The Voice of Customer

Vietnam
2021 consumer trends

Download at wwww.cimigo.com
or ask@cimigo.com
16 May 2021
Helping you make better choices

• Richard Burrage is the Managing Director of Cimigo, a market

research and consulting firm founded 20 years ago.

• Richard a UK national has resided in Vietnam with his three

children since 1997.

• Cimigo have been helping clients make better commercial and

marketing choices for 20 years.

• If you want to know more, just drop us a note at

ask@cimigo.com.

• You can download this presentation at www.cimigo.com.

2
 97.6 million US$343 billion US$3,514 Internet economy 62 million
Retail sales 69 million
GDP 2.91% growth GDP/capita US$14.9 billion US$163 billion users users
4.3% of GDP 2.6% growth

2020 progress, despite COVID

70% internet 88% smartphone US$3.13 billion 812 new cars 18,500 new 63% banked
National National All advertising per day Apartments National
All Adults 15+ HCMC, HN, DN Adults 18+

Source: 2020 data points. GSO, Global Demographics, Cimigo surveys, VAMA, Savills, Asia Media Partners, SBV, We Are Social
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4
Protect public heath and safeguard the economy

Currently infected 557 (18%)

Died 35 (1%)

Recovered 2,560 (81%)

Total ever infected 3,152 (100%)

Source: Ministry of Health, May 8th 2021

5
COVID protection versus 2020 economic progress

Public protection and economic progress

6%
5%
Taiwan 3%
GDP Contraction / Growth 2020
4%
3% Vietnam 3%
2% China 2%
1%
0% 0
-1% 0 2 4 6 8 10 12 14 16 18
-2% South Korea -1% Indonesia -2%
-3%
-4% Singapore -6%
-5% Japan -5% India -8%
-6% Malaysia -6%
-7% Hong Kong -6%
-8% Thailand -6%
-9% Philippines -10%
-10%
COVID deaths per 100,000 as of May 8th 2021

Sources: Note Vietnam changed GDP calculation in Q4 2019, increasing GDP significantly. 2020 data points. National GSO equivalents, IMF, Trading Economics. 6
Vietnam now 4th largest economy in SE Asia
In absolute size Vietnam has now surpassed Singapore and Malaysia

2020 US$ GDP per capita

Countires<<US$12,000
Countries US$12,000
12,000
11,000 China 10,644
Malaysa 10,391
10,000
GDP US$ per cpaita

9,000
8,000
7,000 Thailand 7,295
6,000 Vietnam 3,524
3,514
5,000 India 2,079
4,000 Indoneisa 3,981
3,000
2,000 Philippines 3,352
1,000 Myanmar 1,303
-
- 500 1,000 1,500
Population millions

Sources: Note Vietnam changed GDP calculation in Q4 2019, increasing GDP significantly. 2020 data points. National GSO equivalents, IMF, Trading Economics. 7
A long journey to reach developed economies

2020 US$ GDP per capita

Countires
Countries >> US$25,000
US$25,000
60,000
Singapore 57,689
55,000
GDP US$ per cpaita

50,000
Hong Kong 46,655
45,000

40,000 Japan 39,256

35,000
Taiwan 25,642 South Korea 31,910
30,000

25,000
0 20 40 60 80 100 120

Population millions

Sources: Note Vietnam changed GDP calculation in Q4 2019, increasing GDP significantly. 2020 data points. National GSO equivalents, IMF, Trading Economics. 8
Vietnam now 4th strongest economic power in SE Asia

9
Manufacturing contributes near ¼ of GDP and has bounced back

Vietnam Purchasing Managers Index

60
54 55
55 52 52 52 52
51 51 51
49 50
50 48
46
45 42 43

40

35 33

30

Source: IHS Markit >50 = improvement since previous month

10
Vietnam leads on global trade interconnectivity

• Free trade agreements abound. Vietnam leads the charts on global trade interconnectivity. Vietnam global
interconnectivity in 2020 was 159%.
• Interconnected global trade is defined as imports plus exports as a % of GDP.
• Down from 200% in 2019, previous GDP calculations were adjusted increasing GDP by over 20%.

• Minimum monthly wages today in Saigon are US$191, just 58% of the minimum in Guangzhou at US$326.

11
Q1 2021 economic indicators

12
 Anh we need a cool
image that depicts
consumer demand

Consumer
winners and losers

13
Fevered nationalism and healthier lifestyles

• National pride has been propelled further by • Covid has accelerated the emphasis on healthy
Covid management. lifestyles, sports, food and beverage propositions.

14
 Vietnam’s agricultural economy absorbs job losses where many
survive, but are under employed

Net Net Net

450,000 1,630,000 181,000
jobs added jobs lost in jobs lost in
in 2019 2020 Q1 2021

Many job losses in tourism, hospitality and manufacturing.

Vietnam has a large migrant work force whom return to home

provinces at TET and when things get tough.

The agricultural economy acts as a sponge to this work force,

they have shelter, can eat, but are grossly under employed.

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Consuming class 44% of all households
Today there are 12,148,729 consuming class households with an average of 3.57 individuals. These households have
sufficient income for discretionary expenditure. They represent 44% of all households and have an income above
US$429 per month, they are classified as ABCD economic class.

Economic class distribution

14,000,000 27,335,221 households 50%
43%
45%
12,000,000
40%

10,000,000 35%
24%
30%
8,000,000
8,147,696
25%
6,000,000
20%
14%
3,904,104
4,000,000 15%
4% 13%
2% 1,867,180 10%
2,000,000 509,231 2,376,411
2,797,431 3,522,691 5%
169,744 1,864,954
725,260 1,139,694
- 310,826 0%
A class: 1072 and B class: From 858 to C class: From 644 to D class: From 429 to E class: From 215 to F class: Below 215
above below 1072 below 858 below 644 below 429

Urban households Rural hosueholds 2020 % of households

Source: GSO, Cimigo 16

Household incomes contracted by 12% in 2020

• Household incomes dropped by 12% in 2020.

• Household income shortfalls on average equate to one month’s salary.
• Yet the averages mask that some households were far harder hit.
• 90% will recover to 2019 levels in Q3 2021.

• Household savings rate declined.

• Household savings rate will recover in Q4 2021.
• Household saving nests will recover in Q4 2022.

17
Beyond the averages, identifying households hit hard

• Tourism, hospitality, small trading owners and blue collar production employees were the hardest hit.

• People on average have 1.7 sources of income. Secondary income sources were hit hard. Typically
small stores and trading enterprises.

• Provinces with a high concentration of tourism and manufacturing were hardest hit, with both job
losses and a loss of overtime.

• Those households hardest hit were typically lower income households classified as E and F class,
where the main income earners are over 40.

• Those in the largest cities finding more alternatives. Younger employees being more agile. White
collar roles proved more agile and secure.

18
Consumer shifts in expenditure

• Consumer packaged goods (CPG) largely grew but at a slower pace than 2019.

• Income shortfalls derailed the premiumisation of CPG. Down trading in CPG will continue
through 2021.

• Planned high ticket purchases were delayed.

• Vehicles and appliances expected to recover in Q4 2021.

• Discretionary expenditure was re-evaluated.

• Travel was restricted and plans remain cautious and closer to home.
• Out of home entertainment expenditure was held back. It has since rebounded.
• Localised periodic COVID scares create high volatility for discretionary expenditure.

• Super premium luxury consumer packaged goods and durable goods did not decline.

19
Domestic consumer demand shrank in 2020

Outbound Out of home Domestic Eating out of Spa and

travel entertainment travel home beauty services

Shrank in 2020 – yet pent up demand remains

Shrank

Apartments Car Two-wheeler Home Fashion Devices Home

appliances furnishing

20
Domestic consumer demand accelerated in 2020

Will endure
Online CPG down trading Delivery and Gaming Content E-wallets Ed tech
shopping thrifty options ride hailing streaming

Accelerated growth in 2020

COVID reaction
Hygiene F&B CPG packed Health Books, Electrical Sports
Sanitiser, delivery food supplements stationery accessories apparel (yoga!)
mask, soap, wash,
mouthwash

21
E-commerce sales grew by 54% in 2020

• Online shopping will surpass modern Retail sales contribution %

trade share of sales in 2028. and # of modern self service stores

0.4% 0.7% 1.1% 1.9% 2.9% 4.3%

100% 7,008 8,001
90% 17% 17% 18% 19% 7,001
• E-commerce has reached a tipping 80%
20% 22%
6,001
6,020
point with consumer trust now granted. 70%
5,001
60%
The 60% incidence in 2018 in 50% 4,001
metropolitan cities, grew to 80% over 40% 83% 82% 81% 79% 3,177 77% 74% 3,001
30%
2020. 20% 2,100 2,700 2,001
1,800 1,001
10%
0% 1
2015 2016 2017 2018 2019 2020
• E-commerce logistics and delivery Tradtional trade Modern trade E-Commerce Modern outlets
times improving exponentially into
rural areas.

• Bach Hoa Xuan (mini market format)

expanding into rural areas.
Largest store expansions over 2018-2020

• Modern trades contribution to retail

sales has moved from 15% in 2005 to
22% in 2020.
22
From humans to
algorithms

23
Glued to screens for 6H 47M per day

TV/Video
Social
Edutainment

2h21m 2h40m
(any device) (any delivery/device)

Source: We Are Social

24
Experiences over tangible goods - shift purchase priorities

THEN (and 45+) NOW (and 20+)

Long-term planning, Looking to enjoy life NOW,

work hard before less focus on delaying
enjoying, thinking about gratification
the future

Income is spent on
Income is spent on experiences that create
gathering assets, memories, they “make-do”
possessions and savings with possessions

Narrower definition of Broader definition of

“success” – being wealthy, “Success” – being happy, self
many possessions & fulfilment, recognition in social
property, high-level title media

25
Digital transformation shifts consumer priorities

Internet, mobile & social New business models and Aggressive financing
media the sharing economy
Easier to gain access to promotions,
Causing the most Democratising access to discounts and loans – making
fundamental change in goods and services previously purchases more “affordable”.
people’s lifestyles and only available to a limited
behaviours. segment.

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Keeping up with the Nguyen’s with consumer finance

Smaller household size US$66 billion

changes priorities.

Up 8.8% over 2019

Less older dependents in the
280,000 apartments sold in
the last 5 years. Despite the 19% of GDP
massive decline from 88,000
in 2019 to 18,500 in 2020.
41% of retail sales
Lower birth rate see less
pester power.

Source: MoF, Fiingroup 27

Digital transformation, digital economy now at US$15 billion

2020 Internet economy 20% 47% 22% 11%

US$14.9 billion Online travel Online Ads, media, games Ride hailing
4.3% of GDP shopping

2019 Internet economy 31% 38% 23% 8%

US$12 billion Online travel Online Ads, media, games Ride hailing
3.9% of GDP shopping

US$3 billon in 2015 at 1.7% of GDP. | US$9 billion in 2018 at 3.8% of GDP. | USD$12 billion in 2019 at 3.9% of GDP.

Source: GSO, Temasek, Google, Cimigo

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 Anh we need a cool
image that depicts
Vietnamese people
in a packed crowd

Demographic
dividends until 2030

29
 Hanoi
3,962,310

Hai Phong
924,741

Newly formed Thu Duc

City joins the charts, as
Danang
988,561 Vietnam’s 3rd largest city

HCMC
5,955,526 Bien Hoa
830,829
Can Tho Thu Duc City
860,557 1,169,967 Source: GSO 2019 census City populations (not province which includes rural administrative areas) 30
Changing demographic structures
Declining

Growing
0-14 years and Rural 50+ and Urban

Source: GSO, Global Demographics, Cimigo

31
Rapid urbanisation drives efficiency and ultra convenience

The rural population

commenced a decline Rural versus urban profile in 000s
120,000
in 2017. Increasingly urban, rural decline
100,000

80,000 55%
Rural household sizes
in falls from 4.6 in 2008 60,000 64%
72%
to 3.6 in 2020.
40,000

20,000 45%
28% 36%
Urban provides ultra -
convenience but
stressed infrastructure
and pollution. Urban Rural

Source: GSO, Global Demographics, Cimigo

32
Decelerating birth rates, under 14s and pester power

The demographic that drives

Age profile in 000s
much of mums purchase Silver is golden going forward
behaviour has commenced a
slow decline. 100,000

24% 36%
80,000
The birth rate has declined
from 75 in 2008 to 46 in 2020
60,000
(rate per 000 females 15 to 31%
28%
49).
40,000
23%
20%
Vietnam’s youth has provided 20,000
an unrivalled dynamism. 22% 17%
-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
We now need to consider
making better choices for the All 0-14 All 14-29 All 30-49 All 50+
silver generation.

Source: GSO, Global Demographics, Cimigo

33
Demographic dividend – low dependency ratio

96% men (20 – 64 years) work 88% women (20 – 64 years) 59% is the working population
work as a % of the total in 2020

• Highest % working population in region. It significantly lowers dependency ratios at just 0.7 per employed person. This
gives GDP a huge boost. Urban working adults have on average 1.67 sources of income.

Source: GSO, Global Demographics, Cimigo

34
Leapfrogging more and more

• Vietnam tops SE Asia clean energy output.

• In March 2021, VinFast launched its first electric car,

the VFe34.

• Social and live stream sales growing exponentially.

• Mobile payments leapfrog credit cards. USD210 billion

versus US$17 billion on cards in 1st half of 2020.

• Gaming and e-sports propelled.

• Edutech and Medtech nascent but make in roads.

• Mobile content platforms propelled for edutainment.

35
Covid’s consumer impact

Economic impact
• The dual strategy for public protection and economic progress has proven extremely successful.
• On average household incomes have fallen 12%. This average masks the hardest hit households.
• Business has bounced back beyond tourism and hospitality. Export bound manufacturing has performed strongly.
• Vietnam remains the most interconnected trading nation globally.

Attitudinal impact
• National pride has been propelled further by Covid management.
• Covid has accelerated the emphasis on healthy lifestyles, sports, food and beverages.

Behavioural impact
• CPG largely grew but at a slower pace than in 2019. Income shortfall derailed the premiumisation of CPG.
• Down grading to value for money alternatives will persist through 2021.
• Delayed high ticket item purchases will recover in Q4 2021.
• Digital transformation accelerates demand for online consumer edutainment and shopping.
• Online shopping will surpass the modern trade share of sales in 2028.

36
Vietnam’s dynamism

Structural changes
• Rapid urbanisation provides challenges, but high efficiency and convenience.
• The rural population is shrinking fast. Migration and lower birth rates mean households are smaller and
slightly wealthier.
• Digital and modern trade expansion makes in-roads into rural households.
• Vietnam enjoys a huge demographic dividend owing to low dependency ratios on earners.
• A staggering drop in the birth rate and an aging population will take hold in the 2030s.
• Elderly dependents will become a key challenge in 2040s.

Vietnam’s dynamism
• The speed of change will accelerate through to 2030.
• Sector wide tech adoption will continue to leapfrog the development paths followed by mature markets.

37
 97.6 million US$343 billion US$3,514 Internet economy 62 million
Retail sales 69 million
GDP 2.91% growth GDP/capita US$14.9 billion US$163 billion users users
4.3% of GDP 2.6% growth

2020 progress

70% internet 88% smartphone US$3.13 billion 812 new cars 18,500 new 63% banked
National National All advertising per day Apartments National
All Adults 15+ HCMC, HN, DN Adults 18+

Source: 2020 data points. GSO, Global Demographics, Cimigo surveys, VAMA, Savills, Asia Media Partners, SBV, We Are Social
38
The Voice of Customer

Helping you make better choices

Download at wwww.cimigo.com
or ask@cimigo.com