RAMP it up!
Research Insights
From Secondary Research
Myanmar's Economic Potential and Growth
According to statistics from greenfield investment monitor[1] FDI Markets, Myanmar's FDI peaked in 2013, with 105 projects worth $13.5bn. In the five years since 2010, a total of 285 projects worth nearly $21bn have been recorded, with financial services ranking as the top sector, accounting for 19% of projects. Japan and Thailand are the leading source countries in terms of numbers of projects. Domestic market growth potential has been cited as the key motive for investors.
Myanmar is expected to grow by 7 to 8 percent a year over the decade and Asia Development Bank estimates its income per capita to triple by 2030[2].
Agriculture accounts for about 60% of Myanmar’s GDP and as much as 65% of its labor force is employed in this sector[3]. Rice is the most important crop grown and is heavily reliant on the monsoons for its irrigation and water needs.
Its other major area of economic activity is through its natural resources. Myanmar is expected to have huge gas reserves and has invited bids to explore its oil and gas blocks. It is also the world's biggest exporter of Rubies. Their gem stone industry export alone tops about $1 Billion[4].
Tourism is a growing sector of the economy. In 2013, Myanmar held, for the first time in 44 years, the 27th Southeast Asian Games. This was one indicator to show that Myanmar is getting ready to welcome international tourists from around the world and that the country is moving aggressively to promote tourism. In addition, Myanmar is planning to organise several international tourism events within the country. In 2014, there will be several conferences, including the Myanmar Hospitality and Tourism Conference 2014 during February, Myanmar Civil Aviation Development Conference 2014 in March and Myanmar Urban Development Conference 2014 in May. The old capital city of Yangon is the most popular destination for hosting these seminars and conferences.
1) The number of arrivals surged by 59% to reach over one million for the first time in 2013
2) Relaxing of the visa process and issuing of Visas-on-Arrival (VoA) stimulated a huge rise in the number of international tourists in 2013
3) The number of arrivals is projected to increase at a CAGR of 16% to reach over 2 million trips in 2019
Source:
[3] http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Burma-Myanmar-AGRICULTURE.html
[4] http://en.wikipedia.org/wiki/Economy_of_Burma
Yangon - It's lifestyle
Men of all ages (and some women) spend their time at ubiquitous tea-shops, found in any corner or street of the city. Watching European football (mostly English Premier League with occasional La Liga, Serie A, Bundesliga) matches while sipping tea is a popular pastime among many Yangonites, rich and poor alike.
The average person stays close to his or her neighbourhood haunts.
Source:
[5] http://www.ide.go.jp/English/Publish/Download/Brc/PolicyReview/05.html
[8] http://en.wikipedia.org/wiki/Yangon#Lifestyle
The three core regions in Myanmar -
* Yangon,
* Mandalay (with Pyin Oo Lwin) and
* Nay Pyi Taw
are more than two times richer than the national average.[5]
But Yangon, whose population has tripled since 1983 to 7.4 million[6] has claimed much of the foreign investment that has flooded Myanmar since political reforms began in 2011. Such investment was just over $900m in 2010, compared with $5 billion forecast for this fiscal year[7].
We, therefore, explored further about Yangon in Myanmar.
The well-to-do tend to visit shopping malls and parks on weekends. Some leave the city on weekends for Chaungtha and Ngwesaung beach resorts in Ayeyarwady Division.
Yangon's museums are the domain of tourists and rarely visited by the locals.
Most of Yangon's larger hotels offer some kind of nightlife entertainment, geared towards tourists and the well-to-do Burmese. Some hotels offer traditional Burmese performing arts shows complete with a traditional Burmese orchestra. The pub scene in larger hotels is more or less the same as elsewhere in Asia. Other options include karaoke bars and pub restaurants in Yangon Chinatown.
Rental Market
Yangon’s property market is the most expensive in the country and beyond the reach of most Yangonites. Most rent outside downtown and few can afford to rent downtown area apartments. (In 2008, rents for a typical 650-to-750-square-foot (60 to 70 m2) apartments in downtown and its vicinity ranged between MMK 70,000 and MMK 150,000 and those for high end condos was between MMK 200,000 and MMK 500,000.)[8]
High Cost of Land and Rent - at US$ 80 to US$ 90 per square metre, per month, in Yangon
Mode of Payment
Due to the problems of high inflation, the lack of high denomination notes, and the fact that many of the population do not have access to checks, or credit or debit cards, it is common to see citizens carrying a considerable amount of cash. (The highest denomination of Burmese currency kyat is 10 000 (~US$10.)) Credit cards are only rarely used in the city, chiefly in the more lavish hotels.
Internet and Social Media
Wireless towers now popping up across the country, the government thinks 80% of citizens may have a mobile phone with a data connection by 2016 (source : The Economist)
Prices of SIM cards have fallen from hundreds of dollars to just $1.50. Services were launched in Mandalay, the capital Naypyidaw and former capital Yangon in September and October 2014, and 2 million customers were signed up in the space of five weeks.
Myanmar is experiencing the the strongest growth in both internet users and the number of mobile telephone subscriptions.
This is however from a very low base due to previous restrictions and in 2030 just 8.3% of its population will be internet users. Traditional markets still dominate retailing, accounting for 90% of retail sales, paving the way for modern retailers to gain first-mover advantage.
Social - Economic Profile of Yangon
Five strata segmentation method based on income level and ownership of durable consumer goods which is the most commonly used standard.
Ice Cream Market in Myanmar
Euromonitor predicts the packaged food industry in Myanmar to have a CAGR of 15% between 2013 and 2018.
In the meanwhile, Myanmar's consumer expenditure is expected to have a CAGR of 12% between 2013 and 2020.
Euromonitor expects a 52% growth in the ice cream market space in Myanmar between now and 2020.
Competitor Landscape
Based on our analysis of the various ice cream vendors and their offerings/product description, coupled with user feedback and reviews data from Tripadvisors.com and the respective Facebook fan page, we have framed the following perceptual map for the various brands of ice cream that are currently being sold in our target market.
Business Environment
Since 2011, the Government of Myanmar has undertaken reforms to open Myanmar's economy to the global marketplace. The Government of Myanmar has adopted, among other changes, budgetary and tax reforms, monetary and financial sector regulatory changes, and liberalization of trade and investment in order to integrate its country in the international economy.
Furthermore with the relaxation of US and European sanctions this year Myanmar is becoming increasingly accessible to multinational businesses keen to invest in the opportunities the country has to offer. The enactment of a new Foreign Investment Law in 2012 have encouraged foreign companies to consider investing on Myanmar. Foreigners may now lease land for a period of 50 years, with two extensions of 10 years each (an increase on the 30 year plus two five year periods under the 1988 law).
Although, Myanmar has adopted widespread reforms the country has a long way to go. Investor protection and the criteria for approving foreign investments are not well-defined, and Myanmar's weak rule of law means that it does not have in place the proper mechanisms and instruments for enforcing contracts or property rights and for settling disputes.
Only a few small regional companies operate local franchises, although there is strong interest among local businesspeople in franchising opportunities. The early foreign franchise entrants hail mainly from the food & beverage sector.
Country of Origin Perception
Imported products are perceived as having much higher quality than locally-made products, a sentiment which largely stems from consumer experience with inferior quality products produced by government-run enterprises during the military regime. Moreover, small and local businesses generally have low standards of customer service, supply chain management, and professionalism when compared to international or even regional practices. Products of U.S. origin are considered high quality.
Regulatory Framework
The National Food Law of 1997 (Appendix II) establishes the framework for regulating the production, sale, and trade of food and food products in order for these to meet the required wholesomeness and quality standards.
Myanmar Food and Drug Board Authority (MFDBA) sets out directives and regulations for the production, storage, distribution, inspection, labeling, advertising, and sale of food. However, it’s yet to issue any specific directives and /or regulations, and defers to Codex for most of its standards. Myanmar is an active participant in the ASEAN Codex Committee.
Labelling Requirement
Myanmar follows Codex guidelines and the ASEAN Common Principles and Requirements (Appendix 2) for the labelling of Pre-packaged Foods. All foods must be labelled and imported products must have the labels in Myanmar's local language or a label in the local language must be affixed with the name and address of the local importer and/or distributor and the country of origin
Packaging Requirement
There are no regulations on the size or weight of imported food container.
Food Additive Regulation
Although under the Food Law, the Food and Drug Board Authority is responsible to regulate additives, it has not issued a specific list of items that are allowed to be used in food. As such, it defers to Codex standards for food additives
Roads Infrastructure
Myanmar's transport sector is considerably under-developed for a country of its size, population, and potential. The number of vehicles in Myanmar has more than doubled from 960,000 in 2004 to 2,354,000 in 2011 (but it's still only 38 vehicles per 1000 people), and the strong growth trajectory is expected to be maintained as the economy continues to expand.
Existing cross-border road links with Myanmar’s closest neighbours – China, India and Thailand – are limited and poor in quality
Power Generation
Currently, Per capita electricity consumption in Myanmar is among the lowest in Asia, with an electrification rate of only 27%. Blackouts are commonplace in urban areas, especially in the dry season, and power fluctuations regularly cause damage to electrical appliances. It is estimated that only a quarter of Myanmar's population currently have access to a regular supply of electricity and even Yangon is plagued by frequent outages, limiting economic growth and development.
The power shortfall is estimated at about 30% of demand during the dry season. The 2012 Foreign Investment Law allows 100 percent foreign ownership in power generation. To diversify electricity sources, the Government of Myanmar is inviting foreign and domestic firms to assist with thermal power plant development.
A new budget signalled major funding boosts in Myanmar for the power generation, which have been identified as structural weaknesses in the economy.
Brand Awareness
Brand awareness, in general, is high among respondents aged 24 - 40 Yrs. Though, 50% of respondents between 24 and 30 yrs old were aware of Cold Stone Creamery.
Knowledge of multiple brands amongst people who have travelled abroad
Swensens and Haagen Dazs are the most popular brands
Willingness to try a new brand
95% of the respondents, who were Myanmar citizens living in Myanmar, were more likely to try a new brand
Expats living in Myanmar were open to try new brands
Even 91% of respondents, who havent travelled abroad were likely to try new brands!! Curiosity??
Willingness to Pay
Female respondents are more willing to pay extra for a good ambiance and experience
Male respondents do not care for the experience and would avoid paying more if they can
65% of the respondents whose house hold income is more than 500,000 MMK are willing to spend more than 3000 MMK per person for ice cream
Consideration Factors
Quality, variety, experience, and health/nutrition facts are the most important factors that influence the buying decision
Health/nutrition facts are more important to females than males
Ability to customize their ice cream and having more varieties are more important to females than males
Vegetarian/Non-Vegetarian was the least important factor for all respondents
Frequency of Purchase
Females tend to consume ice creams more frequently than males
At least 60% of the respondents state that they have ice creams for more than twice a month
Chocolate seems to be the most preferred flavor
Other Insights
It appears, super-market is the go-to place for buying ice creams as 56% of the respondents responded stating that they buy ice cream from super markets. But still 47% of the respondents go to ice cream parlors to buy ice cream.
Ice cream is consumed mostly as a dessert. 56% of the respondents have it to have a good time with family and friends and close to 30% have ice creams to celebrate special occasions
90% of the respondents visit ice cream parlor with friends and family.
People are not into spending time at ice cream parlor in the late nights.
5W1H Framework
We can summarise the insights of our primary and secondary research analysis, as below -
Cultural Dimension
Myanmar having been closed for the last 50 years with limited influence from foreign countries, is quite distinct from other countries in terms of consumer behaviors and buying attitudes. Even with neighboring Asian countries, such as Thailand, there are only little similarities in Myanmar consumer culture.
Myanmar has high Power Distance Indicator (PDI). This is consistent among Asian culture where head members (usually elders) hold authoritative power and younger members are willing to listen to them. Consumers are more likely to listen to authoritative figures in this society.
Myanmar is rated relatively low in the Asian region in terms of masculinity.
Myanmar culture is more feminine, i.e. caring and quality of life oriented. Buddhism is the major religion and promotes simplicity and quality of life as its core philosophy. Thus, materialism is considerably low in most areas of the country. People are likely to be content with what they have; they do not aspire to possess new things and products. Even though the country is rated high in feminism, men still make household decisions.
Similar to other Asian countries, Myanmar is a collectivist country and the society is family and community oriented. Here, “word of mouth” is a relatively more effective tool. Consumer tends to consult and ask friends, family or their seniors' advises before they make their purchasing decisions. It is an effective way of marketing to look for those influencers in the community and make them your evangelist or ambassadors of the brand.
In terms of uncertainty avoidance, Myanmar is considerably low - perhaps even lower than the other neighboring countries. This can be explained by the country’s previous military rulings which effected consumer sentiment and confidences in the past fiscal policies formulated by them. Banks are still not trusted and gold bars are still the best way to invest the money in Myanmar. Consumers are in general skeptical to promises and warrants from companies and advertisements. They are likely to buy the product that they have put their trust in or that which someone in their environment has recommended.
Myanmar is long-term oriented country. For example, Male consumers expect their electronic white goods to last average 5 years while women expect as long as 10 years.This could also be because the country is still early at its developing stage and absorption of new products are still relatively low.
Considering that Cold Stone Creamery has been able to successfully operate in more than 25 countries, we believe Cold Stone has the requisite skills to address any cultural differences.
From Primary Research
Based on the responses received via our online survey, the following insights could be gathered about the ice cream purchasing behavior in Myanmar...