FMCGs In Vietnam

FMCGs in VietnamAll images within this document are examples for illustrative purposes.

FAST-MOVING CONSUMER GOODS (FMCGS)OR CONSUMER PACKAGED GOODS (CPGS) AREPRODUCTS THAT ARE SOLD QUICKLY AND (GENERALLY)AT A RELATIVELY LOW COST.Source: GSO Vietnam2

KEY ECONOMIC INDICATORS : VIETNAM LOOKING GOODFOR GROWTHCPI4.093.532.660.63Retail Sales ofConsumer 1Q1 2017 vs. YASource: GSO Vietnam3

HOWEVER FMCG GROWTH HAS SLOWED MORE RECENTLYUrban4 CitiesValue Growth%3.92.64.82014Volume 0.5 8.62.74.56.48.27.31.21.24.1*: To calculate FMCG price paid change, we calculate how much price contributes to the value change for each category, sum upthese contributions and relate to value YA**: To calculate FMCG volume change, we calculate how much volume contributes to the value change for each category, sum upthese contributions and relate to value YA (this results in an average category change in volume)Source: Kantar Worldpanel Households Panel Urban 4 Key Cities & Rural Vietnam Total FMCG excluding Gift4

DESPITE THE POSITIVE ECONOMIC ENVIRONMENT, CONSUMERS ARE SPENDINGLESS FOR FMCGS, AND MORE FOR A FOR LIFESTYLE UPGRADATIONGROWTH H1’18 vs YASLOW GROWTHAgriculture3.9%FAST CG es*4.8%Big ctronics*14.7%Pharmaceuticals*10.0% FMCG brands need to invest in the right innovations to spurgrowth by addressing better the new changing lifestylesSource: Vietnam GSO Social and Economic Situation in H1’18, Vietnam Association of Motorbike Manufacturers FY 2017 rcycles-up-in-2017-vamm.html#bwI7WEpraq4DLhJC.97), GfK TEMAX results for Vietnam, FY 2017; th.html; Nielsen RA ending Jun’18;

RAPID URBANIZATION AND RISING MIDDLE CLASSVietnam’s urbanization(*) wasfaster than the global rate.50% of population will belong toGlobal middle class by 2035 Premiumization trends Rising demand for Health & Wellness products and services(*) Urbanization: increasing the densities of people and production in cities and townsSource: Vietnam 2035 report – World Bank, Vietnam Ministry of planning Investment6

FURTHER IMPACTING FMCG CONSUMPTION IS INCREASED AWARENESS OFFOOD SAFETY AND HEALTH AND WELLNESSThe Vietnamese government imposition of a special consumption tax (SCT) for sugary drinkswill be placed on carbonated and non-carbonated soft drinks, energy drinks, sports drinks andbottled instant coffee and tea. Vietnam's Ministry of Finance (MoF) announced its plans at apress conference in mid-August 2017 to apply a 10% or 20% tax that will take effect from2019. Opportunity to develop better-for-me products Promote good related health functions (i.e. anti pollution)Source: Asia Pacific Journal of Clinical Nutrition – Non-communicable diseases, food andnutrition in Vietnam from 1975 to 2015: the burden and national response7

DAIRY AND PACKAGED FOODS STAGNANT3.9%6.3%1.2%5.8%2.1%0.7%4.9%URBAN 4 CITIES-1.0%-0.7% -2.6%2018 versus year agoValue change%Volume* change%DAIRYRURAL7.9%6.6%BEVERAGESPACKAGED FOODSPERSONAL CAREHOME CARE9.0%8.1%3.6%3.9%3.7%4.4%2.8%0.8%*: To calculate FMCG volume change, we calculate how much volume contributes to the value change for each category, sum up these contributions and relate to value YA (this results in an average category change in volume)Source: Kantar Worldpanel Households Panel Urban 4 Key Cities & Rural Vietnam Total FMCG excluding Gift8

FOOD SAFETY HAS IMPACT BEVERAGES IN PARTICULARExtensive marketing campaigns employedand to regain consumers' trust.Source: Vietnam Retailer Sentiment Q2’16

CONSUMERS NOW INCREASINGLY LOOKING TONATURAL INGREDIENTS10

AGEING POPULATION WILL IMPACT FMCGS INCREASINGLY TARGETING ANOLDER AGE BAND Vietnam – Total population and % by age group Vietnam – Population CAGR 2000 - 2025Vietnam population (‘000 people)80,2866%7%18%Gen Yand 01535-49202050-642000 - 0-644.365 2.8202565 Source: United Nations, WUP, 201411

1VIETNAM HAS GONE MOBILE, ECOMMERCE WILL THRIVEConnected households% Households with Internet88%Urban 4cities38%RuralOnline shopping evolution% Households with Smartphone95%Urban 4cities69%RuralTriple-digitOnlinehot categoriesgrowth rate% shoppers shop online:Urban4 cities22% 225knew households6%Rural 478.5knew householdsSource: Kantar Worldpanel Family Form & Media Report & Households Panel 2018 vs 2017

EVEN THOUGH CONSUMERS NOW SPEND AN AVERAGE OF OVER 4 HOURS/DAYON DEVICES IN VIETNAM, THEY ARE GENERALLY LESS RECEPTIVE TO DIGITALADVERTISING, WITH MANY TAKING ACTION TO AVOID ITPeople are less accepting of digitaladvertisingGenZ33Gen XPeople use technology to avoid ads (e.g. ad blockers) aswell as skipping and engaging in other activityGen Y393317137Traditional advertising72% skip or pay 47% use techto avoid adsto block adsDigital advertisingNet Positive attitude to advertising format40% don’t watch/do something else

UPTRADING14

LESS THAN 1 IN 10 BRANDS GREW SIGNIFICANTLY OVER A 3 YEAR TIMEFRAME6% In many categories no brands grew Growth tends to come in the form of a stepchange, something that disrupts the statusquo Incremental gains are easily countered bythe competition and the status quo remains Budgets, protocols and processes create a“comfort zone” which encourages businessas usualSource: BrandZ , analysis of 2,052 brands between 2014 and 201715

THE NEW WISDOM SUGGESTS THAT SALIENCE IS ALL A BRAND NEEDS TOGROWSo which of our three topline measures of brand equity best anticipates whether brands grow or decline?SALIENCEMEANINGDIFFERENCEDisruptorsBrands that grewBrands that declinedDead and dying-25-5153555-25-5153555-25-515Source: BrandZ , profile scores comparing absolute to expected values foreach brand, brands that grew or declined measured across 3 years355516

THERE ARE NOW 20 NEW LAUNCHES IN FMCG EACH DAYMore focus on brand’s variant portfolioPersonal Care & Packaged Foods:The most innovative environment% of new launches(2018 vs 2014)% of new launches(2018 vs 2014)10739201811Beverages3335Dairy2018Home CarePackaged Foods3233New brandNew variant(flavor, benefit)Changes to existing products(pack size/type, format)Personal CareSuccessful launches remain hard to achieve(2017 – 2018)Urban 4 cities% Households a new launchreached after 1 year4.4%( 5.4 in 2014)% Households repeatpurchase in the 1st year23.9%( 26.9% in 2014)Source: Kantar Worldpanel Households Panel New Launch Tracker

INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OFSUCCESS[1] Natural products with clear evidence of natureVinamilk organic milkVinamilk introduced the firstorganic RTD milk in VietnamSunlight NatureSunlight new added value variant(with white tea, mineral salt,lemon) claimed to be safe for kids,gentle to skin and have mildfragranceClear HerbalClear’s new variant with 9 herbalextracts such as Centella,Asiatica, Cinnamomum, Ginseng to help get rid of dandruffand helps to restore thenecessary nutrients for the scalp.Colgate NaturalsColgate Natures reconnecting with nature to reviveour senses, rejuvenate our mindand revitalise our body for ahealthy life with Lemon oil, TeaTree oil, Seaweed and Aloe Veraextract, for a fresh and cleanmouth18

INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OFSUCCESS[2] Make Life EasierAjinomoto with diverseOmomatic liquid washing ballrange of culinary productsOmo pioneered in UPGRADING THEPACKAGE WITH A BALL helped to makelaundry easier – containing the liquid foraccurate dosage and supporting washingmachine from within.Ajinomoto with WIDE RANGE OFPRODUCTS facilitates the cooking process,helping Vietnamese cook delicious food inthe convenient and less time-consumingway.19

INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OFSUCCESS[3] Mix of traditions and the modernNumber 1 Salted LemonRevive Salted LemonNumber 1 Salted Lemon initiated thesalted lemon segment in isotonic drinkcategory, and Revive Salted Lemonsoon joined the band wagon.Both could grasp significant growth,hurting the long-established hard-coreisotonic segment, by delivering the greattraditional taste via a modern sporty &youthful imageryPush Max Passion fruitPush Max was the first RTDJ brandlaunching passion fruit flavor (apopular fruit flavor in North), gaininggrounds quickly and hurting Twistermarket share in this marketCoboteCobote - a new local brand offers widerange of natural personal careproducts made from naturalingredients coconut, cucumber, ginger,lemon grass, 20

INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OFSUCCESS[4] New mixes of ingredientsCoke CoffeeCoke Coffee offers a different experienceof Coke, which can also help themrefreshed and wake them up.FuzeteaThe combination of Chia seed andpeach/ passion fruit flavourADM ChuốiVinamilk launched ADM Banana – thefirst-ever combination of milk andbanana in Vietnam21

INNOVATIONS THAT ARE DIFFERENT IN SOME WAY HAVE A GREATER CHANCE OFSUCCESS[5] Packaging innovations that excitePepsiCoke and PepsiMiloCocoximMiloPepsi Next Generationpackaging collectionPepsi is reintroducing itsiconic vintage design onregular Pepsi products fora limited time.Coke and Pepsi launchedlimited editions of packaging tocelebrate World Cup 2018Milo launched can,making it the first-everdairy drink in CanformatCocoxim excitesVietnamese consumerswith packed coconut juice22

FMCGs in VietnamAll images within this document are examples for illustrative purposes.

Traditional advertising Digital advertising Gen Z Gen X Gen Y People are less accepting of digital advertising People use technology to avoid ads (e.g. ad blockers) as well as skipping and engaging in other activity 72% skip or pay to avoid ads 47% use tech to block ads 40% don't watch/ do something else Net Positive attitude to advertising .