Issue 01 | 2023 allianzgi.com Grassroots Research® Market Monitor Food Inflation – Japan Online Pharmacies – India Independent Rehabilitation Residential Building Trades – UK Solar Panel Demand – Europe Hospitals – China Demand for Garmin Products – US Food Inflation – Japan Grassroots conducted interviews with Price hikes by food and beverage sources at supermarkets and grocery companies typically range from stores in Japan to understand the 4% to 11%. impact on pricing and consumption due 82% who commented said their sales to price hikes imposed by major food volume dropped after price hikes of and beverage companies. food and beverage products, citing Regarding implementation of price consumers decreasing the number hikes, 39% who commented said they of items purchased, choosing less instantly raise prices as soon as price expensive items, and visiting stores less hikes are announced by food and bever- frequently. In addition, 12% who com- age companies, 22% said they raise mented said sales of beer and alcohol item for sources who commented, with prices when existing inventories are dropped because shoppers stocked up 25% each reporting it as both a resilient fully consumed, and 39% said they use before the October 1 price increase, and vulnerable food category. a combination of instantly raising prices while 6% said there was no impact to and absorbing price hikes, rather than sales due to price hikes. having a binary policy of either one. Indeed, 31% of sources who commented When asked about passing on price reported sales of daily necessities such hikes, 36% who commented said they as bread were resilient after price hikes, fully pass on price hikes to consumers, while 19% commented that discretion- another 36% said they use a mix of full ary items including alcohol, beer, coffee, and partial pass on strategies, 14% and tea suffered in sales volume. Instant said partially pass on, and 14% said ramen noodles appeared to be split corporate headquarters decides. between a necessity and discretionary Value. Shared.

Market Monitor Residential Building Trades – UK Solar Panel To gauge confidence in the UK resi- sustainability/energy improvements Demand – Europe dential building market and sentiment would see the biggest growth as among trades, Grassroots commis- people look to save money on their sioned interviews with tradespeople heating bills. One source said, “the focused on the residential/home sector that I am in—fitting doors and building market. When asked what windows—is very busy as people are their expectations of the residential/ trying to improve their home insulation. home building market were in general We have a four-month lead time on for 4Q 2022 vs. same period last year, fitting now, which is much higher than it 40% said the market was flat, while was a year ago. So, I think sustainabil- To track demand for solar panels another 40% said it was slowing, 13% ity/energy improvements will do well and types of inverters for residential, said slowing significantly. At the same in 2023, while new builds and larger industrial, and commercial use, time, 47% expect it to slow down in projects will suffer the most.” Grassroots interviewed solar panel in- 2023 vs. 4Q 2022 and 20% expect a 93% of sources said that inflation has stallers throughout France, Germany significant slowdown, while 27% expect affected the way they priced jobs in 4Q and Spain. Current demand for solar it to remain flat. 2022 compared to 1H 2022, and more panel installation vs. the same time The area likely to see the biggest than half who commented said they last year is up by more than 100% in growth in the residential/home build- pass the increase in material costs on Germany, the high double to triple ing industry is repair/maintenance for to customers, and one-third said they digits in Spain, and the high double nearly half of sources who commented pass increased labor costs on. digits in France, led by residential use, as customers look to save money by followed by industrial use and com- just doing essential work, and 40% said mercial use. One source in Germany commented, “we see current demand for residential, commercial, and industrial installations up 300% each. The war in Ukraine and the increasing Online Pharmacies – India power costs have led to an explosion in demand that we find hard to meet, Interviews with consumers in India who platforms is very high, with over despite having put together seven purchase medicine through either online 90% giving ratings of 4 or 5 to their new installation teams. While a or offline (brick-and-mortar) pharmacies most often used platform. Among those higher degree of energy-self-reliance revealed that penetration of online phar- who cited areas of dissatisfaction, “lower is desirable for all customer groups, macies is extremely high, with 85% having discount vs. peers” and “the process bringing down power costs is a used online pharmacies for purchasing of uploading prescriptions” were most question of survival for energy- medicine in the past 12 months. frequently mentioned. intense industries.” Convenience is the top reason for using When asked about discounts, sources Looking ahead, demand for solar online pharmacies, followed by more dis- reported the level of discounts offered panel installation is expected to counts vs. offline channels. Willingness to by major online pharmacies appear to increase in 2023 vs. 2022 by high continue using online pharmacies is very be similar—about 30% said the prices double digits in all countries surveyed, high, with 98% reporting they would do so. are 10%–20% less expensive than offline with residential use continuing to In addition, fast delivery and brand trust channels, while about 26%–31% said lead growth. A source in France said, are the top reasons cited for choosing a the prices are 20%–30% less expensive. “we expect current demand from preferred online pharmacy, with those Assuming discounts from online pharma- homeowners and professionals to that offer fast delivery standing out from cies come off to become comparable continue to trend up 100% and 75%, the competition. Overall, the majority are to offline channels, the majority would respectively, next year. The price of satisfied with the delivery time on their last still prefer to use online pharmacies. In electricity has increased at least 5% order with their preferred platform. addition, 76% of non-users are open to this year, and it is estimated it will using online pharmacies, mainly for the increase between 20% and 25% by Regarding product range and prices, advantage of discounting. 2030 from 18 cents per kilowatt to 25 satisfaction with major online pharmacy cents per kilowatt. We are seeing a (Cont. on page 3) 2

Market Monitor (Cont. from page 2) Independent Rehabilitation lot of interest from commercial and Hospitals – China industrial clients looking for either a self-sufficiency and resale solution or investment opportunity in large According to hospital managers while 27% expect it to stabilize, and 13% central projects. But the majority of interviewed in Huadong areas in eastern expect it to decelerate. Future demand business will continue to come from China, the average bed utilization rate growth is driven by the aging population residential clients who want to lower at the end of 2021 was 84%, and it is and high incidence of chronic disease. their utility bills, and with solar panels, expected to be 89% by the end of 2022 Meanwhile, 80% said the current bed this can be achieved to up to 50%.” and 93% by the end of 2023. The rate has supply is inadequate to meet demand. According to sources, cost efficiency been increasing due to greater market 60% said the sluggish economy has and reliability are the most important awareness of rehabilitation services, slowed new competition entering the factors in all countries surveyed reasonable treatment costs, and good market, and they expect competition to when choosing the type of solar patient outcomes. Sources expect remain stable, while 20% expect there to panel inverter across residential, revenue to see stable growth—up an be more competition, and another 20% commercial, and industrial end users. average 9% in 2022 vs. 2021 and 12% expect less. 80% of sources said stable The choice of the inverter type is in 2023 vs. 2022—driven by demand or less competition is positive, as it allows made by the installer for 100% of growth and improvement in the quality of existing players to maintain revenue sources in Germany and 67% each in rehabilitation services, balanced by price growth and achieve healthy margins. France and Spain, as they are best caps, competition, and patients’ ability to positioned to make a decision. afford treatment. An average 56% of residential As for demand growth, 60% expect the solar panel installations in Germany pace of independent rehabilitation hos- and 46% in Spain currently adopt pitals to accelerate in the next 12 months, string inverters with switchers, while 1% in both countries adopt microin- verters. In France, an average 78% adopt microinverters. Demand for Garmin Products – US At the same time, an average 65% of commercial solar panel installa- tions in Germany and 54% in Spain Grassroots interviews were conducted competitors and security breach issues. currently adopt string inverters with with dealers who carry Garmin products One source commented, “there’s not been switchers, while 54% in France adopt in the US to assess recovery prospects of much of a shift in Garmin’s mass-market string inverters with optimizers. Garmin’s declining product sales. 65% of appeal. What’s good is they have more Microinverters are rarely used for Garmin fitness-product dealers said sales low- to high-end models in terms of commercial installations use due to in summer 2022 were in line with expecta- cost options. They appeal to both those high cost and not being appropriate tions, while 25% said below, and 10% looking for a simple model or one that for large-scale solar installations. said above. Meanwhile, 90% of Garmin does neat tricks.” Indeed, 80% said there Microinverters for residential use are outdoor-product dealers said sales of were no significant changes in Garmin’s expected to reach an average 81% Garmin outdoor products in summer 2022 marketing its fitness products in the past penetration in France, 5% in Spain, were in line with expectations, while 10% six months. and 2% in Germany on the one-year said below. None of the outdoor-product At the same time, 50% of Garmin outdoor- horizon, and they are expected to dealer sources expect outdoor products product dealers said that they are not reach 84% in France, 11% in Spain, sales to decrease post-COVID as was the doing marketing for outdoor products and 5% in Germany on the three-year case with Garmin fitness products. currently, while the other 50% cited various horizon. Penetration of microinverters When asked about mass-market appeal, marketing activities including displays, for commercial use is expected to 65% of fitness-product dealers said the pamphlets, signage, digital ads, and remain low on both the one- and appeal of Garmin’s fitness products has events sponsorships. three-year horizons. remained the same in the last six months and 15% said it increased, while 20% said it decreased due to more ads from 3

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