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Baby Care in Vietnam

Baby Care in Vietnam Category Briefing | 21 Jul 2010 HEADLINES • Baby care posts 9 % growth in current value terms in 2009, reaching VND250 billion • Strong rising consumer demand is main factor driving growth • Fastest growing segments in 2009 are baby skin care and baby toiletries, with 10% growth rates in current value terms • In 2009, unit price continues to rise due to higher availability of premium products • Johnson & Johnson Vietnam Co Ltd dominates baby care with 49% value share in 2009 • Over the forecast period, baby care is expected to grow by a constant value CAGR of 6%

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TRENDS • Demand for baby care products in Vietnam continued to show strong growth in 2009 despite the ongoing decreasing trend in the birth rate. With rising income levels and better living standards, especially in urban areas, parents were able to afford the best for their babies and were willing to spend more for baby care products. As the availability and variety of products and brands increased, more choices appeared for parenting consumers. Correspondingly, consumers also became more demanding and meticulous about their purchasing decisions. The most outstanding performance belonged to baby skin care and baby toiletries both growing by 10% in current value terms in 2009. These two categories were able to outperform the others because Vietnamese consumers have always been aware of good skin care in general, thus, manufacturers chose to improve consumers’ baby care knowledge and develop the category targeting parents’ foremost concerns about hygiene and protection for their babies’ skin. That also explains the good performance of baby sun care which grew by 9% in current value terms in 2009.

Meanwhile, baby hair care was given less attention and witnessed weak demand since consumers usually use bath/shower products as a replacement. • In 2009, the unit price increased because consumers became more willing to trade up to premium baby care products. Moreover, manufacturers regularly created new and innovative products with better features, ingredients and production technology which drove up input costs and increased the end price accordingly. • Although mass products dominated, accounting for 99% share of the category’s value sales, premium products’ presence increased, up from 1. % in 2008 to 1. 4% in 2009. The main consumers of premium baby care products are those parents with high-income levels and luxurious lifestyles. There are limited premium baby care brands available in the category. In general, consumers purchase premium products such as L’Occitane and Corine de Farme mainly on recommendations from acquaintances or their own research. • Natural and organic ingredients are big trends in baby care. Since baby’s skin is considered as the most sensitive, the more gentle a baby care product claims to be, the more favour it gains from consumers.

Thus, natural products which are always believed to be the tenderest, gained more consumer preference although their prices may be more expensive than the average. COMPETITIVE LANDSCAPE • Johnson & Johnson Vietnam successfully protected its leading position in 2009 despite the temporary loss initiated from rumours about its products causing cancer in babies which worried consumers and forced some supermarkets to remove Johnson & Johnson products from their shelves at the beginning of the year.

After authorities officially proved the safety of Johnson & Johnson products, the company quickly regained its reputation through various promotional and marketing activities. • Oriflame Vietnam witnessed the largest increase in its 2009 value sales, growing by 39%. Apart from the temporary benefit caused by negative rumours about Johnson & Johnson products, Oriflame created its success story by a broad and effective distribution network and strong strategies of positioning its baby care products as natural and gentle.

Its larger sales forces can help Oriflame reach and educate more consumers, particularly parents who are concerned about products for their baby. As sales representatives can answer questions from parents directly, it introduces more chances for sales for the company. • Domestic manufacturers play an insignificant role in baby care as the competitive environment with dominant participation of famous international brands such as Johnson’s Baby, Pureen, Pigeon and Oriflame make existing local companies struggle to survive and abolish intentions to enter the category.

International brands seize all the competitive advantages such as reputation, brand awareness, good product quality and affordable pricing. • Marketing activities for baby care products were not paid adequate attention over the review period. Only Johnson & Johnson continued to emphasise it its advertising through various public media channels such as television and newspapers. Other brands’ sales rely mostly on their reputation built up by the product’s quality and good distribution networks.

PROSPECTS • Over the forecast period, sales of baby care are predicted to increase strongly by a constant value CAGR of 6% in constant value terms. The demand for products in this category is anticipated to continue its rising trend as beauty and personal care in general grows together with the expanding urban areas with the current rapid urbanisation. Moreover, manufacturers will try to penetrate rural areas to seek new growth opportunities. The lack of marketing activities may become a threat to growth in baby care since apart from gaining consumers’ trust, advertising and promotion has the benefit of encouraging consumers to try new products and improve their knowledge to a more sophisticated level. Sales growth cannot rely on a booming population any longer because obviously the birth rate is gradually decreasing. • Baby toiletries is predicted to see the fastest growth over the forecast period with a constant value CAGR of 7%, along with baby skin care.

The category has high opportunities to expand the consumer base and approach all consumer segments since baby toiletries come first as the most basic products that parents need to care for their babies, compared to other products such as skin care, sun care and hair care. • Over the forecast period, unit prices in this category will continue to rise as premium brands are expected to increase their attempts to penetrate with higher availability of brands and products. CATEGORY DATA Table 1 Sales of Baby Care by Subsector: Value 2004-2009 VND billion |2004 |2005 |2006 |2007 |2008 |2009 | | | | | | | | | |Baby Hair Care  |41. 1 |44. 2 |46. 8 |49. 4 |51. 9 |54. 8 | |Baby Skin Care  |34. 9 |37. 9 |41. 3 |45. 2 |49. 8 |54. 5 | |Baby Sun Care  |4. 0 |4. 4 |4. 8 |5. 2 |5. 7 |6. 2 | |Baby Toiletries  |83. |90. 3 |97. 5 |106. 3 |115. 6 |126. 6 | |Medicated Baby Care  |- |- |- |- |- |- | |Nappy (Diaper) Rash Treatments  |5. 5 |5. 7 |6. 1 |6. 5 |7. 0 |7. 5 | |Baby Care  |168. 7 |182. 5 |196. 6 |212. 7 |229. 9 |249. 5 | Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 2 Sales of Baby Care by Subsector: % Value Growth 2004-2009 % current value growth |2008/09 |2004-09 CAGR |2004/09 TOTAL | | | | | | |Baby Hair Care  |5. 6 |5. 9 |33. 3 | |Baby Skin Care  |9. 5 |9. 3 |56. 0 | |Baby Sun Care  |9. 0 |9. 2 |55. 3 | |Baby Toiletries  |9. |8. 8 |52. 2 | |Medicated Baby Care  |- |- |- | |Nappy (Diaper) Rash Treatments  |7. 0 |6. 4 |36. 5 | |Baby Care  |8. 5 |8. 1 |47. 9 | Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 3 Baby Care Premium Vs Mass % Analysis 2004-2009 % retail value rsp |2004 |2005 |2006 |2007 |2008 |2009 | | | | | | | | | |Premium  |0. 5 |0. 8 |1. 0 |1. 2 |1. 3 |1. 4 | |Mass  |99. 5 |99. 2 |99. 0 |98. 8 |98. 7 |98. 6 | |Total  |100. 0 |100. 0 |100. 0 |100. 0 |100. 0 |100. 0 | Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates Table 4 Baby Care Company Shares 2005-2009 % retail value rsp |2005 |2006 |2007 |2008 |2009 | | | | | | | | |Johnson & Johnson Vietnam Co Ltd  |50. 2 |50. 6 |49. 7 |49. 1 |48. 6 | |Bubchen-Werk Ewald Hermes Pharmazeutische Fabrik GmbH  |10. 5 |11. 0 |12. 3 |12. 8 |13. 1 | |Summit Co (M) Sdn Bhd  |7. |8. 0 |9. 8 |10. 4 |10. 4 | |Pigeon Corp  |9. 1 |8. 8 |7. 8 |7. 8 |7. 6 | |Ascendia Brands Inc  |- |6. 8 |6. 6 |6. 5 |6. 4 | |Hoffmann La Roche Ltd  |1. 4 |1. 3 |1. 3 |1. 3 |1. 3 | |Beiersdorf AG  |1. 4 |1. 3 |1. 2 |1. 1 |1. | |Oriflame Vietnam Ltd |0. 6 |0. 8 |0. 8 |0. 6 |0. 7 | |Cow Brand Soap Kyoshinsha Co Ltd  |0. 4 |0. 3 |0. 2 |0. 1 |- | |Henkel Vietnam Co Ltd  |0. 2 |0. 2 |0. 0 |- |- | |Lana Cosmetics  |0. 5 |0. 5 |- |- |- | |Lander Co Inc  |6. |- |- |- |- | |Unza Vietnam Co Ltd  |1. 7 |- |- |- |- | |Others  |9. 5 |10. 2 |10. 2 |10. 3 |10. 8 | |Total  |100. 0 |100. 0 |100. 0 |100. 0 |100. 0 | Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates

Table 5 Baby Care Brand Shares by GBN 2006-2009 |% retail value rsp |Company |2006 |2007 |2008 |2009 | | | | | | | | |Johnson’s Baby  |Johnson & Johnson Vietnam Co Ltd |41. 3 |40. 6 |40. 3 |40. 1 | |Bubchen  |Bubchen-Werk Ewald Hermes Pharmazeutische Fabrik GmbH |11. 0 |12. 3 |12. 8 |13. | |Pureen  |Summit Co (M) Sdn Bhd |8. 0 |9. 8 |10. 4 |10. 4 | |Pigeon  |Pigeon Corp |8. 8 |7. 8 |7. 8 |7. 6 | |Lander  |Ascendia Brands Inc |6. 8 |6. 6 |6. 5 |6. 4 | |Bepanthen  |Hoffmann La Roche Ltd |1. 3 |1. 3 |1. 3 |1. 3 | |Nivea Baby  |Beiersdorf AG |1. 3 |1. 2 |1. 1 |1. | |Oriflame  |Oriflame Vietnam Ltd |0. 7 |0. 7 |0. 5 |0. 6 | |Ok  |Oriflame Vietnam Ltd |0. 1 |0. 1 |0. 1 |0. 1 | |Cow Brand  |Cow Brand Soap Kyoshinsha Co Ltd |0. 3 |0. 2 |0. 1 |- | |Fa Kids  |Henkel Vietnam Co Ltd |0. 2 |0. 0 |- |- | |Lana  |Lana Cosmetics |0. |- |- |- | |Lander  |Lander Co Inc |- |- |- |- | |Carrie  |Unza Vietnam Co Ltd |- |- |- |- | |Others  |Others |19. 5 |19. 3 |19. 2 |19. 2 | |Total  |Total |100. 0 |100. 0 |100. |100. 0 | Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 6 Baby Skin Care Brand Shares by GBN 2006-2009 |% retail value rsp |Company |2006 |2007 |2008 |2009 | | | | | | | | |Bubchen Baby Cream  |Bubchen-Werk Ewald Hermes Pharmazeutische Fabrik GmbH |18. 0 |21. |22. 0 |23. 2 | |Pureen Baby Lotion  |Summit Co (M) Sdn Bhd |7. 6 |9. 0 |10. 0 |10. 2 | |Johnson’s Baby Lotion  |Johnson & Johnson Vietnam Co Ltd |8. 5 |8. 0 |8. 2 |8. 5 | |Johnson’s Baby Cream  |Johnson & Johnson Vietnam Co Ltd |8. 5 |8. 0 |7. 8 |7. 4 | |Johnson’s Baby Oil  |Johnson & Johnson Vietnam Co Ltd |8. 3 |7. 5 |7. |6. 4 | |Lander Baby Lotion  |Ascendia Brands Inc |6. 5 |6. 0 |5. 5 |5. 8 | |Pigeon Baby Oil  |Pigeon Corp |6. 3 |5. 0 |4. 8 |4. 5 | |Johnson’s Baby Clear Anti-Mosquito  |Johnson & Johnson Vietnam Co Ltd |4. 0 |3. 7 |3. 5 |3. 4 | |Pigeon Baby Lotion  |Pigeon Corp |3. 3 |3. 0 |2. 8 |2. | |OK for Kids  |Oriflame Vietnam Ltd |0. 6 |0. 7 |0. 4 |0. 6 | |Lander Baby Lotion  |Lander Co Inc |- |- |- |- | |Carrie Aroma Baby  |Unza Vietnam Co Ltd |- |- |- |- | |Others  |Others |28. 5 |28. 1 |28. 0 |27. 4 | |Total  |Total |100. |100. 0 |100. 0 |100. 0 | Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 7 Baby Sun Care Brand Shares by GBN 2006-2009 |% retail value rsp |Company |2006 |2007 |2008 |2009 | | | | | | | | |Nivea Sun for Kids  |Beiersdorf AG |55. |49. 0 |46. 0 |44. 6 | |Bubchen Baby Suncare  |Bubchen-Werk Ewald Hermes Pharmazeutische Fabrik GmbH |17. 0 |25. 0 |26. 0 |26. 3 | |Others  |Others |28. 0 |26. 0 |28. 0 |29. 2 | |Total  |Total |100. 0 |100. 0 |100. 0 |100. 0 | Source: Trade associations, trade press, company research, trade interviews, Euromonitor International estimates

Table 8 Forecast Sales of Baby Care by Subsector: Value 2009-2014 |VND billion |2009 |2010 |2011 |2012 |2013 |2014 | | | | | | | | | |Baby Hair Care  |54. 8 |56. 3 |57. 9 |59. 5 |61. 1 |62. 5 | |Baby Skin Care  |54. 5 |57. 8 |61. 5 |65. 9 |70. 9 |76. | |Baby Sun Care  |6. 2 |6. 6 |6. 9 |7. 3 |7. 7 |8. 0 | |Baby Toiletries  |126. 6 |131. 7 |138. 9 |148. 7 |160. 5 |174. 2 | |Medicated Baby Care  |- |- |- |- |- |- | |Nappy (Diaper) Rash Treatments  |7. 5 |7. 7 |7. 9 |8. 0 |8. 1 |8. 2 | |Baby Care  |249. 5 |259. 9 |273. 1 |289. |308. 3 |329. 5 | Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 9 Forecast Sales of Baby Care by Subsector: % Value Growth 2009-2014 |% constant value growth |2009-14 CAGR |2009/14 TOTAL | | | | | |Baby Hair Care  |2. 7 |14. | |Baby Skin Care  |7. 0 |40. 5 | |Baby Sun Care  |5. 3 |29. 2 | |Baby Toiletries  |6. 6 |37. 6 | |Medicated Baby Care  |- |- | |Nappy (Diaper) Rash Treatments  |2. 0 |10. | |Baby Care  |5. 7 |32. 0 | Source: Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates Table 10 Forecast Baby Care Premium Vs Mass % Analysis 2009-2014 |% retail value rsp |2009 |2010 |2011 |2012 |2013 |2014 | | | | | | | | | |Premium  |1. |1. 5 |1. 6 |1. 8 |2. 0 |2. 3 | |Mass  |98. 6 |98. 5 |98. 4 |98. 2 |98. 0 |97. 7 | |Total  |100. 0 |100. 0 |100. 0 |100. 0 |100. 0 |100. 0 | Source: Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates http://www. portal. euromonitor. com. ezproxy. lib. rmit. edu. au/Portal/Pages/Search/SearchResultsList. aspx

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