CIAO DATE: 02/2013
January 2013
When the economy flags, do Americans buy less soap? As incomes rise, do South Africans drink more tea? Finding the link between economic trends and consumer purchases has always been difficult, but it is becomingly increasingly vital as companies plan their sales strategies across multiple markets growing at very different rates. To help, the Economist Intelligence Unit (EIU), with its expertise in economic forecasting, has teamed up with Mintel, renowned for its knowledge of consumer markets. By working together to develop a new forecasting method (see p10-11), we have drilled down from the macro to the micro, turning the EIU’s five-year household spending forecasts into five-year forecasts for some of Mintel’s fast-moving consumer goods (FMCG) categories. This report showcases some initial results from our collaboration, looking at household spending trends in the five major emerging markets of China, India, Mexico, South Africa and Turkey, and contrasting those with the developed US and UK markets. Our analysis shows that, though some consumer tastes are converging as goods become more affordable, the differences between these markets remain stark. Regulation, cultural factors such as religion and attitudes towards health and beauty, and the marketing efforts of companies themselves all affect how households spend money. The US remains overwhelmingly the biggest market in terms of total spending, although the UK spends more per head in many consumer categories. But as mature markets, both are relatively slowgrowing. While the five emerging markets we profile are expected to see total spending rise by between 7.7% and 15.2% a year, on average, in 2013-16 (Mexico will be the slowest and China the fastest), US spending growth will average 4.5% a year and the UK just 3.6%.
Resource link: Convergence with divergence: Consumer spending priorities in fast-growing emerging markets [PDF]