The Myanmar Consumer Survey Poised for take-off January 2020 Foreword 03 Poised for take-off 04 The Myanmar Consumer Survey 09 1. Overall consumer sentiment 11 2. Spending patterns 14 3. Buying behaviour and brand preferences 20 4. Communication channels 26 5. Buying channels 28 6. Payment 32 Looking ahead 35 Contact us 37 Foreword
Characterised by their growing sophistication and penchant for new experiences, the Myanmar consumer is dynamic – and fast-evolving. Over four editions of the Myanmar Consumer Survey, we have observed how the Myanmar consumer has grown in sophistication and discernment, while remaining grounded with a healthy dose of prudent optimism.
In this fourth edition of the consumer survey conducted in Yangon, Mandalay, and Mawlamyine in 2019, we continue to witness a decreasing price sensitivity, and greater demand for discretionary spending. Beyond these constants, however, the survey also revealed a number of new insights that just might change the game for consumer companies.
For a start, the Myanmar consumer continues to demonstrate an openness to new products and services, even as they remain value-conscious in their purchasing decisions. Although this represents the opportunity for companies to introduce new value propositions to the market, the flip side is that investments will need to be made to secure long-term brand loyalty and ensure recall by the consumer: this edition of the survey revealed that several new brands are appearing to gain a foothold in consumer recall, surpassing its competitors with widespread and innovative marketing and promotional campaigns.
Later in this report, we also explore how the Myanmar consumer is increasingly prioritising discretionary spending, and placing an increasing value on connectivity. Specifically, they allocate a significant amount of their expenditure to utilities that will enable them to remain constantly connected, whether it is the mobility of moving from one physical location to another, or staying digitally connected to the Internet.
Finally, we discuss an impending revolution in the digital payments sector that could spark the rapid takeoff of Myanmar’s e-commerce market. Within the span of only a few years, Myanmar’s digital payment services sector has experienced phenomenal growth, and the potential for digital payments to leapfrog card payments in Myanmar’s payments sector is now steadily increasing even as we speak.
We hope that this report will provide you with some insights into the fascinating Myanmar consumer, and the considerations that you will need to make to capture the opportunities as they become ripe for take-off in this dynamic market.
Pua Wee Meng Consumer Industry Leader Deloitte Southeast Asia
03 The Myanmar Consumer Survey | Poised for take-off
Poised for take-off
Myanmar’s economy is at a turning point: in 2018, economic expansion appears to have stagnated following years of rapid growth. Looking ahead to the medium term, however, Myanmar’s prospects remain promising.
Economic overview Since the 2010 General Elections, Myanmar’s Gross Domestic Product (GDP) has been growing at rapid year-on- year rates of about 5-8% (see Figure 1). Overall, GDP per capita reached USD 1,298 in 2017, and the poverty rate dropped from 48% in 2005 to 32% in 20151.
In 2018, however, Myanmar’s economy appeared to have hit a stumbling block. With the ongoing humanitarian crisis in Rakhine state and issues with the restructuring of the banking sector, Myanmar’s short-term growth appears to have stagnated, and its full potential continues to be a moving target2.
Nevertheless, when compared to its regional and global counterparts, Myanmar’s growth prospects appear promising in the medium term (see Figure 2). Heavy investments in infrastructure projects are expected to lift domestic consumption, and drive GDP expansion3. Furthermore, the liberalisation of its financial services sector is expected to increase the presence of foreign players in the retail banking and insurance landscape, and stimulate investment and growth in nascent industries, such as retail and digital commerce.
1 “Overview”. The World Bank. April 2019. http://www.worldbank.org/en/country/myanmar/overview 2 “2018 Article IV Consultation – Press release”. International Monetary Fund. April 2019. https://www.imf.org/~/media/Files/Publications/ CR/2019/1MMREA2019002.ashx 3 “Economic growth”. The Economist Intelligence Unit. 7 August 2019. http://country.eiu.com/article.aspx?articleid=808348464&Country= Myanmar&topic=Economy&subtopic=Forecast&subsubtopic=Economic+growth&aid=1&oid=898348473
04 The Myanmar Consumer Survey | Poised for take-off
Figure 1: Myanmar’s GDP growth rate (2011-2020)
8.0% 7.5% 7.3% 7.0% 6.8% 6.8% 6.8% 6.6% 5.9% 5.9%
2011 2012 2013 201 2015 201 2017 2018 2019 2020 forecast forecast Source: Asian Development Bank
Figure 2: GDP growth rates for selected regional economies (2018)
Bangladesh 7.86%
Cambodia 7.50%
Vietnam 7.08%
India 6.81%
Myanmar 6.80%
China 6.59%
Lao PDR 6.30%
Philippines 6.20%
Pakistan 5.53%
Indonesia 5.17%
Malaysia 4.72%
Thailand 4.13%
Sri Lanka 3.22%
Singapore 3.14%
Hong Kong 3.02%
Republic of Korea 2.67%
Taiwan 2.63%
Papua New Guinea -0.60%
Source: Asian Development Bank
05 The Myanmar Consumer Survey | Poised for take-off
A wave of policy reforms Now in the third of its five-year term, the government, led by the National League for Democracy, is intensifying its push for policy reforms ahead of the 2020 election in a bid to drive greater integration between Myanmar and its regional peers in the ASEAN Economic Community. These transformations are expected to enable Myanmar to better attract foreign capital, and improve its overall business environment: currently, Myanmar ranks 171 out of 190 in terms of the ease of doing business (see Figure 3).
Figure 3: Ease of doing business in Myanmar and selected regional economies (2019)
ase o o n us ness s ore
80. 0 Malaysia (rank: 15) 7.9 Indonesia (rank: 73)
7.23 India (rank: 77)
3. 1 Regional average
51.2 Lao PDR (rank: 15 )
44.72 Myanmar (rank: 171)
The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance.
Source: The World Bank
Several key policy reforms can be observed in the following areas: • Infrastructure: Myanmar’s infrastructure is in dire need of investment, with estimates suggesting that it could require as much as USD 120 billion until 20304. To that end, the government has developed the Myanmar Sustainable Development Plan (MSDP), which lays out its vision to bridge the infrastructure gap. In line with this, it has also introduced a project bank, a centralised and publicly accessible database that will enable the government to coordinate ministries and departments, and prioritise proposals which are in line with the MSDP5.
• Digital payments: With the objective of introducing and promoting digital payments in Myanmar, the Central Bank of Myanmar is currently working on a standard, codenamed “MMQR”, for QR code payments. When implemented, it is expected that this standard will enable payments to be made through QR codes at local banks and businesses, which will enable Myanmar to take a huge stride towards becoming a cashless society, given that cash remains its most dominant payment method.
• Intellectual property: To strengthen its protection of intellectual property rights for a more conducive business environment, the Myanmar government recently introduced four draft bills covering its trademark, industrial design, patent, and copyright laws6, which are expected to provide a more favourable environment for technology companies, manufacturing firms, and retail businesses, amongst others.
4 “Private capital needed to fund required infrastructure”. Myanmar Times. 28 March 2019. https://www.mmtimes.com/news/private-capital- needed-fund-required-infrastructure.html 5 “Govt announces ‘project bank’ to get Myanmar building”. Myanmar Times. 31 January 2019. https://www.mmtimes.com/news/govt- announces-project-bank-get-myanmar-building.html 6 “Myanmar passed legislation to protect intellectual property”. The Irrawaddy. 20 February 2019. http://www.mondaq.com/x/782500/ Trademark/Myanmar+Passed+Legislation+To+Protect+Intellectual+Property
06 The Myanmar Consumer Survey | Poised for take-off
• Electricity tariffs: In July 2019, the government announced significant increases in electricity tariffs in a bid to reduce the high losses it was incurring every year: in Financial Year 2018-2019, this amounted to approximately USD 400 million. This long-awaited move has been welcomed by both local and international investment communities, as the previous tariff rates – the lowest amongst Southeast Asian economies – had been deemed to be financially unsustainable7. By removing a significant amount of subsidies, the government has paved the way for investors to scale up their investments in power generation and distribution, and enable Myanmar to provide a more stable electricity supply to businesses and consumers.
• Insurance sector: Following the introduction of a new policy in early 2019, foreign life and non-life insurers can now form joint ventures with local life and non-life insurers, respectively. As of August 2019, six joint ventures between local firms and foreign firms from Japan and Thailand have been approved for life and general insurance services. In addition, five licenses have been granted to foreign life insurers to operate as wholly-owned subsidiaries8. Such developments are expected not only to promote the growth of the insurance sector in Myanmar, but also attract foreign capital and contribute to job creation.
Improving logistics and connectivity The overall low efficiency of Myanmar’s logistics infrastructure not only increases the cost of product distribution, which in turn leads to higher retail prices for the consumer, but also creates an economic imbalance across different regions of the country.
In 2018, Myanmar was ranked 137 out of 160 economies on the World Bank’s logistics performance index, in contrast to its neighbours Thailand and Vietnam, which were ranked 32 and 39 respectively9.
To improve Myanmar’s infrastructure and logistics connectivity, the government is collaborating with several investors on infrastructure improvement projects under Build-Operate-Transfer and Public Private Partnership agreements (see Figure 4).
Figure 4: A list of selected ongoing infrastructure improvement projects in Myanmar
Project Myawaddy- Yangon- Yangon-Dala Yangon- Yangon Yangon Mae Sot Thanlyin Bridge Mandalay Circular Elevated Bridge Bridge Rail Railway Expressway Funding Government Japan South Korea’s Government Japan 10 local organisation of Thailand International Economic of Japan International and foreign Cooperation Development Cooperation companies Agency Cooperation Agency Cost USD 126 USD 278 USD 188 USD 3 billion USD 250 Not available million million million million Timeline for Completed 2021 2022 2023 2023 Not available completion
Source: Deloitte analysis
7 “Myanmar electricity rates to soar next month”. Myanmar Times. 25 June 2019. https://www.mmtimes.com/news/myanmar-electricity-rates- soar-next-month.html 8 “Japanese firms to push growth in Myanmar insurance market”. The Irrawaddy. 8 August 2019. https://www.irrawaddy.com/news/burma/ japanese-firms-push-growth-myanmar-insurance-market.html 9 “Domestic LPI, Performance: Myanmar 2018”. World Bank. Accessed on 20 August 2019. https://lpi.worldbank.org/domestic/ performance/2018/C/MMR
07 The Myanmar Consumer Survey | Poised for take-off
The rise of the digital economy Although Myanmar’s digital economy remains nascent, its penetration rates for Internet, mobile, and social media have been steadily increasing, and moving closer towards the overall average for Southeast Asian economies (see Figure 5). Currently, Myanmar’s e-commerce market is estimated to be worth about USD 6 million , and is expected to show promising growth on the back of a young and increasingly tech-savvy population, development of more comprehensive logistics networks, and rapid uptake of digital payment solutions.
Figure 5: Myanmar’s Internet, mobile, and social media penetration rates relative to the regional average
129%
105%
63% 61%
39% 39%
Internet penetration rate Mobile penetration rate Social media penetration rate
Myanmar Southeast Asia
Source: ASEAN Studies Centre
10 “Social media in Southeast Asia”. ASEAN Studies Centre. October 2018. https://www.iseas.edu.sg/images/pdf/ASEANFocus%20Oct%20 2018.pdf 11 “e-Commerce in Myanmar: A rising tide”. Kasikornbank. Accessed on 20 August 2019. https://www.kasikornbank.com/international- business/en/AEC/Intelligence/Pages/201811_Myanmar_Ecommerce_Trend.aspx
08 The Myanmar Consumer Survey | Poised for take-off The Myanmar Consumer Survey | Poised for take-off
The Myanmar Consumer Survey
In the fourth edition of the Myanmar Consumer Survey, we Product category Examples of sub-categories explore some of the consumer behaviour patterns revealed by the recent consumer survey conducted by Deloitte in Beverages (Alcoholic) • Beer Yangon, Mandalay, and Mawlamyine in 2019. We examine • Whisky the overall consumer sentiment and spending patterns, • Wine before delving into specific buying behaviours and brand Beverages (Non- • Fruit or Vegetable Juices preferences. Later in the report, we also take a look at alcoholic) • Ready to Drink Coffee the Myanmar consumer’s preferred communication and • Ready to Drink Tea purchasing channels, and explore the potential of digital • Soft Drinks payments in this promising market. Confectionery • Biscuits • Bread Methodology • Chocolates The survey was conducted in the second quarter of 2019 • Pastries across 600 households through face-to-face interviews Packaged Foods • Breakfast Cereals in three major cities: Yangon, Mandalay, and Mawlamyine. • Canned Sardines Yangon and Mandalay were selected for this survey as • Instant Noodles they are two of the most populated cities and account Personal Hygiene • Bath and Shower • Mouthwash for a significant proportion of Myanmar’s GDP, while Products Products • Toothbrushes Mawlamyine was selected for its proximity to Thailand • Haircare Products • Toothpaste and the accompanying high volume of cross-border trade, • Laundry Products which has resulted in consumption patterns that differ Household Air-conditioners significantly from the other two cities. • Appliances (Major) • Refrigerators TV Sets The respondent sample was constructed to be • Washing Machines representative of Myanmar’s overall population in terms of • age, gender, monthly household income, education level, Household • Clothes • Hair Dryers and decision-making role. Respondents were surveyed Appliances (Small) • Irons • Toasters on their spending patterns, buying behaviours, brand • Fans • Vacuum Cleaners preferences, communication channels, buying channels, Tobacco • Cigarettes e-commerce activities, and geographic differences across • Cigars eight product categories.
09 The Myanmar Consumer Survey | Poised for take-off
Demographics of survey respondents
Geographical distribution Gender distribution
Mawlamyine
Yangon
Mandalay 50% 50%
Age distribution
ge grou , years 15-2
25-3
35- 9
50-
Source: Deloitte's Myanmar Consumer Survey (2019)
Monthly household income distribution
onthly household income, million Less than 0.2
0.2-0.5
0.5-1
1-1.5
1.5-3
More than 3
Source: Deloitte's Myanmar Consumer Survey (2019)
10 The Myanmar Consumer Survey | Poised for take-off
1. Overall consumer sentiment
Across all income segments, the Myanmar consumer expects to spend more in the year ahead, revealing an optimism for the future driven by expectations of an economic recovery.
An uplift on the horizon Myanmar’s economic growth rate experienced some stagnation at 6.8% in 2018, and this is expected to fall to 6.6% in 2019, falling short of the World Bank’s estimates of 7-8%12. This dip is reflected in the decrease in the percentage of survey respondents expressing an optimistic sentiment, which fell from 66% in 2018 to 57% in 2019.
Nevertheless, with expectations that the economy will make a recovery following a series of regulatory reforms and investment liberalisation initiatives, the consumer’s future outlook remains upbeat: the percentage of survey respondents expressing an intention to increase their expenditure nearly doubled from last year’s survey, increasing from 8% to 15%. Similarly, the percentage of survey respondents expressing an intention to decrease their expenditure reduced from 33% to 30% (see Figure 6).
Figure 6: Overall consumer sentiment and plan for future expenditure
Question: Do you feel confident that Myanmar’s Question: Do you intend to spend more, spend economy will improve in the next year? less, or the same in the next year?
2017 2018 2019 2017 2018 2019 Agree Neutral Disagree Increase No change Decrease Unsure
Source: Deloitte's Myanmar Consumer Survey (2019) Source: Deloitte's Myanmar Consumer Survey (2019)
12 “After 3 years, Suu Kyi running out of time to energize Myanmar economy”. Asian Nikkei Review. 30 March 2019. https://asia.nikkei.com/ Politics/After-3-years-Suu-Kyi-running-out-of-time-to-energize-Myanmar-economy
11 The Myanmar Consumer Survey | Poised for take-off
Maintaining momentum Myanmar needs to tackle a multitude of socioeconomic and political issues to achieve and maintain its near-term growth momentum. Currently, the economy is struggling with trade and fiscal deficits, as well as high inflation rates due to volatility in fuel and food prices13. The lack of infrastructure also continues to pose operational risks for potential investors, in addition to the mounting international pressure stemming from the ongoing border conflict14.
Still, the prospects are promising: the government’s recent efforts to restructure its economy with the launch of the MSDP and monetary policy reforms ahead signal a strategic shift towards a more intensified focus on attracting foreign investment and stimulating economic growth.
For instance, the Myanmar Companies Law enabled foreign investors to acquire a stake of up to 35% in local companies, as well as 100% ownership in retail and wholesale companies15. Given these developments, the retail and wholesale segment is expected to drive GDP growth within the services sector, which contributed to 42% of GDP in 2018, and is expected to grow at a rate of 8.3% in 201916.
Myanmar also seems poised to become a regional, low-cost production powerhouse, with a growing manufacturing sector that is now worth USD 11 billion, second only to its oil and gas and power sectors, which accounted for the majority of permitted foreign investment at 53.9%17.
13 “The World Bank's latest report on Myanmar: 5 Takeaways on growth and risks”. The Irrawaddy. 17 October 2019. https://www.irrawaddy. com/news/burma/world-banks-latest-report-myanmar-5-takeaways-growth-risks.html 14 “U.N. investigator reports possible fresh war crimes in Myanmar”. Reuters. 3 July 2019. https://www.reuters.com/article/us-myanmar-rights- un/u-n-investigator-reports-possible-fresh-war-crimes-in-myanmar-idUSKCN1TX2JV 15 “Myanmar opens up for foreign retailers and wholesalers”. Myanmar Times. 14 May 2018. https://www.mmtimes.com/news/myanmar- opens-foreign-retailers-and-wholesalers.html 16 “Myanmar Economic Monitor June 2019”. The World Bank. 17 June 2019. 17 “Foreign investment by sector”. Directorate of Investment and Company Registration. 30 June 2019. https://www.dica.gov.mm/sites/dica. gov.mm/files/document-files/fdisector.pdf
12 The Myanmar Consumer Survey | Poised for take-off
A growing middle income segment In comparison to the results of the 2018 survey, monthly household expenditure in low and middle income segments have increased signficantly. Of these two groups, the middle income segment appears to hold the most real growth potential: although survey respondents in the low income segment spend an increased proportion of their monthly household income, this is likely due to the impact of the hike in basic commodity prices on daily essentials, rather than a real increase in consumption. In contrast, the high income segment has opted to save more, with about 90% of survey respondents in this segment spending only half of their monthly household income (see Figure 7).
Overall, however, survey respondents across all income segments expect to spend more in the year ahead (see Figure 8). This represents a marked turnaround in sentiment from the previous edition of the survey, where most survey respondents indicated plans to either maintain or spend less in the year ahead. Looking forward, the middle income and high income segments are likely to remain the main drivers of retail spending, and the target market for the influx of new and diverse products and services in Myanmar’s consumer industry.
Figure 7: Monthly household expenditure by monthly household income level
Question: Which of the following best represents your total monthly household expenditure?
Less than 0.2 0.2-0.5 0.5-1.0 1.0-1.5 1.5-3.0 More than 3.0 Low income Middle income High income Monthly household income, MMK million Less than MMK 0.0 - MMK 0.15- MMK 0.3- MMK 0.5- More than MMK 0.0 million 0.15 million 0.3 million 0.5 million 1.0 million MMK 1.0 million
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 8: Plan to vary the current level of spending by monthly household income level Question: Which of the following best represents your total monthly household expenditure?
Less than 0.2 0.2-0.5 0.5-1.0 1.0-1.5 1.5-3.0 More than 3.0 Low income Middle income High income Monthly household income, MMK million Decrease No change Increase Unsure Source: Deloitte's Myanmar Consumer Survey (2019)
13 The Myanmar Consumer Survey | Poised for take-off
2. Spending patterns
The Myanmar consumer is prioritising discretionary spending on non-essential goods, and placing an emphasis on services that will enable them to remain constantly connected.
Demand soars for discretionary spending There appears to be a general trend towards greater discretionary spending, as the burgeoning young and middle income consumers increase their demand for non-essential goods, such as brand-name clothing and organic foods18. As a result, there has been a slight dip in the overall allocation of monthly household expenditure to essential items in product categories such as Confectionery and Packaged Foods, as well as, to a lesser extent, Alcoholic Beverages and Tobacco.
There are, however, slight nuances to this. For instance, survey respondents in the low income segment have increased their expenditure on Confectionery, Packaged Goods, and Personal Hygiene Products, while respondents in the middle and high income segments have increased their expenditure on Alcoholic Beverages, with up to 10% of them allocating MMK 100,001-150,000 to this product category (see Figure 9).
Figure 9: Household spending by monthly household income level and product category (2018-2019)
Question: How much did you spend in previous month for the following categories? 2019 onthly household e erages e erages onfectionery ackaged Foods ersonal ygiene Tobacco income, million ( lcoholic) (Non alcoholic) roducts % 5% 2% 2% 3% 1% 77% 14% 4% 14% 69% 12% 18% 66% 14% 16% 71% 11% 3% 78% 15% 80% 15% Less than 0.2 4% 2% % 8% 5% 20% 18% 81% 8% 64% 13% 52% 24% 1% 14% 64% 4% 62% 28% 84% 12% 0.2-0.5 4% 7% 9% 3% 3% 1% 1% 2% 1% 2% 13% 4% 17% 2% 2% 73% 8% 49% 28% 14% 10% 45% 22% 10% 63% 6% 41% 35% 16% 81% 12% 0.5-1 4% 5% 20% 7% 5% 2% 1% 1% 1% 5% 7% 65% 8% 8% 8% 7% 7% 52% 27% 12% 4% 44% 35% 5% 61% 4% 45% 38% 12% 65% 19% 12% 4% 1-1.5 12% 23% 5% 2% 3% 2% 5% 67% 7% 9% 7% 9% 43% 36% 16% 12% 34% 29% 12% 47% 29% 10% 31% 34% 26% 7% 76% 7% 16% 2% 1.5-3 19% 2% 3% 3% 2% 55% 3% 3% 8% 21% 24% 3% 24% 5% More than 3 16% 18% 34% 45% 37% 11% 32% 47% 8% 13% 47% 79% 13% 8% 5% 11% 11% 5% 8% 3% 2018 onthly household e erages e erages onfectionery ackaged Foods ersonal ygiene Tobacco income, million ( lcoholic) (Non alcoholic) roducts 2% 2% 1% 2% 9% 1% Less than 0.2 67% 16% 12% 87% 12% 79% 12% 14% 84% 2% 5% 86% 64% 35% 2% 7% 0% 1% 3% 5% 64% 10% 13% 10% 75% 8% 64% 14% 76% 4% 71% 24% 59% 39% 2% 0.2-0.5 21% 23% 9% 2% 2% 5% 2% 0.5-1 56% 11% 14% 58% 31% 10% 8% 41% 36% 13% 11% 62% 4% 50% 40% 6% 43% 46% 14% 24% 10% 1% 1% 2% 2% 2% 1% 2% 1-1.5 55% 7% 19% 49% 42% 10% 4% 44% 37% 13% 7% 63% 44% 43% 10% 52% 37% 17% 27% 8% 2% 3% 2% 1% 3% 2% 1.5-3 57% 5% 16% 14% 9% 36% 52% 9% 31% 48% 17% 57% 36% 2% 28% 41% 28% 59% 36% 3% 3% 3% 2% 3% 50% 11% 21% 5% 8% 3% More than 3 18% 13% 18% 63% 16% 47% 26% 5% 34% 47% 21% 55% 63% 16% 5% 3% 8% 16% 18% 3%
None Less than MMK 10,000 MMK 10,000-20,000 MMK 20,001-50,000 MMK 50,001-100,000 MMK 100,001-150,000
Source: Deloitte's Myanmar Consumer Survey (2019)
18 “Growth of incomes and Myanmar’s young population drive demand for nonessential goods”. Oxford Business Group. 2019. https://oxfordbusinessgroup.com/ overview/buyers%E2%80%99-market-expanding-young-population-and-rising-incomes-drive-demand-non-essential-goods
14 The Myanmar Consumer Survey | Poised for take-off
Connectivity is key Whether offline or online, survey respondents prioritise the allocation of their expenditure on utilties that will enable them to remain connected. For instance, they spend between half to three-quarters of their expenditure on Transportation, and Internet Services (see Figure 10).
Transportation services, in particular, have witnessed substantial growth with the introduction of ride-hailing mobile applications. For instance, the Grab mobile application has been downloaded over 2 million times, and its daily bookings have risen by 30% since last June. Grab continues to provide other auxiliary services within its mobile application, including long-distance travel services, hotel booking services, and payment services19. With major national infrastructure projects on the way, the focus on transportation services is likely to continue to grow.
In terms of Internet Services, Facebook appears to be dominant channel in Myanmar, with many businesses choosing to promote their presences solely on Facebook – eschewing other traditional online storefronts, such as websites. On YouTube, the most popular channels in Myanmar are DVB, Eleven, and 7 Days, with combined total views of more than 450 million20.
Another important observation is also the fact that monthly household expenditure on Leisure & Entertainment are nearly on par with Healthcare and Education. This is not surprising, given the proliferation of a range of different entertainment services competing for their attention, from modern cinema facilities to subscription services such as Netflix. Interesting, however, expenditure on Fitness/Wellness remains low, highlighting an untapped potential in the health conscious movement.
Figure 10: Monthly household expenditure by service category
Question: How much did you spend in previous month for the following categories? onthly household Leisure ayment nternet Fitness Trans ortation Deli ery ealthcare ducation income, ntertainment olutions er ices ellness million 2% 1% 1% 1% 1% 9% 2% 6% 6% 2% 24% 4% 6% 2% 4% 10% Less than 0.2 45% 39% 98% 83% 94% 62% 98% 2% 60% 18% 82% 8% 4% 1% 9% 6% 4% 4%
1% 1% 1% 1% 1% 11% 3% 6%2% 2% 3%1% 9% 1%1% 5% 1% 10%2% 0.2-0.5 53% 24% 92% 3% 76% 84% 42% 28% 97% 66% 11% 76% 12% 1% 10% 5% 5% 3% 20% 1%1% 10% 3% 3% 5%
1% 1% 2% 1% 1% 1% 1% 2% 2% 2% 11% 7% 4% 3% 6% 2% 27% 18% 1% 8% 2% 15% 2% 0.5-1 48% 22% 91% 2% 3% 2% 62% 39% 93% 4% 7% 6%2% 19% 10% 15% 81% 4% 2% 17% 2% 61% 10% 2% 62% 5% 10%
1% 1% 1% 1% 2% 1% 1% 1% 1% 1%1%1% 4% 1% 5% 17% 4% 27% 12% 4% 7% 1% 4% 4% 1-1.5 42% 24% 24% 6% 4% 65% 77% 10% 6% 4% 43% 93% 2% 76% 8% 73% 7% 88% 6% 2% 14% 1% 5% 10% 6% 1% 2% 3% 2% 2% 19% 7% 7% 3% 2% 3% 5% 17% 90% 3% 3% 3%3% 55% 12% 5%3% 24% 95% 2% 3% 60% 14% 84% 38% 31% 5% 74% 1.5-3 38% 12% 9% 7% 2% 2% 10% 2% 3% 7% 3% 5% 12% 5%
3% 5% 3% 3% 13% 5% 3% 58% 11% 5% 3% 21% 5% 3% 11% 5%3% 66% 3% 8% 18% 74% 8% 8% 8% 47% 21% 87% 8% 3% 3% 16% 50% 18% More than 3 8% 8% 87% 3% 3% 5% 68% 3% 5% 5% 3%
None MMK 10,000-20,000 MMK 50,001-100,000 MMK 100,001-300,000 MMK 500,001-1,000,000 Less than MMK 10,000 MMK 20,001-50,000 MMK 100,001-150,000 MMK 300,001-500,000
Source: Deloitte's Myanmar Consumer Survey (2019)
19 “Grab sees higher growth with more services in Myanmar”. Eleven Myanmar. 16 June 2019. https://elevenmyanmar.com/news/grab-sees- higher-growth-with-more-services-in-myanmar-asianewsnetwork 20 “Myanmar’s digital game changers”. Myanmar Times. 6 March 2019. https://www.mmtimes.com/news/myanmars-digital-game-changers.html
15 The Myanmar Consumer Survey | Poised for take-off
Openness to new products and services Survey respondents continue to demonstrate an openness to new products, particularly in the product categories of Non-Alcoholic Beverages, Packaged Foods, and Personal Hygiene Products. Of note is also the fact that they seem to be more curious about new products than new services. They do, however, appear to be more willing to try out new services in the service categories of Leisure & Entertainment, Payment Solutions, and Internet Services.
One contributing factor for this could be the increasing number of options in the market: Myanmar consumers can now choose between service packages offered by four telecommunications operators and over 140 licenced Internet Service Providers21. At the same time, although card payments currently account for only 5% of total retail industry revenue22, a number of different banks, payment service providers, and telecommunications players are introducing alternative forms of digital payment services. Currently, the market leader appears to be Wave Money, which is leading the market with a remittance volume of USD 1.3 billion, or about 2% of Myanmar’s GDP23.
Ultimately, however, consumers are still very value-conscious, and prioritise factors such as lower prices, better taste or flavour, and word-of-mouth reputation in their decision to try new products and services. In a similar vein, higher prices and the lack of quality assurances were ranked as particularly undesirable factors, illustrating the high price elasticity of demand for basic consumer goods (see Figure 11).
Figure 11: Number of survey respondents who tried new products and services
Question: In the last year, did you purchase any of the following new products and services? Personal Household Household Beverages Beverages Confectionery Packaged Foods Hygiene Appliances Appliances Tobacco (Alcoholic) (Non-alcoholic) Products (Major) (Small)
91 292 273 297 290 55 88 55
Products 509 308 327 303 310 545 512 545
Leisure and Payment Internet Fitness/ Transportation Delivery Healthcare Education Entertainment Solutions Services Wellness
93 17 109 127 156 11 90 58
Services 507 583 491 473 444 589 510 542
Yes No
Question: What are the reasons to try/not try new products and services?
Top reasons to try Top reasons to not try
1. Better taste/flavour (n=356) 1. Higher price (n=295) 2. Lower price (n=338) 2. Poor quality assurance (n=276) 3. Recommendation from friends/family (n=247) 3. Unaware of new products/services (n=272)
Source: Deloitte's Myanmar Consumer Survey (2019)
21 “Growth of mobile and internet usage make Myanmar ICT more competitive”. Oxford Business Group. 2019. https://oxfordbusinessgroup. com/overview/tech-transformation-mobile-and-internet-usage-rise-sector-set-expand-and-become-more-competitive 22 “Daw Win Win Tint, CEO and Founder, City Mart Holding: Interview”. Oxford Business Group. 2019. https://oxfordbusinessgroup.com/ interview/convenient-consumption-daw-win-win-tint-ceo-and-founder-city-mart-holding-investment-opportunities 23 ‘Wave Money sees higher demand for its mobile money services.” Myanmar Times. 1 March 2019. https://www.mmtimes.com/news/wave- money-sees-higher-demand-its-mobile-money-services.html
16 The Myanmar Consumer Survey | Poised for take-off
In this edition of the survey, we also found that survey respondents from Mawlamyine seem to be more open to new products and services than their counterparts in Yangon and Mandalay, except in the Leisure & Entertainment category where Mandalay respondents have topped the charts for two consecutive years. In terms of demographics, Millennials and Generation Z survey respondents appear to be the most adventurous, especially in categories such as Non-Alcoholic Beverages, Packaged Foods, Personal Hygiene Products, Internet Services, and Leisure & Entertainment (see Figure 12).
Figure 12: Breakdown of survey respondents who have tried new products and services in the past year
ro u s To a mon h y en er o a on e rou Serv es househo n ome
Less than 0.2: 45% Yangon: 38% 15-24: 59% Male: 47% 0.2-0.5: 50% 0.5-1: 50% 25-34: 47% Mandalay: 57% 1-1.5: 55% 35-49: 46% Beverages Female: 50% 1.5-3: 43% Mawlamyine: 65% (Non-alcoholic) 50-64: 36% (n=292) More than 3: 42%
Less than 0.2: 42% 15-24: 52% Yangon: 45% Male: 45% 0.2-0.5: 52% 25-34: 52% 0.5-1: 52% Mandalay: 52% 1-1.5: 51% 35-49: 49% Packaged Foods Female: 54% 1.5-3: 48% (n=297) Mawlamyine: 58% More than 3: 47% 50-64: 40%
Less than 0.2: 41% Yangon: 43% 15-24: 51% Male: 44% 0.2-0.5: 49% 0.5-1: 48% 25-34: 48% Mandalay: 50% 1-1.5: 54% Personal 35-49: 48% Hygiene Products Female: 53% 1.5-3: 47% Mawlamyine: 61% (n=290) More than 3: 55% 50-64: 44%
Less than 0.2: 9% Yangon: 11% 15-24: 23% Male: 18% 0.2-0.5: 14% 25-34: 20% 0.5-1: 20% Mandalay: 28% 1-1.5: 30% Leisure & 35-49: 13% Female: 19% 1.5-3: 21% Entertainment Mawlamyine: 20% 50-64: 12% (n=109) More than 3: 26%
Less than 0.2: 11% Yangon: 25% 15-24: 17% Male: 21% 0.2-0.5: 18% 25-34: 27% 0.5-1: 25% Mandalay: 11% 1-1.5: 29% 35-49: 21% Payment Solutions Female: 22% 1.5-3: 22% Mawlamyine: 31% 50-64: 18% (n=127) More than 3: 34%
Less than 0.2: 20% 15-24: 32% Yangon: 20% Male: 27% 0.2-0.5: 22% 25-34: 30% 0.5-1: 27% Mandalay: 31% 1-1.5: 27% 35-49: 21% Internet Services Female: 25% 1.5-3: 40% Mawlamyine: 31% 50-64: 14% (n=156) More than 3: 37%
Source: Deloitte's Myanmar Consumer Survey (2019)
17 The Myanmar Consumer Survey | Poised for take-off
New traditions Watching TV/movies, shopping, surfing the Internet, and reading are the top holiday activities for survey respondents (see Figure 13). Myanmar’s film and cinema industry, in particular, is experiencing impressive growth: the number of moviegoers jumped from about 300,000-600,000 in 2017 to a whopping 1.3 million in 201824. With the rise of modern retail complexes and new city projects, Myanmar is set to witness the introduction of a whole new range of retail facilities that combine modern shopping experiences with innovative entertainment amenities.
These activities are likely to be the most appealing for higher income consumers, who tend to possess more disposable income for such activities. In terms of demographics, Millennial survey respondents also tend to spend more time and money on the Internet, where they watch TV/movies, engage in online shopping, and read articles, while older survey respondents tend to prefer more traditional shopping activities (see Figure 14).
Figure 13: Top holiday activities cited by survey respondents
Question: On your days off, which of the following activities do you engage in?
Watching TV/movies 96% Shopping 87% Surfing the Internet 82% Reading 79% Visiting friends and family 29% Going to the cinema 23% Visiting markets 22% Eating out 21% Visiting parks 14% Travelling domestically 12% Playing sports 12% Doing art 7% Attending concerts/gigs 3% Visiting amusement parks 2% Going for a spa 1% Participating in learning activities 1% Travelling internationally 1%
Source: Deloitte's Myanmar Consumer Survey (2019)
24 “Growing moviegoers: A stimuli to retailtainment”. Colliers International. 29 April 2019. https://www.colliers.com/-/media/files/ marketresearch/apac/myanmar/colliers_myanmar_retail_q1_2019.pdf?la=en-gb
18 The Myanmar Consumer Survey | Poised for take-off
Figure 14: Breakdown of survey respondents for the top four holiday activities
ro u s To a mon h y en er o a on e rou Serv es househo n ome
Less than 0.2: 96% Yangon: 94% 15-24: 98% Male: 96% 0.2-0.5: 94%
0.5-1: 97% 25-34: 99% Mandalay: 96% 1-1.5: 94% Watching TV/ 35-49: 93% movies Female: 96% 1.5-3: 100% (n=574) Mawlamyine: 99% More than 3: 100% 50-64: 90%
Less than 0.2: 80% 15-24: 86% Yangon: 86% Male: 79% 0.2-0.5: 88%
0.5-1: 91% 25-34: 86% Mandalay: 85% 1-1.5: 82% 35-49: 87% Shopping Female: 95% 1.5-3: 88% (n=521) Mawlamyine: 94% More than 3: 95% 50-64: 90%
Less than 0.2: 73% 15-24: 91% Yangon: 83% Male: 87% 0.2-0.5: 76%
0.5-1: 83% 25-34: 91% Mandalay: 83% 1-1.5: 89% Surfing the 35-49: 75% Internet Female: 76% 1.5-3: 88% Mawlamyine: 75% (n=156) More than 3: 97% 50-64: 54%
Source: Deloitte's Myanmar Consumer Survey (2019)
19 The Myanmar Consumer Survey | Poised for take-off
3. Buying behaviour and brand preferences The Myanmar consumer is exhibiting decreasing levels of price sensitivity, a dynamic and shifting brand loyalty, and increasing levels of health consciousness in their consumption patterns.
Decreasing price sensitivity Several important shifts could be observed from this year’s survey results. Across all product categories, the importance of Price has decreased in importance by approximately 4%, while Taste has increased in importance. Overall, survey respondents appear to have become less price sensitive, prioritising Taste and Quality as the most important factors in their purchasing decisions.
This trend can be observed even in Tobacco, where survey respondents are prioritising Taste and Smell over factors such as Access and Price, a marked shift from last year’s results, where Price was the most important consideration. Similar, but subtler, trends can also be observed in the Household Appliances categories, where Durability and Technology factors are accorded more importance than Price (see Figure 15).
One contributing factor for this decreasing price sensitivity could be the increase in foreign investments and rapid growth of foreign brand franchises in Myanmar’s consumer market25. These developments have in turn led to higher employment rates in services and manufacturing sectors, especially in urban areas, resulting in higher consumer spending power and reduced price sensitivity.
Figure 15: Top three purchasing consideration factors across product categories
Question: What are the top three influencing factors when you choose a certain product/brand?
Taste Taste 22% Beverages 23% (Alcoholic) Quality 16% Price 19% Price 15% Quality 17%
Beverages Taste 28% Taste 25% (Non- Price 15% Price 19% alcoholic) Smell 15% Quality 15%
Quality 20% Taste 28% Confectionery Smell 20% Price 19% Price 17% Smell 15%
Taste Taste Packaged 26% 25% Foods Price 16% Price 19% Smell 15% Smell 16%
Taste 18% Price 19% Tobacco Price 17% Quality 18% Smell 17% Availability 13%
Personal Quality 20% Quality 20% Hygiene Smell 20% Smell 20% Products Price 17% Price 20%
Household Durability 27% Durability 29% Appliances Technology 16% Technology 15% (Major) Price 14% Price 15%
Household Durability 27% Durability 28% Appliances Technology 16% Price 15% (Small) Price 15% Technology 15%
Source: Deloitte's Myanmar Consumer Survey (2019)
25 “FPI jumps 77pc to US$ 2.3 billion in first half of 2019”. Consult Myanmar. 7 August 2019. https://consult-myanmar.com/2019/08/07/fdi- jumps-77pc-to-us2-3-billion-in-first-half-of-2019/
20 The Myanmar Consumer Survey | Poised for take-off
Shifting brand loyalty Brands in several product categories, such as Beverages, Household Appliances, and Tobacco, continue to enjoy strong brand loyalty from survey respondents. This loyalty, however, can be quite dynamic: while brand loyalty decreased slightly in product categories such as Alcoholic Beverages since the previous edition of the survey, it also showed significant increases in Household Appliances and Tobacco.
Three brands dominate recall: Myanmar Beer, Yum Yum, and Red Ruby continue to hold top positions in the product categories of Alcoholic Beverages, Packaged Foods, and Tobacco respectively. The percentage of survey respondents citing these brands have also increased across the board by 19% for Myanmar Beer, 5% for Yum Yum, and 12% for Red Ruby. This year, however, two brands appear to be gaining a foothold: Speed energy drink, having invested in widespread local marketing and promotional campaigns, emerged as the top brand in the Non- Alcoholic Beverages category, and Family Care clinched the top spot in the Personal Hygiene Products category (see Figure 15)
Figure 16: Top brands by product category
Question: Please list up to three brand names that you purchase.
Beverages Beverages Confectionery Packaged Personal Household Household Tobacco (Alcoholic) (Non- Foods Hygiene Appliances Appliances Alcoholic) Products (Major) (Small)
First Myanmar Speed Pucci Yum Yum Family Care Samsung National Red Ruby
Second Tiger Max Plus Shwe Kyee MAMA Lux Toshiba Panasonic Mevius
Grand Royal LG Third Shark Good Morning Shin Shin Pond's Philips Ngwe Nagar Andaman Gold Sony
First Second Third Others
Source: Deloitte's Myanmar Consumer Survey (2019)
21 The Myanmar Consumer Survey | Poised for take-off
Survey respondents generally prefer Foreign brands in the Personal Hygiene Products and Household Appliances categories if they can afford them. This could be due to the fact that Myanmar imports the majority of products in these categories from neighbouring countries such as China, India, Malaysia, Singapore, and Thailand26. When it comes to Beverages, Confectionery, Packaged Foods, and Tobacco, however, survey respondents continue to prefer Local brands (see Figure 17).
Overall, there has been a marked increase in the preference for Foreign brands since the previous edition of the survey. This is an observation that is not surprising, given the continuous influx of Foreign brands into Myanmar’s consumer market27. This trend is especially pronounced in more urban regions, such as Yangon and Mandalay, than in more rural areas like Mawlamyine (see Figure 18).
Figure 17: Preferences for Local and Foreign brands by monthly household income level Question: hich type o brands do you pre er Household Household onthly household Beverages Beverages Packaged Personal Hygiene Confectionery Appliances Appliances Tobacco income, million (Alcoholic) (Non-alcoholic) Foods Products (Major) (Small)
Overall
Less than 0.2
0.2-0.5
0.5-1
1-1.5
1.5-3
More than 3
Local Foreign
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 18: Foreign and Local brand preferences by city
Question: hich type o brands do you pre er Household Household Beverages Beverages Packaged Personal Hygiene Confectionery Appliances Appliances Tobacco (Alcoholic) (Non-alcoholic) Foods Products (Major) (Small)
Overall
Yangon
Mandalay
Mawlamyine
Local Foreign
Source: Deloitte's Myanmar Consumer Survey (2019)
26 “Burma - Consumer Goods”. Export.gov. 29 November 2018. https://www.export.gov/article?id=Burma-Consumer-Goods 27 “Burma - Franchising”. Export.gov. 29 November 2018. https://www.export.gov/article?id=Burma-prospects-franchising
22 The Myanmar Consumer Survey | Poised for take-off
In terms of Foreign brands, survey respondents appear to prefer Japanese, Korean, and Thai brands. Korean brands, in particular, are quickly gaining popularity in the Beverages and Confectionery product categories (see Figure 19 and 20). One reason for this could be the proliferation of Korean franchises in Myanmar, such as the opening of Pizza Maru and Tom N Toms Coffee outlets, as well as the influence of Korean celebrities and pop culture from the media as on-demand streaming apps featuring Korean dramas, such as VIU, gain popularity across Myanmar28.
Figure 19: Breakdown of Foreign brand preferences by monthly household income level
Question: Which Foreign brands do you find the most appealing? Household Household onthly household Beverages Beverages Packaged Personal Hygiene Confectionery Appliances Appliances Tobacco income, million (Alcoholic) (Non-alcoholic) Foods Products (Major) (Small)
Overall
Less than 0.2 7% 0.2-0.5 11% 1% 2% 0.5-1
1-1.5 2% 1.5-3
More than 3
Thai Chinese Korean Japanese European American Others
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 20: Breakdown of Foreign brand preferences by city
Question: Which Foreign brands do you find the most appealing? Household Household Beverages Beverages Packaged Personal Hygiene Confectionery Appliances Appliances Tobacco (Alcoholic) (Non-alcoholic) Foods Products (Major) (Small)
Overall
Yangon 1%
Mandalay
1% Mawlamyine
Thai Chinese Korean Japanese European American Others
Source: Deloitte's Myanmar Consumer Survey (2019)
28 “Realising digital Myanmar”. Telenor Report. 6 February 2018. https://www.telenor.com/wp-content/uploads/2018/02/Telenor-Realising- Digital-Myanmar-Report-06-February.pdf
23 The Myanmar Consumer Survey | Poised for take-off
Growing health consciousness With greater access to health information through social network and mobile applications29, Myanmar consumers appear to be making more informed decisions when purchasing products and services. For instance, survey respondents showed an increased health consciousness, with 86% of them indicating that they would prefer to drink water, instead of sugary drinks, when they are perspiring (see Figure 21). This is a significant increase from last year’s survey, where this figure was 67%.
Health consciousness also appears to be more prevalent amongst survey respondents between the age of 50-64 years and those with a monthly household income level of more than MMK 3 million (see Figure 22). In terms of the awareness and consideration of health information, however, survey respondents tend to focus on expiry dates, prioritising this over other information such as calorie content and sugar content (see Figure 23).
Figure 21: Health consciousness in food, beverage, and leisure choices
or my a y mea s am ers r n so have on y o hours o ree me a er or so
n 515
I try to avoid oily and I will consume water, 03 I will swim, work salty food unsweetened tea, or out, run, or walk isotonic drinks
85
I am not too conscious I will consume 197 I will go for drinks, about eating oily food carbonated drinks, or dine out with 2019 energy drinks, or other 2019 my friends 2019 2018 sweetened drinks 2018 2018
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 22: Breakdown of demographics for survey respondents choosing healthy options
To a mon h y househo en er o a on e rou n ome
ess than . : : an on: ale: . . : . : : andalay: I will try to avoid . : oily and salty food : emale: . : a lamyine: (n= 00) ore than : :
ess than . : an on: : ale: . . : I will consume water, . : : andalay: unsweetened tea, or . : : isotonic drinks emale: . : a lamyine: (n=515) ore than : :
ess than . : : an on: ale: . . : . : : andalay: I will swim, work . : : out, run, or walk emale: . : a lamyine: (n=30 ) ore than : :
Source: Deloitte's Myanmar Consumer Survey (2019)
24 The Myanmar Consumer Survey | Poised for take-off
Figure 23: Awareness and consideration of health information seriously consider the am a are o the in ormation am not a are o in ormation be ore purchasin . but do not consider it seriously. the in ormation.
Expiry date
Product content
Nutritional values
Sugar content
Calorie content
2019 2018 Source: Deloitte's Myanmar Consumer Survey (2019)
Digital product discovery yet to take off Overall, survey respondents conduct more research before purchasing products than services. For the purchase of both products and services, however, offline channels remain the dominant source of information. Even when survey respondents conduct online research, they tend to rely predominantly on company websites, rather than social media channels (see Figure 24).
This behaviour suggests that consumer companies may need to adopt a more holistic approach in building credible online presences beyond social media, especially in view of the Digital Economy Association’s upcoming move to regulate unlicensed online shops, typically with storefronts on social media channels such as Facebook30.
Figure 24: Sources of information for the purchase of products and services Question: o you loo up in ormation Question: hich sources do you use to loo up in ormation on products n prior to purchasin a product nline Offline
Company websites Friends/Relatives
Company social Store visits o media accounts es Print media Influencers Product catalogues
Customer reviews Customer hotlines
Question: o you loo up in ormation Question: hich sources do you use to loo up in ormation on ser ices n prior to purchasin a ser ice nline Offline
Company websites Friends/Relatives es Company social Store visits o media accounts Print media Influencers Product catalogues Customer reviews Customer hotlines Source: Deloitte's Myanmar Consumer Survey (2019)
30 “Digital Economy Association to license online shops”. Myanmar Business Today. 19 June 2019. https://www.mmbiztoday.com/articles/digital-economy-association- license-online-shops
25 The Myanmar Consumer Survey | Poised for take-off
4. Communication channels
The impact of traditional mass communication channels appears to have declined, as Myanmar consumers increasingly become drawn to the appeal of targeted marketing.
Targeted marketing gains traction Across all age groups, conventional word-of-mouth recommendation from Friends & Relatives continues to be the dominant channel influencing consumers’ purchasing decisions, followed by TV and Billboards (see Figure 25).
While traditional above-the-line, mass communication channels remain important, their apparent impact appears to have declined over the past three years, as survey respondents increasingly look towards alternative sources of information (see Figure 26). TV, for instance, experienced a decrease of 7% in this edition of the survey, with Radio and Print Media also suffering persistent declines. The only exception here appears to be Billboards, which saw a small uptick of 3%.
On the other hand, targeted marketing channels such as Events and In-Store Promotions appear to be gaining traction, especially amongst Millennial and Generation Z survey respondents. With almost universal access to the Internet in major Myanmar cities31, Social Media channels are also increasing in popularity. This takeoff is expected to continue in the near future with the advent of 5G32, and increasing Internet and mobile penetration rates.
Figure 25: Preferred sources of information by age group
1% Overall
1% 15-2 1% 25-3
1% 35- 9
50-
Friends Relatives Billboards Social Media Websites Radio TV In-Store Promotions Events Print Media
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 26: Overall preferred sources of information (2017-2019) 1% 2019 1% 2018 1% 1% 2017
Friends Relatives Billboards Social Media Websites Radio TV In-Store Promotions Events Print Media
Source: Deloitte's Myanmar Consumer Survey (2019)
31 “Myanmar’s digital game changers”. Myanmar Times. 6 March 2019. https://www.mmtimes.com/news/myanmars-digital-game-changers.html 32 “MyTel anticipating 5G rollout next year if granted licence”. Myanmar Times. 21 August 2019. https://www.mmtimes.com/news/mytel- anticipating-5g-rollout-next-year-if-granted-licence.html
26 The Myanmar Consumer Survey | Poised for take-off
Different channels for different products Although the trend of moving away from traditional mass marketing channels is apparent across all product categories over three editions of the consumer survey, the most marked shift can be seen in the Alcoholic Beverages and Tobacco product categories. For product categories such as Household Appliances, communication channels such as In-Store Promotions, Social Media, and Events are also taking on greater importance (see Figure 27).
For basic necessities, such as Packaged Foods and Confectionery, traditional channels, such as TV and Billboards, remain influential. Even for product categories that tend to be highly regulated, such as Alcoholic Beverages and Tobacco, there has been an uptick in the use of Billboards, In-Store Promotions, and Social Media channels. One possible reason for this could be the innovative approach that these companies have adopted in their marketing efforts. For example, alcohol and tobacco companies increasingly advertise only their logo, and not their products, in street advertisements, sometimes combining these advertisements with events, or advertisements of non- restricted products under the same brand name.
Figure 27: Preferred sources of information by product category
Question: Which sources of information have influenced you in your purchase of a product/brand? Select up to three channels. 1% Beverages (Alcoholic) 1% Beverages (Non-Alcoholic) 1% Confectionery 1% Packaged Foods 1% Personal Hygiene Products 1% Household Appliances (Major) 1% Household Appliances (Small) 1% Tobacco
Friends Relatives Billboards Social Media Websites Radio TV In-Store Promotions Events Print Media
Source: Deloitte's Myanmar Consumer Survey (2019)
27 The Myanmar Consumer Survey | Poised for take-off
5. Buying channels
Supermarkets are increasing in popularity for offline shopping, while payment concerns have been displaced by quality concerns for online shopping.
Solid as a brick In Myanmar, brick-and-mortar stores continue to dominate buying channels. Grocery Stores, in particular, are the top buying channel for daily consumables. The only exception here is with the purchase of Alcoholic Beverages, where Convenience Stores are preferred (see Figure 28).
Since the previous edition of the survey, there has been a 14% increase in the preference for Supermarkets. Currently, only a handful of shopping malls, such as Junction City and Myanmar Plaza, have supermarket tenants. By locating within shopping malls, supermarket players can capitalise on this untapped opportunity for integrated lifestyle concepts33, which are common across most markets in Southeast Asia.
Figure 28: Preferred buying channels for daily consumables
Question: n the past year here did you usually purchase items rom the ollo in product cate ories
Beverages (Alcoholic)
Beverages (Non-Alcoholic)
Confectionery
Packaged Foods
Personal Hygiene Products
Tobacco
Grocery Stores Supermarkets Shopping Malls Restaurants/Bars Convenience Stores Roadside Vendors/Stalls Food Court Others
Source: Deloitte's Myanmar Consumer Survey (2019)
33 “Lack of retail offerings in Myanmar yields growth opportunity for investors”. Myanmar Times. 9 August 2018. https://www.mmtimes.com/ news/lack-retail-offerings-myanmar-yields-growth-opportunities-investors.html
28 The Myanmar Consumer Survey | Poised for take-off
For the purchase of Household Appliances, there appears to be a continued preference for Boutique Electric Retail Shops, likely due to the convenience and host of repair services that they offer (see Figure 29 and 30). At the same time, however, other Modern Trade channels, such as Branded Showrooms, Supermarkets, and Shopping Malls, are gaining traction, especially in the cities of Mandalay and Mawlamyine.
Figure 29: Preferred buying channels for Household Appliances (Major) by city (2018-2019)
Question: n the past year here did you usually purchase a or ousehold ppliances
1% Overall
1% Yangon
1% Mandalay
Mawlamyine
Bouti ue Electric Retail Shops Branded Showrooms Supermarkets Shopping Malls Convenience Stores
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 30: Preferred buying channels for Household Appliances (Small) by city (2018-2019)
Question: n the past year here did you usually purchase a or ousehold ppliances
1% 1% Overall
2% Yangon
Mandalay
2% 1% Mawlamyine
Bouti ue Electric Retail Shops Supermarkets Branded Showrooms Shopping Malls Convenience Stores Roadside Vendors/Stalls
Source: Deloitte's Myanmar Consumer Survey (2019)
29 The Myanmar Consumer Survey | Poised for take-off
Quality matters for online shopping In the previous two editions of the survey, payment concerns were cited by survey respondents as the top reason for not shopping online. However, this concern has now been displaced by product quality concerns (see Figure 31). This represents a significant shift, and could be due to the fact that Myanmar consumers have now grown accustomed to online shopping with cash-on-delivery payment systems.
Although Myanmar’s e-commerce penetration rate is currently less than 3%, a number of developments, such as the expected introduction of a national payments system based on QR codes to facilitate digital transactions later in 201934, are set to spur its rapid growth.
Figure 31: Top reasons for not shopping online
s n r an an an
Concerns on product uality
Unable to try/sample
Concerns on payment
Higher price
Concerns on damage during transportation
Impersonal or slow customer service
Long lead time for delivery Limited product variety 2019 2019 2019 and assortment 2018 2018 2018
Source: Deloitte's Myanmar Consumer Survey (2019)
34 “Digital payment market potential in Myanmar”. Myanmar Business Today. 23 April 2019. https://www.mmbiztoday.com/articles/digital- payment-market-potential-myanmar-fintech
30 The Myanmar Consumer Survey | Poised for take-off
Nascent e-commerce sector heats up Although Myanmar’s e-commerce sector is considered to be nascent relative to other regional markets (see Figure 32), a number of prominent retail events offer a glimpse into the potential that it holds. When Alibaba’s famous 11.11 sales event was introduced to Myanmar consumers for the first time in 2018, its app attracted over 150,000 shoppers in a single day35.
The potential of this market has not escaped the attention of investors: earlier in June 2019, the popular online local shopping app, rgo47, received an investment from Daiwa PI, a Myanmar-focused private equity firm, to scale its operations and optimise technology and delivery36. Another popular buy-and-sell local app, OneKyat, acquired by Norway’s Telenor Group in 2017, is also working on its rebranding and intensifying its marketing and promotional efforts37.
Figure 32: Maturity of e-commerce sector in selected regional economies
as en ro h Ma ure ove
12% t ai l e e
r 9% c r t o
n o mm e t i % ib u e-C o t r n o c 3%
0%
High e-commerce growth rate
Source: Deloitte analysis
35 “Online shopping picks up momentum in Myanmar”. The Myanmar Times. 20 November 2019. https://www.mmtimes.com/news/online- shopping-picks-momentum-myanmar.html 36 “Online shopping site rgo47 eyes a growing market”. The Myanmar Times. 6 June 2019. https://www.mmtimes.com/news/online-shopping- site-rgo47-eyes-growing-market.html 37 “OneKyat App Adds a New Category for Automobiles”. Myanmar Business Today. 8 October 2019. https://www.mmbiztoday.com/articles/ onekyat-app-adds-new-category-automobiles
31 The Myanmar Consumer Survey | Poised for take-off
6. Payment
Digital payments have demonstrated exponential growth, and are likely to leapfrog card payments in Myanmar’s payments sector.
Diffusion of digital payment services While Cash still retains its crown as the primary payment method, the uptake of digital payment services has made significant progress since the previous edition of the survey, increasing from 25% in 2018, to 42% this year (see Figure 33). This is primarily driven by non-bank, mobile financial services providers, who have invested in extensive agent networks throughout the predominantly cash-based economy to encourage the adoption of mobile domestic remittances.
As the latest disruptors to Myanmar’s payments sector, these new entrants are more nimble, and are able to expand their footprint at a much faster rate than incumbent banks. AYA Bank, one of Myanmar’s largest banks, took about nine years to open 258 branches38. In contrast, Wave Money, one of the leading mobile financial services providers in Myanmar, took only about two and a half years to acquire a network of 45,000 mobile agents39.
In terms of demographics, Millennials and survey respondents with higher monthly household income levels tend to show a higher preference and usage of digital payment services. At the same time, while the preference for digital payment services appears to be more prevalent in Yangon, its usage is in fact higher in Mawlamyine (see Figure 34).
The primary features of digital payment services driving its takeoff appears to be the speed and convenience that it offers. Although consumers are gradually becoming more confident in the security of digital payment channels, these concerns have not completely gone away. A lack of familiarity with digital channels, concerns on security, as well as concerns on payment dispute remain the three top reasons cited by survey respondents for not using digital payment services (see Figure 35). Nevertheless, survey respondents appear to be optimistic about the future, with 73% responding favourably when asked if they would adopt digital payment services in the future (see Figure 36).
Figure 33: Usage and preference for different payment methods (2018-2019)
Question: hich payment methods ha e you used or Question: hich payment method do you pre er your transactions
2019
2018
Cash Digital Payment Bank Transfer Che ue
Source: Deloitte's Myanmar Consumer Survey (2019)
38 “Branches”. AYA Bank. Accessed on 26 August 2019. https://www.ayabank.com/en_US/contact/branches 39 “Wave Money announces stellar growth in H1 2019”. Yahoo Finance. 17 July 2019. https://finance.yahoo.com/news/wave-money- announces-stellar-growth-010000880.html
32 The Myanmar Consumer Survey | Poised for take-off
Figure 34: Breakdown of usage and preference for digital payment methods (2018-2019)
onthly household ocation income le el million e years Question: hat do you use di ital payments or Question: hich payment methods ha e you used or your transactions
ess than . : : an on: . . :
. : :
e
andalay: a
s . : : . : a lamyine: ore than : :
Question: hich payment method do you pre er
Transfer money ess than . : : Purchase mobile credits . . :
e : . :
Shop online n e
r . : : e
Pay utility bills
e . : r
Make regular payments : ore than :
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 35: Reasons for using and not using digital payment services
Question: hich are your reasons or usin di ital payment ser ices Question: hich are your reasons or not usin di ital payment ser ices
Faster Not familiar with transactions digital payments Less secure Cash-free convenience transactions Payment disputes More secure transactions Digital payment option Easier to is not available track spending Difficult to track spending Reward points collection
Source: Deloitte's Myanmar Consumer Survey (2019)
Figure 36: Expectations for future usage of digital payment services (2018-2019) Question: ill you use di ital payment ser ices in the uture
o o
es yes
Source: Deloitte's Myanmar Consumer Survey (2019)
33 The Myanmar Consumer Survey | Poised for take-off
Digital payments to leapfrog card payments? This year’s survey findings revealed a stagnation in the growth of banking services, in terms of bank accounts, debit cards, and credit cards (see Figure 37). With only 6% of its adults relying exclusively on banks for financial services, including credit, savings, and remittances services40, the majority of Myanmar’s population relies on non-bank formal and informal financial services.
As an illustration of the consumers’ rapid adoption of digital payments services, KBZ Pay, one of the recent rising stars in the digital payments sector, acquired 1.6 million installed customers within a year of its launch41. At the same time, Wave Money handled about USD 1.3 billion worth of transactions in 2018, with this amount set to triple to USD 4 billion in 201942.
Figure 37: Ownership of bank accounts, debit cards, and credit cards
an accounts ebit cards redit cards
Overall
Yangon
Mandalay
Mawlamyine Question: o you ha e a local ban account and or local ban card
Yes No Source: Deloitte's Myanmar Consumer Survey (2019)
In a bid to liberalise the banking sector, Myanmar’s government has embarked on several transformation efforts, including a plan to issue more licences to foreign banks. However, several initiatives, such as an attempt to stabilise the currency with a domestic ban on prepaid cards43, and the increase of annual credit card interest rates to 20% to control the levels of unsecured lending44, have since met with some backlash.
With nimbler mobile payments service providers pushing ahead with aggressive expansion plans throughout the country, there is a possibility that digital payments may leapfrog card payments in Myanmar, rendering the latter irrelevant. Ultimately, it is expected that Myanmar’s credit card penetration rate will not exceed 5%, the average rate for Southeast Asian economies (see Figure 38).
Figure 38: Penetration rates of bank accounts and credit cards in regional economies
Japan Singapore Malaysia Thailand China India Indonesia Philippines Vietnam Lao PDR Myanmar Cambodia
Bank accounts Credit cards
Source: Nikkei Asian Review
40 “MAP Refresh Myanmar Diagnostic”. Making Access Possible. 2018. http://finmark.org.za/wp-content/uploads/2019/04/Myanmar_Diagnostic_2018_CB3_repro.pdf 41 “Ambitious KBZPay eyes 30m clients in Myanmar”. Eleven Media Group. 26 February 2019. https://elevenmyanmar.com/news/ambitious-kbzpay-eyes-30m-clients-in- myanmar 42 “Myanmar's digital money transfers set to triple in 2019”. Nikkei Asian Review. 6 July 2019. https://asia.nikkei.com/Business/Business-trends/Myanmar-s-digital-money- transfers-set-to-triple-in-2019 43 “Latest CBM ruling seen as setback for cashless transactions”. Myanmar Times. 1 August 2019. https://www.mmtimes.com/news/latest-cbm-ruling-seen-setback- cashless-transactions.html 44 “CBM raises annual credit card rates to 20pc”. Myanmar Times. 1 May 2019. https://www.mmtimes.com/news/cbm-raises-annual-credit-card-rates-20pc.html
34 The Myanmar Consumer Survey | Poised for take-off
Looking ahead
In this fourth edition of the Myanmar Consumer Survey, we explored a number of consumer behaviour patterns uncovered by the recent consumer survey conducted in three major cities: Yangon, Mandalay, and Mawlamyine.
There are three key takeaways. Firstly, the Myanmar consumer is prioritising discretionary spending on non- essential goods, and exhibiting decreasing levels of price sensitivity. With their optimistic outlook of the future and openness to new experiences, there is an untapped opportunity for companies to introduce new product and lifestyle offerings to this increasingly sophisticated consumer.
Secondly, the Myanmar consumer’s brand loyalty is dynamic and shifting. Although several brands have managed to dominate recall over several editions of the survey, we also observe new brands gaining a foothold through the use of intensive promotional campaigns. This highlights the need for consumer companies to make continuous and consistent investments in their marketing and brand-building efforts to entrench themselves firmly in the minds of the Myanmar consumer. Doing so, however, will require a keen understanding of the communications channels that will best resonate with the consumer and the product category in question.
Finally, we see an evolution in the digital payments sector that will set the platform for the rapid takeoff of e-commerce. In particular, digital payments have demonstrated exponential growth, and are likely to leapfrog card payments in Myanmar’s payments sector. While concerns over payment security remain a barrier for online shopping, this edition of the survey reveals that it has diminished in importance, as the consumer’s concerns shift towards issues on product quality.
Despite the recent years of economic stagnation, the Myanmar economy looks set to pivot back to higher growth. With their growing sophistication, penchant for new experiences, and dose of prudent optimism, the Myanmar consumer is one that is dynamic and constantly evolving. Consumer companies who wish to keep up, too, must develop more innovative and responsive strategies as they ready themselves for take-off in this fast-growing and fast-moving market.
35 The Myanmar Consumer Survey | Poised for take-off
Researched and written by
Pua Wee Meng Executive Director, Consulting [email protected] +65 6232 7244
36 The Myanmar Consumer Survey | Poised for take-off
Contact us
Southeast Asia Consumer industry practice
Southeast Asia and Singapore Pua Wee Meng [email protected] +65 6232 7244
Brunei Myanmar Ng Hui Hua Aye Cho [email protected] [email protected] +673 222 5880 +65 6800 2255
Cambodia Lao PDR Kimleng Khoy Choopong Surachutikarn [email protected] [email protected] +855 2396 3788 +66 2034 0114
Guam Philippines Mike Johnson Melissa Delgado [email protected] [email protected] +1 671 646 3884 +63 2 581 9000
Indonesia Thailand Maria Christi Manoon Manusook [email protected] [email protected] +62 21 5081 9300 +66 2034 0123
Malaysia Vietnam Pua Wee Meng Nguyen Vu Duc [email protected] [email protected] +65 6232 7244 +84 4 6288 3568
37 The Myanmar Consumer Survey | Poised for take-off
38 The Myanmar Consumer Survey | Poised for take-off
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