Consumer GOODS in CAMBODIA

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Consumer GOODS in CAMBODIA OPPORTUNITIES FOR An Insider’s Look at the Changing CONSUMER Cambodian Consumer GOODS IN CAMBODIA EXECUTIVE SUMMARY EXECUTIVE SUMMARY OPPORTUNITIES FOR CONSUMER GOODS IN CAMBODIA An Insider’s Look at the Changing Cambodian Consumer November 2016 Prepared by: Opportunities for Consumer Goods in Cambodia Contents Introduction and Overview 4 Cambodia’s Fast-Changing 4 Consumer Landscape Opportunities at All Levels, 5 from Luxury to Mass Market Advice for Potential Investors 7 Why Invest in Cambodia 7 Country Information 8 Import Process, Regulations, 11 3 Duties and Taxes The Rise of the Cambodian Consumer: 14 Overview of Consumer Trends Consumer Segments in Cambodia 18 Market Overview Data 20 Distribution 22 Types of Distribution Models 23 Appendix 25 Methodology 25 Acknowledgments 26 Opportunities for Consumer Goods in Cambodia Introduction 4 and Overview Cambodia’s Fast-Changing Consumer Landscape It is a transformative and opportune time for brands With this growth in earnings comes a growth in and consumer products in the Kingdom of Cambodia. disposable incomes. Borders are opening up, trade is increasing, and there are many more products to buy. Modern Cambodia is among the fastest growing Products – and brands – represent a connection to economies in the world, averaging just over seven the wider world, and the promise of a successful and percent annual growth for more than a decade.1 prosperous future. Its young population – half under the age of 25 – is Against this backdrop, tastes, preferences and habits tech-savvy and worldly: avid users of Facebook and are forming, and changing rapidly. YouTube, with increasing awareness of the world outside of Cambodia.2 This awareness shapes their In a unique inversion of the mature market process, preferences for how they want to live – and they it is the young population that is driving new product want to live like the world they see through their preferences – guiding habit formation, and influencing smartphones: individual, independent but family- the adoption of branded products by their parents. oriented, self-directed, and with all the choices and Young people are teaching their parents about accoutrements of a middle-income society. products “new to Cambodia”, and how to use them. They are leading the way in the adoption of new This middle-class society is arriving. In 2016, technologies. Cambodian incomes have moved into the World Bank’s Middle Income bracket, passing $1,045 As these brand-preference habits are forming, the GNI per capita.3 opportunity to introduce products typically favours first movers; product preference is more expensive to Income levels are rising across all socio-economic change, once established.5 classes. A small but significant group of highly affluent families have emerged, of particular interest to luxury In the past, established multinationals could wait goods sellers. In remote rural villages, subsistence for emerging nations to develop robust consumer farmers now have income for the first time in their societies, before entering the market with their lives. And in the cities – where much of the action of products. Recent reports, however, show that local economic growth is visible – educated young adults’ and regional firms are entering these markets earlier, income is growing, and they expect to have more winning market share from established multinationals highly paid careers.4 because of “a deeper understanding of regional markets, and robust relationships with stakeholders, governments and customers.” 6 Opportunities for Consumer Goods in Cambodia Opportunities at All Levelss, from Luxury to Mass Market Brands that are in Cambodia today are building The big international corporations in mass-market mindshare and market share. products are already in the market, benefiting from Cambodia’s high economic growth rate. Companies The European clothing brand Mango, for example, including Unilever, Proctor & Gamble, and Nestlé arrived in Phnom Penh in 2014, and now dominates understand the importance of building awareness clothing brand awareness and brand desirability and loyalty while brand preferences are being simply by being early to market. They have built a established. They distribute packets of their products loyal following among middle class Cambodians.7 in rural areas to build brand preference early in the product adoption lifecycle.9 They are shaping Luxury brands like Christofle, Boss, and Brioni have consumer behaviour and building brand loyalty. Asian opened shops in the prestigious Vattanac tower. companies have also arrived, building preference These brands understand that by arriving early in the for their own FMCG brands, such as Indonesia’s marketplace, they can shape preferences for their Indofoods (large variety of food and beverages), products among their target wealthy consumers.8 Julie’s of Malaysia (packaged cookies and crackers), The Philippines’ Universal Robina Corporation (snacks and candy), and Korea’s Nature Republic (cosmetics). The Packaged Foods The Beverage The Personal Care 5 Market Market Market The market for imported Cambodia’s beverage market Cambodia’s personal care market packaged foods is growing category is large and growing, is small but growing. Cambodians rapidly in Cambodia, with a high presenting many opportunities care about their appearance and potential for continued future for European companies to their personal hygiene, and they growth. Changing lifestyles have compete with existing local and are interested in learning about led to changes in Cambodians’ global brands. new products that have not been eating habits, leading to greater part of their culture in the past. demand for imported food and an While established companies explosion of new choices. have an advantage in the market, Advertising gives them advice on there are opportunities for new personal grooming, and educates Changing tastes and aspirational competitors – especially with them about new products that living will continue to drive an the expansion of modern trade they are eager to adopt. interest in new European foods, outlets such as supermarkets and especially those supported with convenience stores ("minimarts"). There are opportunities at all educational marketing. levels of product, from mass- European brands of fruit market to mid-range to premium. Companies that enter the juices or other non-alcoholic market now will benefit from beverages could be in position The lower end of the market is the ability to shape preference, for more rapid market adoption if becoming increasingly brand seize mindshare and establish supported by effective marketing conscious, creating opportunities brand loyalty. and promotion of their unique for low-cost brands. properties and their point Categories showing high of origin. The mid-to-upper end of the growth include: market is receptive to new European wines and spirit product brands and product ● Dairy products, at brands will find well-established categories. Successful entrants both the mass distribution channels available should include educational and premium markets level and can build local market share. marketing and advertising to support their growth. ● Baby food and prepared foods for children to take to school or have for breakfast ● Convenience foods and prepared grab-and-go foods Opportunities for Consumer Goods in Cambodia The Home Care Goods Market The Luxury Market The home care goods market in Cambodia is starting The demand for luxury goods and experiences is at a low base, but is expected to grow rapidly. growing rapidly in Cambodia as affluent Cambodians New entrants into the market will face entrenched develop a taste for a new lifestyle, the number of competition from both regional and international affluent tourists visiting the Kingdom continues to companies, complex distribution channels, and the grow, and some expatriates seek out luxury items.12 price conscious buying habits of the majority of the Cambodian population. Affluent Cambodians are status conscious. Cars and mobile phones are the most important signifiers of Brand and product awareness is low, so products that status, with jewellery, handbags, clothing, and shoes can successfully establish mindshare will be rewarded increasing in importance. with market share and brand loyalty. There are significant opportunities for luxury brands Indications from studies of similar emerging markets to enter Cambodia, filling a gap in available retail. show that this category is often slow to develop, as There is a gap in the availability of high-end clothing, consumers will use a single cleaning product, such as shoes and handbags, as well as high-end jewellery powdered laundry soap, for all cleaning needs: floor, and watches. hands and skin, hair washing, and similar uses. But as those markets developed, manufacturers have been New malls are opening, offering premium retail space able to increase the number of home care categories for brands to enter the market. In addition, there is still through the use of educational advertising.10 significant growth potential in duty-free shopping. 6 The Clothing The Consumer and Accessories Market Electronics Market The clothing and accessories market is growing, Ownership of consumer electronics is growing quickly and this presents an opportunity for market entry by in Cambodia. Since ownership of most consumer European brands. Phnom Penh is underdeveloped in electronics other than mobile phones is still relatively branded retail shopping for clothing, shoes, handbags,
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