FooddrinkQ22015 BMI

báo cáo ngành thực phẩm nước uống Việt Nam quý 2 2015 Viet Nam Food and Drink Report Q2 2015 FooddrinkQ22015 BMI BMI Industry View SWOT Industry forecast Maroeconomic Forecast Industry Risk Reward Index Market Overview Industry Trends and Developments Compititive Landscape Company Profile Global Industry Overview Demographic Forecast Glossary Methodology

Q2 2015 www.bmiresearch.com VIETNAM FOOD & DRINK REPORT INCLUDES 5-YEAR FORECASTS TO 2019 ISSN 1749-3072 Published by:BMI Research Vietnam Food & Drink Report Q2 2015 INCLUDES 5-YEAR FORECASTS TO 2019 Part of BMI’s Industry Report & Forecasts Series Published by: BMI Research Copy deadline: March 2015 BMI Research Senator House 85 Queen Victoria Street London EC4V 4AB United Kingdom Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@bmiresearch.com Web: http://www.bmiresearch.com © 2015 Business Monitor International Ltd All rights reserved All information contained in this publication is copyrighted in the name of Business Monitor International Ltd, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained Vietnam Food & Drink Report Q2 2015 INCLUDES 5-YEAR FORECASTS TO 2019 Part of BMI’s Industry Report & Forecasts Series Published by: BMI Research Copy deadline: March 2015 BMI Research Senator House 85 Queen Victoria Street London EC4V 4AB United Kingdom Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@bmiresearch.com Web: http://www.bmiresearch.com © 2015 Business Monitor International Ltd All rights reserved All information contained in this publication is copyrighted in the name of Business Monitor International Ltd, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained Vietnam Food & Drink Report Q2 2015 CONTENTS BMI Industry View SWOT Food Drink 11 Mass Grocery Retail 13 Industry Forecast 15 Consumer Outlook 15 Food 17 Food Consumption 17 Table: Food Consumption Indicators - Historical Data & Forecasts (Vietnam 2012-2019) 19 Canned Food 19 Confectionery 20 Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2012-2019) 22 Pasta 24 Table: Pasta Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) 24 Dairy 24 Table: Dairy Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) 25 Drink 26 Alcoholic Drinks 26 Table: Alcoholic Drinks Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) 28 Hot Drinks 30 Table: Hot Drink Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Vietnam 2014-2019) 31 Soft Drinks 32 Table: Soft Drinks Sales, Production & Trade (Vietnam 2014-2019) 33 Mass Grocery Retail 35 Table: Mass Grocery Retail Sales By Format - Historical Data & Forecasts (Vietnam 2014-2019) 38 Table: Grocery Retail Sales By Format (%) 38 Trade 39 Table: Trade Balance - Historical Data & Forecasts (Vietnam 2014-2019) 40 Macroeconomic Forecast 41 Economic Analysis 41 Table: Economic Activity (Vietnam 2010-2019) 45 Industry Risk Reward Index 46 Asia Pacific - Risk/Reward Index 46 Table: Asia Pacific Food & Drink Risk/Reward Index Q215 48 Vietnam Risk/Reward Index 51 Market Overview 53 © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 Food Agriculture Food Processing Food Consumption Drink Hot Drinks Soft Drinks Alcoholic Drinks 53 53 54 54 56 56 56 57 Mass Grocery Retail 60 Table: Mass Grocery Retail Sales By Format (Vietnam 2006-2015) 61 Industry Trends And Developments 63 Food Key Industry Trends And Developments Drink Key Industry Trends And Developments Mass Grocery Retail Key Industry Trends And Developments 63 63 68 68 77 77 Competitive Landscape 81 Table: Key Players In Vietnam's Food Sector 81 Table: Key Players In Vietnam's Drink Sector 81 Table: Key Players In Vietnam's Mass Grocery Retail Sector 83 Company Profile 84 Vinamilk 84 Table: Vinamilk - Financial Highlights, 2008-2013 95 Unilever Vietnam 96 Nestlé Vietnam 99 Masan Consumer 101 San Miguel Pure Foods Vietnam Co Ltd 104 Hanoi Beer Alcohol Beverage Corp (Habeco) 106 Saigon Beer Alcohol And Beverage Corporation (Sabeco) 109 Carlsberg 111 Saigon Co-op 114 Global Industry Overview 117 Table: TESCO - Selected Historical Financial Indicators 121 Table: Food and Drink Team's Core Views 125 Demographic Forecast 127 Table: Population Headline Indicators (Vietnam 1990-2025) 128 Table: Key Population Ratios (Vietnam 1990-2025) 128 Table: Urban/Rural Population & Life Expectancy (Vietnam 1990-2025) 129 Table: Population By Age Group (Vietnam 1990-2025) 129 Table: Population By Age Group % (Vietnam 1990-2025) 130 © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 Glossary 132 Food & Drink 132 Mass Grocery Retail 132 Methodology 134 Industry Forecast Methodology Sector-Specific Methodology Sources Risk/Reward Index Methodology 134 135 135 136 Table: Food & Drink Risk/Reward Index Indicators 137 Table: Weighting 138 © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 BMI Industry View BMI View: We hold a positive outlook for the Vietnamese consumer, as the government targets economic growth through public spending and promoting investment and exports We forecast real GDP growth at 6.4% in 2015 and 6.6% in 2016, on the back of supportive government policies, as well as a strong outlook for foreign investment and exports However, political risks remain in the form of Chinese tensions, which we believe will continue for some time Headline Industry Data (local currency) ■ 2015 total food consumption growth: +18.0%; compound annual growth rate (CAGR) 2014 to 2019: +18.6% ■ 2015 per capita food consumption growth: +17.0%; CAGR to 2019: +17.6% ■ 2015 alcoholic drinks value sales growth: +8.0%; CAGR to 2019: +10.0% ■ 2015 soft drinks value sales growth: +9.3%; CAGR to 2019: +11.0% ■ 2015 mass grocery retail sales growth: +10.8%; CAGR to 2019: +11.5% Key Industry Trends Vietnam Beer Sector To Attract Interest: We expect strong interest from Thai brewers and global majors in Vietnam's beer sector Thailand is home to strong food and drink companies such as ThaiBev, which are looking to diversify geographically as they face a slowdown in their home market Similarly, global beer majors such as SABMiller, AB InBev and Heineken are seeking to expand to high-growth markets in Asia In addition, foreign investment in Vietnam's beer sector will be fuelled by the state's plans to privatise stateowned companies In March, the government confirmed its intention to reduce its stake in Sabeco, the leading domestic brewer, from 89% to 36% Ten potential buyers, including ThaiBev, Heineken and SABMiller, have already expressed their interest Metro Retail Exit Does Not Diminish Positive Vietnam View: In early August 2014, the German cash-andcarry retailer Metro announced it is planning to sell its Vietnam business, potentially pulling in EUR1.75bn The decision to leave Vietnam is driven by the need to re-focus on its core Europe business and strengthen its balance sheet, rather than being based on any major structural issues or re-rating in the growth profile of the organised food retail sector Like some of the other major European retailers, namely Carrefour and Tesco, Metro has had to rein in spending internationally over the past two-to-three years as retail sales across Western Europe have remained weak while Russia, one of Metro's key markets, slowed down in 2014 We still see Vietnam as one of South-East Asia's best retail opportunities © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 Vietnam Likely To Benefit From Russia Import Ban: Vietnam will benefit from Russia's ban on agricultural imports from select countries, including the US and the EU Russia implemented the ban in August 2014 and it will likely last for one year from the announcement The Russian Economic Development Minister has urged ASEAN countries to increase food exports to the country, particularly highlighting the need for seafood, nuts, beef, pork, chicken, fruit and vegetables We believe that Vietnam's seafood and livestock sectors will particularly benefit © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 SWOT Food SWOT Analysis Strengths ■ The food processing sector accounts for a sizeable proportion of industrial output and GDP, with the sector attracting significant foreign investment in recent years from global industry majors such as Unilever, Nestlé and San Miguel ■ Vietnamese consumers, particularly the young and affluent, are fairly brand aware by regional standards Accordingly, renowned Western products, backed by investment in marketing and promotions, tend to have highly successful launches ■ The wealthy urban centres of Hanoi and Ho Chi Minh City now provide highly receptive consumer audiences ■ Large and diverse domestic agricultural output aids the stability of ingredient supplies and prices for local producers - a vital strength during this period of global volatility ■ Strong economic and private consumption growth will help fuel food consumption growth Weaknesses ■ There are wide income disparities between urban and rural areas, and local consumption patterns vary significantly according to income ■ The food processing industry remains largely fragmented, except for a few key sectors such as dairy and confectionery ■ The country's agricultural sector has been criticised for being too slow to adapt to new technologies to be globally competitive in the long term, although the government is working hard to address this ■ Vietnam's infrastructure is still weak Roads, railways and ports are inadequate to cope with the country's economic growth and links with the outside world ■ The lack of white goods among large sections of the consumer base slows down the development of the high-potential dairy sector © Business Monitor International Ltd Page Vietnam Food & Drink Report Q2 2015 Craft Beer Gathering A Head Of Steam In The UK The proportional contribution of craft beer to overall beer sales by value in the UK will grow considerably over the next few years, from its current level of between 2.5% and 5%, against a backdrop of declining mainstream beer sales Declining overall per capita consumption reflects the growing tiredness with massproduced mainstream beer and a concurrent opportunity for UK and US craft beer producers to take relatively more value away from the multinational beer companies A clear and tangible waning in demand for commercial lager beer has taken place in most of the AngloSaxon world over the last ten years - a trend that has accelerated over the past four or five years especially Focusing primarily on the UK, with references to the US given its position as the lead driver of the craft beer revolution, we point out that the proportional contribution of craft beer (produced locally or imported from the US) has a lot of ground to make up; beer tagged under the craft banner makes up an estimated 2.5% to5% of total beer sales by value in the UK compared to about 15% by value in the US according to the Brewers Association (US figure) We not expect the UK to catch up outright as the US craft beer industry is much further ahead in its lifecycle For example, the UK lacks a major publically listed national craft brewer like The Boston Beer Company The UK also has its own 'Real Ale' movement which, although providing a very different product, shares the common mantra of providing a tired market with innovative, flavourful and often stronger beer that is ultimately serving to revive the beer industry However, craft beer producers will face higher input costs going forward as a result of their success This will manifest mainly in the form of higher hops prices - a key input that adds flavour Hops are typically used in much greater amounts in craft beer production compared with mainstream beer Hops producers have been struggling to keep up with the enormous rise in procurement from craft beer producers The procurement abilities of microbrewers are generally less developed than the larger craft beer companies, so they have much less ability to enter into forward contracts to lock in prices for their hops inventory Multinationals To Increasingly Pursue Frontier Markets Frontier markets like Myanmar will figure increasingly prominently in the growth strategies of global food and drink companies We noted in October 2014 that Myanmar was among the next frontier markets for fast food companies, following Yum! Brands' announcement that it will open its first KFC restaurant in the country in 2015 The KFC outlet will be located in Yangon, Myanmar's largest city, and will be operated by © Business Monitor International Ltd Page 124 Vietnam Food & Drink Report Q2 2015 Singaporean Yoma Strategic Holdings Ltd By entering the Burmese market, Yum! is pursuing its expansion strategy in emerging markets It will rely on Yoma's expertise in Myanmar, where the company already manages real estate developments Although KFC will be the first international fast food chain to open a restaurant in Myanmar, Asian franchises such as South Korean Lotteria or Malaysian Marrybrown are already present in Yangon Fast food chains such as KFC are capitalising on a booming food and drink sector in Myanmar We have previously highlighted opportunities for food and drink companies in the country (see 'Major Food And Drink Firms Piling In', 30 September 2013) Strong opportunities will remain in the sector over the next few years, as we forecast per capita food consumption (in local currency terms) to grow at a compound annual rate of 11.7% over 2013-2018 A 2013 study from the Boston Consulting Group estimates that less than 40% of Burmese consumers frequent restaurants, leaving strong room for growth in fast food However, it also highlights the price sensitivity of most consumers which, combined with the ongoing increase in real estate prices in major cities since the reintegration of Myanmar into the world economy, will be the main obstacle for fast food chains Table: Food and Drink Team's Core Views Short-Term Outlook ■ ■ ■ ■ Grain prices to average higher in 2015 following 2014 declines However, substantial price appreciation is not forecast Consumer sentiment in the eurozone area to remain particularly weak, with the exception of the UK US to continue improving Deflation across a number of European economies, including Spain and Poland, to particularly affect food retailing across all formats - including discounting Strengthening US dollar and British pound to affect sales and earnings at UK/US-based multinational companies with heavy emerging markets exposure Long-Term Outlook ■ ■ ■ ■ Consolidation activity to pick up across the global food and drink industry; organic growth and cost-cutting have been the key area of focus since 2008 Companies with strong emerging market exposure will largely continue to outperform in sales growth despite nearterm weakness, although the best opportunities may now be beyond the BRIC countries Multinationals will increasingly pursue opportunities in frontier markets Competition from locally based food and drink brands to intensify as industry players and conglomerates challenge established global companies ■ Traceability will become increasingly important, particularly in Western Europe following the 2013 horse meat scandal ■ Discount retailing will continue to outperform supermarkets and hypermarkets across much of Europe © Business Monitor International Ltd Page 125 Vietnam Food & Drink Report Q2 2015 Food and Drink Team's Core Views - Continued ■ ■ ■ ■ ■ Emerging market-based industry players and private equity firms will increasingly pursue developed market investments for the purposes of diversification and access to stellar brands Private equity interest in food and drink companies in frontier regions such as Sub-Saharan Africa will increase Hypermarkets will underperform in developed markets, where convenience, discount and online retailing are the strongest opportunities Conversely, hypermarkets remain a great opportunity in less-developed retail markets, particularly adjacent to shopping centres/malls Investment in innovation will increase as producers seek differentiation; emphasis will be placed on protecting innovations ■ Companies will divest brands that are perceived to be at risk from private label substitution ■ Bottled water, juices and energy drinks will be outperformers in global soft drinks ■ Government legislation will play an increasing role in marginalising unhealthy food and beverage products ■ Governments will increasingly pursue alcohol as an effective means of raising revenue through higher taxes ■ Bourbon whiskey to outperform Scotch whisky in global export growth; Scotch particularly affected by China's clampdown on gift giving ■ Functional foods and energy drinks will provide considerable opportunities globally ■ Food safety concerns will increasingly affect food and drink spending, particularly in China ■ Craft beer will outperform mainstream beer in many developed beer markets such as the US and UK ■ Consolidation will continue to take place in the global alcohol industry, particularly in Asia Source: BMI © Business Monitor International Ltd Page 126 Vietnam Food & Drink Report Q2 2015 Demographic Forecast Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model Not only is the total population of a country a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues ranging from future population trends to productivity growth and government spending requirements The accompanying charts detail the population pyramid for 2015, the change in the structure of the population between 2015 and 2050 and the total population between 1990 and 2050 The tables show indicators from all of these charts, in addition to key metrics such as population ratios, the urban/rural split and life expectancy Population (1990-2050) 150 100 50 2050f 2045f 2040f 2035f 2030f 2025f 2020f 2015f 2010 2005 2000 1990 Vietnam - Population, mn f = BMI forecast Source: World Bank, UN, BMI © Business Monitor International Ltd Page 127 Vietnam Food & Drink Report Q2 2015 Vietnam Population Pyramid 2015 (LHS) & 2015 Versus 2050 (RHS) Source: World Bank, UN, BMI Table: Population Headline Indicators (Vietnam 1990-2025) 1990 2000 2005 2010 2015f 2020f 2025f 68,909 80,887 84,947 89,047 93,386 97,057 99,811 na 1.1 0.9 1.0 0.9 0.7 0.5 Population, total, male, '000 33,892 39,827 41,830 43,970 46,158 47,980 49,302 Population, total, female, '000 35,017 41,060 43,117 45,077 47,228 49,076 50,508 Population ratio, male/female 0.97 0.97 0.97 0.98 0.98 0.98 0.98 Population, total, '000 Population, % y-o-y na = not available; f = BMI forecast Source: World Bank, UN, BMI Table: Key Population Ratios (Vietnam 1990-2025) Active population, total, '000 Active population, % of total population Dependent population, total, '000 Dependent ratio, % of total working age © Business Monitor International Ltd 1990 2000 2005 2010 2015f 2020f 2025f 39,197 50,153 56,330 62,305 66,093 68,401 70,001 56.9 62.0 66.3 70.0 70.8 70.5 70.1 29,712 30,733 28,617 26,741 27,292 28,655 29,810 75.8 61.3 50.8 42.9 41.3 41.9 42.6 Page 128 Vietnam Food & Drink Report Q2 2015 Key Population Ratios (Vietnam 1990-2025) - Continued Youth population, total, '000 1990 2000 2005 2010 2015f 2020f 2025f 25,778 25,543 23,038 20,918 20,950 20,690 19,395 65.8 50.9 40.9 33.6 31.7 30.2 27.7 3,934 5,190 5,578 5,823 6,342 7,964 10,414 10.0 10.3 9.9 9.3 9.6 11.6 14.9 Youth population, % of total working age Pensionable population, '000 Pensionable population, % of total working age f = BMI forecast Source: World Bank, UN, BMI Table: Urban/Rural Population & Life Expectancy (Vietnam 1990-2025) 1990 Urban population, '000 2020f 2025f 13,957.7 19,715.6 23,174.6 27,064.2 31,383.5 35,771.3 40,027.3 Urban population, % of total Rural population, '000 2000 20.3 24.4 2005 27.3 2010 30.4 2015f 33.6 36.9 40.1 54,952.2 61,172.3 61,773.2 61,983.2 62,003.1 61,285.7 59,783.9 Rural population, % of total 79.7 75.6 72.7 69.6 66.4 63.1 59.9 Life expectancy at birth, male, years 66.1 69.0 69.9 70.7 71.7 72.7 73.7 Life expectancy at birth, female, years 75.1 78.5 79.6 80.2 80.7 81.2 81.7 Life expectancy at birth, average, years 70.6 73.8 74.8 75.5 76.2 77.0 77.8 f = BMI forecast Source: World Bank, UN, BMI Table: Population By Age Group (Vietnam 1990-2025) 1990 2000 2005 2010 2015f 2020f 2025f Population, 0-4 yrs, total, '000 9,314 7,127 6,897 7,228 7,012 6,574 5,922 Population, 5-9 yrs, total, '000 8,606 9,253 7,023 6,790 7,180 6,968 6,535 Population, 10-14 yrs, total, '000 7,856 9,162 9,117 6,898 6,757 7,147 6,936 Population, 15-19 yrs, total, '000 7,359 8,492 9,050 9,011 6,865 6,725 7,116 Population, 20-24 yrs, total, '000 6,644 7,672 8,332 8,873 8,936 6,802 6,664 Population, 25-29 yrs, total, '000 6,005 7,065 7,470 8,111 8,772 8,837 6,717 Population, 30-34 yrs, total, '000 5,138 6,351 6,909 7,285 8,021 8,680 8,747 Population, 35-39 yrs, total, '000 3,888 5,803 6,241 6,763 7,207 7,939 8,596 Population, 40-44 yrs, total, '000 2,462 4,994 5,719 6,147 6,684 7,127 7,856 Population, 45-49 yrs, total, '000 2,016 3,753 4,935 5,647 6,054 6,588 7,031 © Business Monitor International Ltd Page 129 Vietnam Food & Drink Report Q2 2015 Population By Age Group (Vietnam 1990-2025) - Continued 1990 2000 2005 2010 2015f 2020f 2025f Population, 50-54 yrs, total, '000 1,968 2,345 3,699 4,855 5,521 5,926 6,457 Population, 55-59 yrs, total, '000 2,045 1,885 2,237 3,541 4,677 5,330 5,733 Population, 60-64 yrs, total, '000 1,668 1,790 1,734 2,068 3,352 4,443 5,079 Population, 65-69 yrs, total, '000 1,411 1,770 1,609 1,562 1,906 3,104 4,134 Population, 70-74 yrs, total, '000 1,027 1,322 1,530 1,399 1,379 1,695 2,776 Population, 75-79 yrs, total, '000 752 984 1,080 1,263 1,166 1,159 1,437 Population, 80-84 yrs, total, '000 429 596 731 814 964 900 903 Population, 85-89 yrs, total, '000 223 336 385 482 545 653 617 Population, 90-94 yrs, total, '000 71 132 177 209 267 306 372 Population, 95-99 yrs, total, '000 15 40 52 74 89 115 133 Population, 100+ yrs, total, '000 11 16 23 30 38 f = BMI forecast Source: World Bank, UN, BMI Table: Population By Age Group % (Vietnam 1990-2025) 1990 2000 2005 2010 2015f 2020f 2025f Population, 0-4 yrs, % total 13.52 8.81 8.12 8.12 7.51 6.77 5.93 Population, 5-9 yrs, % total 12.49 11.44 8.27 7.63 7.69 7.18 6.55 Population, 10-14 yrs, % total 11.40 11.33 10.73 7.75 7.24 7.36 6.95 Population, 15-19 yrs, % total 10.68 10.50 10.65 10.12 7.35 6.93 7.13 Population, 20-24 yrs, % total 9.64 9.49 9.81 9.97 9.57 7.01 6.68 Population, 25-29 yrs, % total 8.72 8.73 8.79 9.11 9.39 9.11 6.73 Population, 30-34 yrs, % total 7.46 7.85 8.13 8.18 8.59 8.94 8.76 Population, 35-39 yrs, % total 5.64 7.17 7.35 7.60 7.72 8.18 8.61 Population, 40-44 yrs, % total 3.57 6.17 6.73 6.90 7.16 7.34 7.87 Population, 45-49 yrs, % total 2.93 4.64 5.81 6.34 6.48 6.79 7.04 Population, 50-54 yrs, % total 2.86 2.90 4.36 5.45 5.91 6.11 6.47 Population, 55-59 yrs, % total 2.97 2.33 2.63 3.98 5.01 5.49 5.74 Population, 60-64 yrs, % total 2.42 2.21 2.04 2.32 3.59 4.58 5.09 Population, 65-69 yrs, % total 2.05 2.19 1.90 1.75 2.04 3.20 4.14 Population, 70-74 yrs, % total 1.49 1.63 1.80 1.57 1.48 1.75 2.78 Population, 75-79 yrs, % total 1.09 1.22 1.27 1.42 1.25 1.20 1.44 Population, 80-84 yrs, % total 0.62 0.74 0.86 0.92 1.03 0.93 0.91 © Business Monitor International Ltd Page 130 Vietnam Food & Drink Report Q2 2015 Population By Age Group % (Vietnam 1990-2025) - Continued 1990 2000 2005 2010 2015f 2020f 2025f Population, 85-89 yrs, % total 0.32 0.42 0.45 0.54 0.58 0.67 0.62 Population, 90-94 yrs, % total 0.10 0.16 0.21 0.24 0.29 0.32 0.37 Population, 95-99 yrs, % total 0.02 0.05 0.06 0.08 0.10 0.12 0.13 Population, 100+ yrs, % total 0.00 0.01 0.01 0.02 0.03 0.03 0.04 f = BMI forecast Source: World Bank, UN, BMI © Business Monitor International Ltd Page 131 Vietnam Food & Drink Report Q2 2015 Glossary Food & Drink Food Consumption: All four food consumption indicators (food consumption in local currency, food consumption in US dollar terms, per capita food consumption and food consumption as a percentage of GDP) relate to off-trade food and non-alcoholic drinks consumption, unless stated in the relevant table/ section Off-trade: Relates to an item consumed away from the premises on which it was purchased For example, a bottle of water bought in a supermarket would count as off-trade, while a bottle of water purchased as part of a meal in a restaurant would count as on-trade Canned Food: Relates to the sale of food products preserved by canning This is inclusive of canned meat and fish, canned ready meals, canned desserts and canned fruits and vegetables Volume sales are measured in thousand tonnes as opposed to on a unit basis to allow for cross-market comparisons Confectionery: Refers to retail sales of chocolate, sugar confectionery and gum products Chocolate sales include chocolate bars and boxed chocolates; gum sales incorporate both bubble gum and chewing gum; and sugar confectionery sales include hard-boiled sweets, mints, jellies and medicated sweets Trade: In the majority of BMI's Food & Drink reports, we use the UN Standard International Trade Classification, using categories Food and Live Animals, Beverages and Tobacco, Animal and Vegetable Oils, Fats and Waxes and Oil-seeds and Oleaginous Fruits Where an alternative classification is used due to data availability, this is clearly stated Drinks Sales: Soft drink sales (including carbonates, fruit juices, energy drinks, bottled water, functional beverages and ready-to-drink tea and coffee), alcoholic drink sales (including beer, wine and spirits) and tea and coffee sales (excluding ready-to-drink tea and coffee products that are incorporated under BMI's soft drinks banner) are all off-trade only, unless stated Mass Grocery Retail Mass Grocery Retail: BMI classifies mass grocery retail (MGR) as organised retail, performed by companies with a network of modern grocery retail stores and modern distribution networks MGR differs from independent or traditional retail, which relates to informal, independent-owned grocery stores or traditional market retailing MGR incorporates hypermarket, supermarket, convenience and discount retailing, and in unique cases cooperative retailing Where supermarkets are independently owned and not classified as MGR, BMI will state so clearly within the relevant report © Business Monitor International Ltd Page 132 Vietnam Food & Drink Report Q2 2015 Hypermarket: BMI classifies hypermarkets as retail outlets selling both groceries and a large range of general merchandise goods (non-food items) and typically more than 2,500m² in size Traditionally only found on the outskirts of town centres, hypermarkets are increasingly appearing in urban locations Supermarket: Supermarkets are the original and still most globally prevalent form of self-service grocery retail outlet BMI classifies supermarkets as more than 300m², up to the size of a hypermarket The typical supermarket carries both fresh and processed food and will stock a range of non-food items, most commonly household and beauty goods The average supermarket will increasingly offer some added-value services, such as dry cleaning or in-store ATMs Discount Stores: Although most commonly between 500m² and 1,500m² in size, and thus of the same classification as supermarkets, discount stores will typically have a smaller floor space than their supermarket counterparts Other distinguishing features include the prevalence of low-priced and private label goods, an absence of added-value services, often called a no-frills environment, and a high product turnover rate Convenience Stores: BMI's classification of convenience stores includes small outlets typically less than 300m² in size, with long opening hours and located in high footfall areas These stores mainly sell fastmoving food and drink products (such as confectionery, beverages and snack foods) and non-food items, typically stocking only two or three brand choices per item and often carrying higher prices than other forms of grocery store Cooperatives: BMI classifies cooperatives as retail stores that are independently owned but club together to form buying groups under a cooperative arrangement, trading under the same banner, although each is privately owned The arrangement is similar to a franchise system, although all profits are returned to members The term is becoming more archaic, with fewer cooperatives remaining that conform to this model Most cooperative groups now have a more centralised management structure, operate more like normal supermarkets, and are thus classified as such in BMI's reports © Business Monitor International Ltd Page 133 Vietnam Food & Drink Report Q2 2015 Methodology Industry Forecast Methodology BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and causal/econometric modelling The precise form of model we use varies from industry to industry, in each case being determined, as per standard practice, by the prevailing features of the industry data being examined Common to our analysis of every industry is the use of vector autoregressions Vector autoregressions allow us to forecast a variable using more than the variable's own history as explanatory information For example, when forecasting oil prices, we can include information about oil consumption, supply and capacity When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most desirable method of analysis Such single-variable analysis is called univariate modelling We use the most common and versatile form of univariate models: the autoregressive moving average model (ARMA) In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor In such cases, we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting BMI mainly uses ordinary least squares estimators In order to avoid relying on subjective views and encourage the use of objective views, BMI uses a 'general-to-specific' method BMI mainly uses a linear model, but simple non-linear models, such as the log-linear model, are used when necessary During periods of 'industry shock', for example when poor weather conditions impede agricultural output, dummy variables are used to determine the level of impact Effective forecasting depends on appropriately selected regression models BMI selects the best model according to various different criteria and tests, including but not exclusive to: ■ R2 tests explanatory power; adjusted R2 takes degree of freedom into account ■ Testing the directional movement and magnitude of coefficients ■ Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value) ■ All results are assessed to alleviate issues related to auto-correlation and multi-collinearity © Business Monitor International Ltd Page 134 Vietnam Food & Drink Report Q2 2015 BMI uses the selected best model to perform forecasting Human intervention plays a necessary and desirable role in all of BMI's industry forecasting Experience, expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous data, turning points and seasonal features where a purely mechanical forecasting process would not Sector-Specific Methodology Within the Food & Drink industry, issues that might result in human intervention might include but are not exclusive to: ■ Significant company expansion plans; ■ New product development that might influence pricing levels; ■ Dramatic changes in local production levels; ■ Product taxation; ■ The regulatory environment and specific areas of legislation; ■ Changes in lifestyles and general societal trends; ■ The formation of bilateral and multilateral trading agreements and negotiations; ■ Political factors influencing trade; ■ The development of the industry in neighbouring markets that are potential competitors for foreign direct investment Example Of Food Consumption Model (Food Consumption)t = β0 + β1*(GDP)t + β2*(inflation)t + β3*(lending rate)t + β4* (foreign exchange rate)t + β5*(government expenditure)t + β6*(food consumption)t-1 + εt Sources BMI uses the following sources in the compilation of data, developments and analysis for its range of Food & Drink reports: national statistics offices; local industry governing-bodies and associations; local trade associations; central banks; government departments, particularly trade, agricultural and commerce ministries; officially released information and financial results from local and multinational companies; cross-referenced information from local and international news agencies and trade press outlets; figures from global organisations, such as the WTO, the World Health Organization (WHO), the UN Food and © Business Monitor International Ltd Page 135 Vietnam Food & Drink Report Q2 2015 Agricultural Organization (FAO) and the Organisation for Economic Co-operation and Development (OECD) Risk/Reward Index Methodology BMI's Risk/Reward Index (RRI) provides a comparative regional ranking system evaluating the ease of doing business and the industry-specific opportunities and limitations for potential investors in a given market The RRI system divides into two distinct areas: Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state characteristics that may inhibit its development This is further broken down into two sub categories: ■ Industry Rewards: This is an industry-specific category taking into account current industry size and growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall score for potential returns for investors • Country Rewards: this is a country-specific category, and the score factors in favourable political and economic conditions for the industry Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into question the likelihood of expected returns being realised over the assessed time period This is further broken down into two sub categories: ■ Industry Risks: This is an industry-specific category whose score covers potential operational risks to investors, regulatory issues inhibiting the industry, and the relative maturity of a market • Country Risks: This is a country-specific category in which political and economic instability, unfavourable legislation and a poor overall business environment are evaluated to provide an overall score We take a weighted average, combining industry and country risks, or industry and country rewards These two results in turn provide an overall Risk/Reward Index, which is used to create our regional ranking system for the risks and rewards of involvement in a specific industry in a particular country For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall index a weighted average of the total score Importantly, as most of the countries and territories evaluated are considered by BMI to be 'emerging markets', our index is revised on a quarterly basis This ensures that the index draws on the latest information and data across our broad range of sources, and the expertise of our analysts In constructing these indices, the following indicators have been used Almost all indicators are objectively based © Business Monitor International Ltd Page 136 Vietnam Food & Drink Report Q2 2015 Table: Food & Drink Risk/Reward Index Indicators Rewards Industry rewards Food and drink consumption per capita, US$ Indicator denotes overall breadth of market Wealthier markets score higher Per capita food consumption growth, fiveyear compound annual growth, % Lead Food & Drink growth indicator Scores based on compound annual growth over our five-year forecast period Market fragmentation Subjective score reflecting how relatively developed the industry is Higher score reflects a more fragmented industry Country rewards Population size, mn Indicator denotes size of market GDP per capita, US$ Proxy for wealth Size of population is important but needs to be considered in relation to spending power High-income states receive better scores than low-income states Youth population, % 0>15%, % of total working age population Younger populations are generally considered to be more desirable Risks Industry risks Mass grocery retail penetration, % The proportional contribution of the organised food retailing sector; higher scores reflect better developed routes to consumers and more efficient internal trade systems Regulatory environment Subjective score based on the industry-specific regulatory environment and the presence of potentially restrictive legislation Country risks Short-term economic growth Score from BMI's Country Risk Index (CRI) It evaluates likely growth trajectory over a two-year forecast period, based on BMI's forecasts and projections of business and consumer confidence Income distribution Middle 60% of population, % of total spending Higher score is an indicator of incomes being spread more equitably Lack of bureaucracy From CRI It evaluates the risks to business posed by official bureaucracy, the broader legal framework and corruption Market orientation Subjective score from CRI to denote predictability of openness to foreign investment and trade Physical infrastructure From CRI Poor power/water/transport infrastructure act as bottlenecks to sector development Source: BMI © Business Monitor International Ltd Page 137 Vietnam Food & Drink Report Q2 2015 Weighting: Given the number of indicators/datasets used, it would be inappropriate to give all subcomponents equal weight Consequently, the following weights have been adopted: Table: Weighting Component Weighting Rewards 60% - Industry rewards 30% - Country rewards 30% Risks 40% - Industry risks 20% - Country risks 20% Source: BMI © Business Monitor International Ltd Page 138