confidence slowly increases in 1st quarter of 2021

After significantly down during the quarantine living phase, Indonesian consumer starts to be more optimistic
toward current economic condition
CCI CECI CEI Local COVID-19

Pandemic
Consumer Consumer economic Consumer future
confidence index condition index expectation index
150
138 March ‘21
140
130 Confidence about future condition
120 113 114
110
115
100 Consumer confidence
90 93
80
70 Confidence about current economic condition
60 73
50
54
40
30
20
10
0
DEC17 MAR18 JUN18 SEP18 DEC18 MAR19 JUN19 SEP19 DEC19 MAR20 JUN20 SEP20 DEC20 MAR21
Source: Bank Indonesia 6

TCB
Consumer confidence continues to recover across countries in Q1’21

Significantly for China, Malaysia, Singapore and South Korea. Meanwhile Philippines and Vietnam are slightly
decline vs Q4.
Q3'19 Q4'19 Q1'20 Q2'20 Q4'20 Q1'21
138
118 119 117 121

111
105 104
96
76
58
Asia Pacific India Phillipines Vietnam Indonesia China Malaysia Thailand Singapore Japan S. Korea
*Note : Q1 2020 fieldwork is based on Jan-Feb 2020

Three questions are used to calculate the Index :
Job prospects in the next 12 months
State of your own personal finances in the next 12 months
This moment is the time to buy things you want and need
Source: The Conference Board ® Consumer Confidence Survey, conducted in collaboration with NielsenIQ
7
Bank Indonesia
Confidence on income and job prospect also slowly rebounds

Especially since Q4 of 2020. However, job prospect is still low (<60%) compared to the pre-pandemic level.
Consumer current economic condition by component

Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Oct'20 Nov'20 Dec'20 Jan'21 Feb'21 Mar'21
114
110
86 84
78 79 77 77 80
74 73 72 70 69 73
69 71
64 65 66 69
60 58 60
51 53 53 54
47 48
41 42 43
35 35
30 32
28
25
Current income expectation Job availability expectation Durable goods purchase
Consumer Current Economic Condition compared to 6 months ago.

Source: Bank Indonesia
8
OJK | CMV
Saving & investment fund in the bank still increased vs. last year
Q1 Position Rp4,896,716
+5.67% Rp4,603,321
+6.37%
Fund from saving Rp4,356,280
account + time deposit
(in billion Rp)
2019 Q1 2020 Q1 2021 Q1 (Up to Feb)
3.7
Savings account Time deposit
49 1.3
% Customer 17+ 37 34 % Customer 17+ 0.7
2019 2020 2021 2019 2020 2021
% of segment who have savings account % of segment who have time deposit
Upper 1 27 23 17 Upper 1 66 46 44
Upper 2 31 32 28 Upper 2 21 35 31
Middle 1 28 29 30 Middle 1 12 13 17
Middle 2 10 13 20 Middle 2 1 5 7
Lower 3 3 5 Lower 0 1 1
Source: Otoritas Jasa Keuangan 2019– 2021 / www.ojk.go.Id | Customer penetration - consumer media view up to Q1’21
9
Govt. incentive last year of IDR 695 T to fix the economy. This year,
nearly matched fiscal support will be boosted too
Kesehatan (87.55 T) Perlindungan Sosial (203.90 T) Insentif Usaha (120.61 T)
1. Belanja Penanganan Covid-19: 65.80T 1. PKH: 37.40T 1. PPh 21 DTP: 39.66T

2. Insentif Tenaga Medis: 5.90T 2. Sembako: 43.60T 2. Pembebasan PPh 22 Impor: 14.75T
3. Santunan Kematian: 0.30T 3. Bansos Jabodetabek: 6.80T 3. Pengurangan Angsuran PPh 25: 14.40T
4. Bantuan Iuran JKN: 3.00T 4. Bansos Non-Jabodetabek: 32.40T 4. Pengembalian Pendahuluan PPN: 5.80T
5. Gugus Tugas Covid-19: 3.50T 5. Pra Kerja: 20.00T 5. Penurunan Tarif PPh Badan: 20.00T
6. Insentif perpajakan di Bidang Kesehatan: 9.05T 6. Diskon Listrik: 6.90T 6. Stimulus Lainnya: 26.00T
7. Logistik / Pangan / Sembako: 25.00T
8. BLT Dana Desa: 31.80T
UMKM (123.46 T) Pembiayaan Korporasi (53.57 T) Sektoral K/L & Pemda (106.11 T)
1. Subsidi bunga: 35.28T 1. Penempatan Dana untuk Restru Padat 1. Program Padat Karya K/L: 18.44T
2. Penempatan Dana untuk Restru: 78.78T Karya: 3.42T 2. Insentif Perumahan: 1.30T
3. Belanja IJP: 5.00T 2. PMN: 20.50T 3. Pariwisata: 3.80T
4. Penjaminan untuk Modal Kerja (Stop Loss): 3. Talangan (Investasi) untuk Modal Kerja: 4. DID Pemulihan Ekonomi: 5.00T
1.00T 29.65T
5. Cadangan DAK Fisik: 8.70T
5. PPh Final UMKM DTP: 2.40T 6. Fasilitas Pinjaman Daerah: 10.00T
6. Pembiayaan Investasi kepada Koperasi 7. Cadangan Perluasan: 58.87T
melalui LPDB KUMKM: 1.00T
Source: KEMENTERIAN KOORDINATOR BIDANG PEREKONOMIAN REPUBLIK INDONESIA, 2020 10

CPS
Household spending started to pick up in recent periods,

currently at similar level before the pandemic
Avg. monthly spend/HH – 000 IDR Avg. monthly spend/HH by SES
% Growth  Total % Growth   Upper (16%)  Middle (56%)  Lower (28%)
8,000 Q1 ’21 vs YA  7%
↓ ↓ ↓↓
12,000 Q1 ’21 vs YA 
7,000
10,000
6,000
8,000
5,000
4,000 3,765 3,772

3,513 6,000
3,000
4,000
2,000
2,000
1,000
0 0
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'18 Q3'18 Q1'19 Q3'19 Q1'20 Q3'20 Q1'21
Source: NielsenIQ Home Panel Data – Total Family Spending – Q1 ’21 vs LY

11
Focus is still on FMCG/Food; But spending in Leisure shows an
improvement compared to last year
HH spending contribution %
Q1'20 Q1'21
23 23
22
21
13 12 13
9 10
9 8
7
5 5 5
4 3 4
1 1
FMCG Food Housing Related Transport Comms Education Health Saving + Loans Leisure Insurance
(Fresh & Staples)
Source: NielsenIQ Home Panel Data - Total Family Spending – Q1 ’21 vs LY

12
In-Home Dining continues the market growth
Source: Total Country Key Account 13

Along with Health Management

Skincare and beauty still experience negative growth

Snacking drives Indulgence growth

SCAN
After a year, COVID-related categories are still showing growth,

although slower, except for hand sanitizer which still continues.
% Value Growth vs. YA | Total Key Accounts
10 Selected Categories with Biggest Growth Gap after COVID-19 Local
Liquid Hand Canned Seasoning Liquid Tomato Seasoning
Cheese Vitamin Dry Noodle
Hand Soap Sanitizers Fish & Meat Liquid Antiseptic Sauce Flour
Pre-COVID19 COVID-19 Global COVID-19 Local

(492)
571
194
(124) (70)
(55) (40) (45) (50)
(41) (38) (33)
80
57 42
2 20 4 21 14 35 22 16 5
35
14 6 31 27 34 14
5 5 15
35
10 16 20
(%) = Previous wave COVID-19 Local (i.e. W1020 to W5020)

Pre-COVID 19 : 30 Dec 2019 – 19 Jan 2020 (W0120 – W0320)
Covid-10 Global : 20 Jan 2020 – 1 Mar 2020 (W0420 – W0920)
Covid-19 Local : 2 Mar 2020 – recent (W1020 – W1121)
17
RMS
Retail sales also shows that FMCG growth continues to recover
Value, volume growth & price/unit % change | Top 81 FMCG categories
GDP Growth 5.1 5.2 5.0 -2.1 -0.7 -0.7
Inflation 3.6 3.1 2.7 1.7 1.4 1.4
5
3 5 5
1 4 0 4
2 1
FMCG -2 -1
-3 -4
-7 -6 -6
-10
FY 2017 FY 2018 FY 2019 FY 2020 MAT TY vs YA YTD TY vs YA
FMCG Value Growth % FMCG Vol Unit Growth % FMCG Price/Unit Change %
Source: NielsenIQ Retail Audit Data | Bank Indonesia

18
RMS
RMS
While minimarket was still able to grow in 2020, the traditional

channel is bouncing back
GT, HBC and HBM channels are starting to recover in the end of 2020
Data ending in MAR21
(%Cont) Total HSM (12%) MM (39%) GT (46%) HBM (2%) HBC (2%)
P12M vs YA -6 -10 3 -10 -16 -32
Growth % P3M vs YA -4 -13 -2 -3 -14 -22
P3M vs PP 2 2 -2 5 10 11
Store GRO (%) W3’18 vs YA 0 -4 2 0 0 -1
Value (Rp) – Indexed to MAR’18 MT Hyper/Super MT Minimarket General Trade H&B Medical H&B Cosmetic
200
150
100
50
MAR18 JUN18 SEP18 DEC18 MAR19 JUN19 SEP19 DEC19 MAR20 JUN20 SEP20 DEC20 MAR21
Source: NielsenIQ Retail Audit Data
19
CPS
E-commerce:
Upper SES continues to drive growth of FMCG e-commerce
Middle and lower class are also trying to participate to some extent, even though still very limited.
Total Upper (16%) Middle (56%) Lower (28%)
Penetration (%) Total spending (Bill IDR) Spend/HH (000 IDR)
18.9
2,418
371
1,638
9.4 289
1,303
8.3 8.2 9.1 231
4.6
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Mar-21 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Mar-21 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Mar-21
Source: NielsenIQ Home Panel Data

20
If we can, providing online offering to our consumers is crucial
Source: Nielsen Global Online Shopping Study 21

Online shopping is getting more important for consumers
Source: Nielsen Global Online Shopping Study 22

Most purchased online are payment, F&B, and personal care;
Main reason is cheaper price
CATEGORY PURCHASED DURING COVID -19 REASONS FOR BUYING ONLINE
Base: 416 respondents COVID-19 TOTAL Base: 4484 respondents 2020 2018
BILL PAYMENT 38% (10%)
CHEAPER PRICE 67% (72%)
F&B 33% (25%)
PERSONAL CARE 33% (12%) CAN SHOP AT ANYTIME (24 HOUR A DAY) 48% (33%)
FASHION 32% (74%)
EASY PAYMENT PROCESS 47% (56%)
COSMETIC 25% (42%)
SERVICES 20% (3%) DISCOUNT OR PROMOTION ONLY ON ONLINE 39% (1%)
HOME CARE 18% (20%)
GADGET ACCESSORIES 17% (19%) FEEL SECURE TO PROVIDE PERSONAL IDENTITY 38% (31%)
BABY & KIDS 14% (19%)

CONVENIENT AND EASY TO USE THE INTERNET 38% (51%)
BOOK & STATIONARY 13% (14%)
IT & GADGET 12% (8%) GOOD QUALITY PRODUCT 37% (37%)
ENTERTAINMENT AND HOBBY 10% (10%)
GOOD AND TRUSTWORTHY DELIVERY PROCESS 31% (37%)
TRANSPORTATION 9% (38%)
FINANCIAL PRODUCT 9% (6%) ATTRACTED WITH THE PRODUCT SOLD ONLINE 30% (61%)
FURNITURE & HOME DECOR 8% (9%)
HOUSE APPLIANCES 6% (27%) THE PRODUCT ONLY AVAILABLE ONLINE 30% (31%)
AUTOMOTIVE SPARE PART 5% (5%)

TRAVEL 3% (35%)
Source: Nielsen Clicks Study 2018 – 2020 23

E-Commerce retailers build “repeat purchase” using discount
SAMPLE SIZE: 4484
OFFERED DISCOUNT VOUCHER 49% (N/A)
PROMOTION CHEAPER PRICE COMPARED TO COMPETITORS 47% (37%)
FREE SHIPPING / RETURNS 33% (29%)
ACCUMULATIVE BONUS POINTS FOR ONLINE RETAIL 22% (32%)
DISCOUNTS VOUCHER FOR NEXT PURCHASES 22% (41%)
REWARD//DISCOUNT ON ONLINE STORES / OFFLINE STORES 12% (N/A)
FREE INSURANCE 10% (16%)
DIRECT GIFT 8% (7%)
NEVER GET ANY ONLINE PROMOTION 17% (56%)
Source: Nielsen Clicks Study 2018 – 2020 **(xx%): 2018 Data 24

Source: Nielsen Global Shopper New Normal Study 2020 25
While online continues to grow, shoppers are also starting to shop
more in physical channels
26
Spend has also shown indication of shifted locations
Source: Nielsen Global Shop-Shifting Study 2020 27

Within COVID-19 context, we are in need of profitability
improvement
• FMCG/Retail economics have significantly deteriorated in the last few

years.
• Covid-19 has not helped restore store profit despite top line growth. And
a few of them are “cash crunched”.
• Lockdown has shown us that you can sell more with a more focused
assortment.
• It has also shown that with optimum SKUs, shelf management + store
operations + inventory costs are more efficient.
28
There is urgency to prepare for category reset
Top 80% sales value 81% - 98% sales value Bottom 2% sales value
contributing SKUs contributing SKUs contributing SKUs
Fabric Softener 9% 17% 74%

Detergent 10% 15% 75%
Non Powder Detergent 7% 25% 69% +60% of the assortment
Insecticide 10% 20% 70% takes up much of the
Cosmetics 5% 26% 69% space, generates significant
Tea RTD 12% 13% 75% costs for both retailers and
CSD 8% 21% 71% manufacturers…to deliver
Snack 11% 17% 72% just 2% of category sales
Coffee 6% 21% 73%
Biscuit 8% 17% 75%
SCM 12% 13% 75%
Instant Noodles 7% 18% 75%
Mineral Water 4% 11% 85%
Cooking Oil 3% 11% 86%
Powder Milk 15% 19% 66%
0% 20% 40% 60% 80% 100%
Source: Nielsen Indonesia Scan Track Total MT Key Account – FY 2020 29

There will be no more place for nice to have products. Only focus
on the most important ones – from both retailers and suppliers
stand point
• What should be the core SKUs and the supporting SKUs?
• Which pack size should be the top priority?
• Which SKUs are cannibalizing other SKUs the most?
• Do I know the growth potential that the existing assortment has?
• If the potential impact is good, how can I make it even better ?
• If not, what should I strategize to turn it around ?
• Which SKUs have good incrementality in the category?
• Which products are good in the market and should give good incrementality to me as well?
• What will be the impact for my sales and growth if I change my portfolio?
30
Get a head-start to remain competitive during the recovery period,
prepare for category reset discussion
1. DIAGNOSTIC QUADRANTS 2. OPTIMIZATION OF
-Understand the dynamics of the category. THE CATEGORY/CHANNEL
-Identify the risks and opportunities in terms Actionable range recommendations on
of listing and delisting. the full tree structure for value growth.
Approximate gain per year

with assortment optimization
31
Source: Nielsen Global Shopper New Normal Study 2020 32
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33
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Macro-economy

and FMCG Update

27th May 2021

© 2021 Nielsen Consumer LLC. All Rights Reserved.

10-Apr 5-Jun 14-Sep 12-Oct 11-Jan 23-Feb

Phillipines Thailand Euro Singapore USA Indonesia China Vietnam

Economy is still in a recovery process, it keeps showing progress

GDP growth (%) Annual inflation (%)

2012-2019 2020 2021 2012-2019 2020 2021

5.0 4.8 5.0 5.1 5.2 5.0

Source: BPS, Bank Indonesia 4

Consumption was also moving positively

2021 – GDP contribution by expenditure (%) GDP expenditure growth

Gov. Spending 6.7 Government spending

Net Export/Import 1.1 Gross-fixed capital formation

Others 3.3 -0.2

Overall confidence slowly increases in 1st quarter of 2021

CCI CECI CEI Local COVID-19

Source: Bank Indonesia 6

Consumer confidence continues to recover across countries in Q1’21

118 119 117 121

*Note : Q1 2020 fieldwork is based on Jan-Feb 2020

Confidence on income and job prospect also slowly rebounds

Consumer current economic condition by component

Current income expectation Job availability expectation Durable goods purchase

Consumer Current Economic Condition compared to 6 months ago.

2019 2020 2021 2019 2020 2021

1. Belanja Penanganan Covid-19: 65.80T 1. PKH: 37.40T 1. PPh 21 DTP: 39.66T

Source: KEMENTERIAN KOORDINATOR BIDANG PEREKONOMIAN REPUBLIK INDONESIA, 2020 10

Household spending started to pick up in recent periods,

Avg. monthly spend/HH – 000 IDR Avg. monthly spend/HH by SES

% Growth  Total % Growth   Upper (16%)  Middle (56%)  Lower (28%)

4,000 3,765 3,772

Source: NielsenIQ Home Panel Data – Total Family Spending – Q1 ’21 vs LY

Source: NielsenIQ Home Panel Data - Total Family Spending – Q1 ’21 vs LY

Source: Total Country Key Account 13

Source: Total Country Key Account 14

Source: Total Country Key Account 15

Source: Total Country Key Account 16

After a year, COVID-related categories are still showing growth,

Pre-COVID19 COVID-19 Global COVID-19 Local

(%) = Previous wave COVID-19 Local (i.e. W1020 to W5020)

Retail sales also shows that FMCG growth continues to recover

Value, volume growth & price/unit % change | Top 81 FMCG categories

GDP Growth 5.1 5.2 5.0 -2.1 -0.7 -0.7

Inflation 3.6 3.1 2.7 1.7 1.4 1.4

FY 2017 FY 2018 FY 2019 FY 2020 MAT TY vs YA YTD TY vs YA

Source: NielsenIQ Retail Audit Data | Bank Indonesia

While minimarket was still able to grow in 2020, the traditional

Total Upper (16%) Middle (56%) Lower (28%)

Penetration (%) Total spending (Bill IDR) Spend/HH (000 IDR)

Source: NielsenIQ Home Panel Data

Source: Nielsen Global Online Shopping Study 21

Source: Nielsen Global Online Shopping Study 22

BABY & KIDS 14% (19%)

AUTOMOTIVE SPARE PART 5% (5%)

Source: Nielsen Clicks Study 2018 – 2020 23

SAMPLE SIZE: 4484

OFFERED DISCOUNT VOUCHER 49% (N/A)

PROMOTION CHEAPER PRICE COMPARED TO COMPETITORS 47% (37%)

FREE SHIPPING / RETURNS 33% (29%)

ACCUMULATIVE BONUS POINTS FOR ONLINE RETAIL 22% (32%)

DISCOUNTS VOUCHER FOR NEXT PURCHASES 22% (41%)

REWARD//DISCOUNT ON ONLINE STORES / OFFLINE STORES 12% (N/A)