Modern Distribution in

Vietnam

June 22, 2022

Delivering Growth – in Asia and Beyond.

Page 1
Agenda

1. About DKSH Group and DKSH Vietnam

2. Vietnam FMCG Market
3. DKSH Vietnam- FMCG
4. Opportunities for European products
5. Considerations before market entrance

Page 2
1 About DKSH Group
and DKSH Vietnam

Page 3
We Support Companies To Grow Their Business In and
With Asia…
• Helping companies to grow their business in new and
existing markets

• Providing business partners with the knowledge,

advice, relationships, and on-the-ground logistics to
reach their individual growth goals

• Expanding their access to knowledge, their sourcing

base, revenue opportunities, and ultimately, their
market shares

We ensure that our clients’ products This is what we define as

are accessible at all times. Market Expansion Services.
Page 4
…With a Comprehensive, Tailor-Made Portfolio
of Services

Market Expansion Services goes beyond offering individual services – it is about the integration of many different services to
meet the needs of business partners

Distribution
Market Marketing After-Sales
Sourcing and
Insights and Sales Services
Logistics

Clients Customers

Omni-channel service portfolio

Backflow of information from customers to clients

Blanket market coverage across Asia Pacific

Page 5
DKSH is Market Leader in Asia

No. 1 2,100 clients 23 million

Market Expansion Services transactions per year
provider with a focus on Asia 2,000 suppliers

11.1 billion >10 years 870

Net sales (2021) business locations
4 markets
average client relationship1

More than
33,100 530,000
specialists 150 years in Asia customers
1 Top 200 clients by net sales
Page 6
DKSH is Market Leader in Vietnam

No. 1
Market Expansion Services
provider with a focus on Asia

4 Business
Units & 2 Joint
Ventures
Among top
taxpayers in Vietnam
Healthcare / Consumer Goods / Performance Materials
Technology / DKSH Smollan / Cummins DKSH

18 Business
Locations 4,000 Specialists
Initial Market 300+ Clients
Presence since 1890 190,000 Customers

COVID-19 Response 2021

HR Asia Award 2020-21 Secure supply chain of drugs
Top 100 Places to Work 2018-19 USD 1,000,000 COVID-19 Fund
Asia Pacific Enterprise Award 2021 Vietnam Fatherland Front Award

Page 7
Our Industry Expertise
Four Highly Specialized Business Units

Consumer Healthcare
Goods

Performance Technology
Materials

Page 8
2 VIETNAM FMCG MARKET
Review and Outlook

Page 9
DKSH | Vietnam FMCG Overview

Vietnam Demographic
Rural Area Age, Structure, People
97.34 0.95% 62.6%
Millions Population
Residence
Urban Area

Population Population Growth (Annual) 37.4%

Key Language: GDP (Current USD) and %GDP Growth by Year Economics Freedom Index Corruption Index
Vietnamese (official), English (increasingly favored as a second
language), some French, Chinese, and Khmer, mountain area
languages (Mon-Khmer and Malayo-Polynesian)

Key Indicators:
food processing, garments, shoes, machine-building; mining, coal,
steel; cement, chemical fertilizer, glass, tires, oil, cell phones

Attribute Rank
Inflation Rate Unemployment Rate
Logistics Performance 40

3.2% 2.39% Ease of Doing Business 70

Dealing with Construction Permits 25
Enforcing Contracts 68
GDP per Capita GDP per capita, PPP
Employment by Sector (Current USD) (Current USD) Getting Credit 25
Getting Electricity 27

35,34%
2,786 8,651 Paying Taxes 109
37,22% Agriculture Protecting Minority Investors 97
Industry Registering Property 64
Income Tax Rate Corporate Tax Rate
Services Resolving Insolvency 122

35.0% 20.0% Starting a Business 115

27,44% Trading Across Borders 104
Source: World bank, National Statistics of Taiwan, CIA, Heritage, WikiRating, GitHub, TradingEconomies, Euromonitor | Note: As of 2020 data except Employment by Sector (2019) Page 10
The recovery of Vietnam’s economy after COVID-19
Page 11
 Highest mobility increases with shoppers returning to visit Grocery and
Pharmacy stores.

15 thang 1,2022
Grocery &
Pharmacy change

+107%
20-Apr -2022
compared to
Grocery & Pharmacy
baseline

+38%
compared to baseline

Source: Covid 19 – Google Mobility Report – How did number of visitors chance since the beginning of the pandemic ? Page 12
After the pandemic, the economy recovering again, nearly equal to the pre-
Covid level.
The growth of GDP was forecasted to reach 6.5% in 2022, almost equal to the
More households earned above $500 which made their purchasing power increase.
pre-Covid level in 2019.

% Growth of GDP - Yearly % Growth of GDP –

Quarterly vs LY
7 Household Monthly Incomes
7,00%
6,50%
#households 2017 2021 Growth
6,73%
5,22% 5,03%
2,91% 4,72% $1,000
2,58%
(Class B)
1,236,015 1,530,577 24%
2019 2020 2021 2022F Q1'21 Q2'21 Q3'21 Q4'21 Q1'22
$500 - $999
(Class C, D)
7,963,609 9,603,248 21%
-6,02%

Retail sales of goods in February 2022 have bounced back higher than the level of In 2021, most of the Households were in E class. Households earning A, B, C income came mostly from
September 2019 (Pre-Covid Impacted). Urban.

Retail Sales of Goods

Index September 2019 = 100 Distribution of Economic Class in 2021
Rural
Urban 4 Key cities
111 109 108 4M 3M 2M 1M 0M 0M 2M 4M 6M 8M 10M
105
100 101
95 94 0,3 A > $1184 0,2
93
88 89
Index = 100 0,7 B From $947 to $1184 0,5
75 1,9
69
72 1,9 C From $710 to $947
2,9 D From $473 to $710 3,9

3,6 E From $236 to $473 8,2

1,2 F < $236 2,4

Source: GSO: Cimigo – Vietnam Consumer Trend Page 13

During the pandemic, both Urban and Rural people looked for
convenience and less-contact channels.
Urban Area was impacted by Corona more severely than Rural. During this period, Food
Due to COVID-19, online channels became more important since Urban citizens bought online more
and Dairy fulfilled the basic needs of consumers. Thus, these categories strongly
often.
increased.

Shopping Occasions Spend/Trip

7 7
% Value change FMCG – MAT Q4 2021 vs YA
Online 65% -3%
Urban 4 Urban Rural Mini Stores 9% 22%
Rural
Key cities
Urban 4 Key Hyper -30% 8%
cities Super -13% 6%
14,3%
FY 2020 vs FY 2021 Speciality Stores -9% 4%
11,7%
10,8%
Wet Market -33% 13%

7,0% Street Shop -6% 12%

5,2% 4,7%
3,9%
COVID-19 has created chances for Modern Trade in Rural as people preferred to shop in less-
1,9%
contact places.

Shopping Occasions Spend/Trip

-2,1% -2,0% -2,2%

Modern Trade 7% 0%

-7,8% Direct Sale -1% -26%

Rural
FMCG Total Food Beverages Dairy Home Care Personal 16%
FY 2020 vs FY 2021 Speciality Stores 1%
Care
10%
Wet Market -18%
10%
Street Shop -1%

Source: Kantar Worldpanel – Asia Pulse 2022 Page 14

 Minimarket and online channels have shown their potential with
many advantages in terms of accessibility during the lockdown
period, regardless of low contribution.
% Value Change vs YA % Value Contribution by Channel in 2021

FY 2020 FY 2021 Streetshops Hyper & Super Minimarkets

Urban 4 Key cities Online Specialty Stores Wet Market
60 60

30 27
13 13
6%
10 4 6 5

-2 -6
-16
-24 8%
All Retailers Online Minimarkets Streetshops Specialty Hyper & Wet Market
Stores Super

169
2%
Rural 122

40 31 42
1%
10 9 9 18
5 6

-9 -8
-28
All Retailers Online Minimarkets Streetshops Specialty Hyper & Wet Market
Stores Super
Page 15
Source: Kantar Worldpanel - FMCG Vietnam Insights Collection 2022
Vietnam’s Traditional Trade was impacted heavily by Corona just
after Myanmar. However, recovering again.
% Growth of FMCG Traditional Trade in SEA – % Growth of FMCG Traditional Trade in Vietnam by Quarters
MAT Q4’21 vs YA MAT Q4’21 vs YA
% Value Growth % Weighted Volume Growth % Nominal Value Growth % Weighted Volume Growth
6,8%
9,60% 5,7%
Indonesia
7,70% Back to
1,5%
0,9% Normal
4,50%
Philippines
3,40%

2,70%
Malaysia -6,2%
1,00% -6,3%
-8,0% -8,4%
-8,6% -9,1% -9,1% -8,7%
-8,2% -8,5%
-9,1% -10,4%
-3,00%
Singapore
-6,30%
-15,7%

-5,40% -16,2%
-18,6%
Thailand
-5,70%

-9,10% -25,4%
Vietnam
-8,60%

MAT YA MAT TY Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21
-18,00% Tet
Myanmar Tet
-22,30% Period Covid 19 Covid 19 Period Covid 19 Covid 19
Wave 1 Wave 2 Wave 3 Wave 4
Mar-May Aug-Oct Mar-Apr May - Aug

Source: NielsenIQ – Quarter by numbers MAT Q4 2021 Page 16

 How shopper react when prices increase
Shoppers optimized each trip by picking up more categories. Channels offerings discounts or cheaper prices are preferred by consumers.

Average # categories bought per Average # categories bought Shoppers’ keywords searched on Google (2021 vs 2020)
year per trip

+91%
4,0% 2,0% Mã giảm giá Shopee
Urban 4,0%
-1,0% (Shopee discount rate)

Rural
2,0% 1,0% +325%
0,0% 2,0%
Shopee voucher

As consumer mobility increased, the shopping frequency in Hyper & Super slowly
Consumers switched to Private Labels which have lower prices. These
recovered. However, it is vital to establish the right pricing and promotion strategy to
brands present mostly in MT channels.
gain more traffic in MT channels due to the price sensitivity.

Private Labels Penetration

% - FY 2021 46%

10/2021 – 01/2022
Total Private Labels spend
change - FY 2021 0.6%

Source: Kantar Worldpanel – Division Anticipating Inflation in 2022 & Beyond Page 17
Promotion of Bach Hoa Xanh to increase basket size

Page 18
FMCG Industry Opportunities and Challenges
Opportunities in FMCG Industry Challenges in FMCG Industry

With the Health and Food Safety concern, consumers are shifting to use General Trade channel remains most popular channel for
products that are beneficial for health. Categories that will grow further due to Vietnam, making it hard to reach Rural shoppers for imported
this trend: goods, as shop owners usually favor local brand
• Organic Food / Products
• Nutritional products: Dairy, Milk Powder, Liquid Milk, Nut Milk, especially Yogurt
• Cereal products Price remains a challenge for business. Though middle-class
• Health related drinks: Tea, Juices,... consumers are increasing, but price is still one of their concern in
daily groceries. Hence, they focus on some specific products like
Rapid expansion speed of Modern trade retail formats and shift in Dairy, Milk, Vegetables,...
E-commerce channel usage
• Modern trade format is expanding very fast, especially in urban cities and Vietnam is forecasted to reach 3.5% - 3.9% inflation in 2022 and
forecasted to grow even more dynamic with urbanisation trend. this might cause a surge in food price for consumers, lead to
• Consumers are becoming more favor international brands - which is usually
lower demand for high quality food in short run
claimed high quality and healthier. MT formats create opportunity for imported
brands to enter market easier
• Furthermore, E-commerce platforms are connecting with modern retailers,
Covid-19 is still uncertainty and food demand changes
suppliers... to offer more products to consumers. With Covid-19, consumers are
spending even more time and order online, and becoming new habits of
responsively to the pandemic. If the pandemic outbreak again,
consumers. consumers will shift to use basic products only and cut expense
on more imported/ expensive products
Growth in Middle - Class lead to expansion in spending
Vietnam has one of the highest growing Middle Income rate in Southeast Asia,
Global supply chain is forecasted to not soonly recover, making it
reveals opportunities for high demand and this is one of the driver for economic
difficult for manufacturers to access to materials and hard to
growth.
deliver. This might cause food price to rise further
Page 19
3 DKSH Vietnam FMCG
Overview and Services

Page 20
DKSH | Vietnam FMCG Overview

Introducing DKSH FMCG Vietnam

Extensive Footprint 3,000 specialists

63 Provinces Nationwide DKSH Office 2,000 Sales specialists
WH Main DCs

39 clients
Consumer categories
Leading MNCs and SMEs
• Food
• Non-food
• Non-food (consumer health)
WH 40,000 sqm storage
Temperature controlled 97x2 DLPs in 63 prov.
• Ambient
• Below +30oC
• +18 to +25oC (>2,000 pallets) 159,500+ coverage
All FMCG channels,
WH XD
100% Modern Trade universe
Established in 1890, re-entered Vietnam in 1991

Key clients

General Trade Modern Trade E-commerce

WH
WH
RDC

Specialty, OOH, Professional

Foodservice Hair Salon
Page 21
DKSH | Vietnam FMCG Client Business Models and Services

We offer One-Stop-Shop solutions tailored to Client needs

What services do we offer?

Market
In-store
Sales and trade marketing Digital full insights and
Sales force and key account management (shared or dedicated) execution
services analytics
BTL-marketing
Regional
Support Data and Regulatory
insights services
Credit and collection & Digital VAS
Re-labeling
Activation
Strategic Co-packing
Advisory Online
Virtual in-
Distribution and logistics channel Bonded
store
management goods
insights
Example: what companies do we work with & what solution? Field Marketing Digital Value-adding
services
E-commerce

3PL 4PL Full service Additional services in offering or stand-alone (service fee)

Page 22
DKSH | Vietnam Client Dashboard

A portfolio well balanced across categories and channels

Full Service – Food & Beverage` Consumer Health

`
`

Personal Care Home Care

3PL / 4PL Specialties

Page 23
DKSH | Vietnam FMCG Capabilities

Our holistic approach to create value growth together with

our client
Revenue growth management:

Go-To-Market Tailored and purposeful route-to-market to cater for every

1
Strategy client’s unique growth strategy
Segmentation Accurately target consumer and customer segments through
2
Strategy deep understanding of our markets
CLIENT
Talent Acquiring and training the talents at all levels, from field sales
1 3
Strategy to supply chain management to client management
9 2
Client Seamless experience throughout client’s journey, transparent
4
Experience and regular review of on-the-ground insights
8 3 Product Local and regional expertise to support brand owner with
5
Strategy comprehensive market insights to jointly build product strategy
Data Data-driven strategy and decision making through the use of
7 4 6
Management best-in-class solutions such as PowerBI, SAP

PROMOTION 6 5 CLIENT
Promotion Optimization of promotion, trade spend efficiency through
7 Exceedra platform
Strategy
Sales Deep channel and customer understanding to support
8
DATA
Strategy brand’s sales strategy in driving exceptional growth
MANAGEMENT
Client Be the growth partner of choice through genuine relationship
9 Success building, rather than merely transactional

Page 24
4 Opportunities for European
products

Page 25
Facts and Figures

Opportunities to enter Vietnam market

Consumer’s strong favor towards imported products from

1 One of the country with fastest GDP per capita growth 4
European countries

High potentials for Medical Devices, Branded Originators,

2 Increase in disposable income while inflation is stable 5
Higher Value-Added products

3 Government’s commitment to encourage foreign investment 6 Low labor cost

Souece: vn-tax-vietnam-doing-business-2020.pdf (deloitte.com) Page 26

Health-related categories kept escalating over the past 3
years and will continue to develop in the future.
Retail Value of Vitamins Retail Value of Supplement Nutrition Drinks
Retail Value ($ million) % Y-O-Y Growth Retail Value ($ million) % Y-O-Y Growth

350 60% 600 60%

295,1
300 487,3
50% 500 50%
255,8 439,1
250 398,1
219,4 40% 400 366,2 40%
200 182,8 320,5
154,5 30% 300 30%
150
18,3% 20,0%
16,6% 15,4% 20% 200 14,2% 14,3% 20%
100
9,6% 10,3% 11,0%
8,7%
50 10% 100 10%

0 0% 0 0%
2019 2020 2021 2022F 2023F 2019 2020 2021 2022F 2023F

Retail Value of Dietary Supplements Retail Value of Herbal/ Traditional Products

Retail Value ($ million) % Y-O-Y Growth Retail Value ($ million) Y-O-Y Growth (%)

800 747,1 60% 700 640,2 60%

690,6 590,5
700 636,7 50% 600 545 50%
582 500,2
600 551,1 483,2
500
40% 40%
500
400
400 30% 30%
300
300
20% 20%
11,9% 200 11,6%
200 9,4% 8,5% 9,0% 8,3% 8,4%
8,2%
5,6% 10% 100 3,5% 10%
100
0 0%
0 0%
2019 2020 2021 2022F 2023F 2019 2020 2021 2022F 2023F

Page 27
Source: Euromonitor – DKSH analysis
5 Consideration before entering
Vietnam

Page 28
Choose the Right Partner that allow you to focus on
core capabilities while sales increase.

Page 29
DKSH – Your Market Expansion Services Partner

We offer a broad range of

tailor-made and integrated
services to manage the
entire value chain for our
business partners.

Page 30
In and With Asia

Having been truly at home

in Asia for more than 150
years, DKSH has
unparalleled
relationships and
networks across Asia and
an unmatched depth of
knowledge, experience
and understanding.

Page 31
Delivering Growth – in Asia and Beyond.
Page 32
Disclaimer

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information. Nevertheless, this presentation may be subject to technical inaccuracies, information that is not up-to-date or
typographical errors.

DKSH does not assume liability for relevance, accuracy and completeness of the information provided. DKSH reserves the
right to change, supplement, or delete some or all of the information on this presentation without notice.

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used without DKSH’s written permission.

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