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Emerging Economies in Consumer – Thematic Research

Due to the COVID-19 pandemic, the complexion of emerging economies and all other countries has changed profoundly. The mid-and long-term priority of emerging economies has changed to a short-term focus on survival and recovery from the effects of the pandemic in the established consumer goods markets. Nevertheless, attention will turn once again to emerging economies as a way to gain a competitive advantage, please investors, and cover larger consumer audiences.

In terms of leaders and laggards when it comes to this macro theme, companies that have strong exposure to and a wider footprint in emerging markets gain competitive advantage, while companies that are not expanding to these nations – which have a lot of growth potential – will lose in the long-run.

What are the market dynamics of emerging economies?

One key driver that influences a consumer’s decision on whether they would purchase a product is largely due to a company’s involvement with the environment. This is because of consumers have a strong focus on climate change, environmental deterioration, biodiversity loss, and resource shortages amid growing energy demands. Continuing to focus on the ways in which brands can maximize their involvement, will increase the likelihood of a consumer purchasing a product.

Another essential trend that is key to consumer buying habits is the rise of interest in digital lifestyles. Essentially, consumers are focusing on becoming digitally connected has now become heavily ingrained in consumers’ daily lives, creating a deepening desire for instant gratification and an inclination to multitask. Therefore, consumers will look towards companies and brands that have established a strong online presence to grab the attention of consumers.

Cocooning is a key trend when analyzing consumer behavior and reflects a more deliberate retreat into the home. This has resulted in the home becoming a more sophisticated hub for an expanding share of consumption occasions. This has undoubtedly increased due to the pandemic, which had led to numerous lockdowns.

What are the major countries that offer an opportunity for expansion in the emerging economies?

The major countries that offer a major opportunity for expansion in various industries like FMCG, foodservice include:

Brazil: The most popular trade in the Brazilian soft drinks market trade is traditional retail, as it accounts for 35.5% of all distribution channels. Home delivery is expected to have a 3.4% volume and 5.3% value CAGR from 2020 to 2025 in the retail segment. However, one of the top two largest growth potential sub-channels is e-commerce, as it has grown in importance over the years. This relates directly to emerging economies as e-commerce is a key aspect of emerging economies, within the FMCG sector.

Russia: Within the beverages sector, packaged water, which is one of the largest categories in the Russian soft drinks sector, recorded annual volume growth of 3.3% in Q4 2020, showcasing levels of growth because of the pandemic. This is because the sales were driven by increased health concerns amid the COVID-19 pandemic.

South Africa: GlobalData Q2 Consumer Survey found that only 9% of consumers from South Africa buy high-end/premium versions of these products, therefore resulting in a decline in sales for the baby food market. The company which has been dominating the baby food industry in South Africa is Nestle, and despite the economic decline, there is evidence of slight growth in sales.

Indonesia: It was found that haircare in Indonesia had a very competitive market and global brands like Unilever, Procter & Gamble, and Loreal SA, is ranked the top three companies. GlobalData Q2 Consumer Survey found that 15% of consumers from Indonesia buy large portions of haircare products, indicating a high level of interest. With a further 24% of consumers purchasing high-end premium versions of haircare products.

What is the value chain in emerging economies?

The value chain of the emerging economies is segregated into consumer drivers, brand and product attributes, and related industry topics.

Consumer drivers: The increased purchasing power of consumers in emerging markets has resulted in consumer goods purchases in sectors that were previously unavailable in these geographies. The accelerated economic growth experienced by emerging markets has determined many big companies to sell and offer FMCG categories that historically had no presence in these countries. Big consumer goods companies, as well as foodservice and retailers, that want to expand in emerging markets must make sure that the products and services that they offer are affordable enough so that they are accessible to large audiences.

Brand and product attribute: Many FMCG companies, retailers, and foodservice operators face constant pressure from investors to keep growing. This means extending already established products or introducing new product ranges. However, that can prove problematic in the saturated markets in the developed world, so companies often turn to emerge economies to extend their offerings. Companies wishing to invest in emerging markets must test them first.

Related industry topics: The rise in the middle class in emerging economies highlights improved living standards and a growing purchasing power. The Middle-class is therefore an attractive consumer segment to sell new products and services to, as consumers from this group are experiencing rising disposable incomes which allows them to spend more on discretionary consumption. Many big companies are attractive to emerging economies because of the small labor costs and usually inexpensive raw materials. However, the benefit of lower labor costs might be overstated in the long run, considering that worker productivity in emerging countries tends to be significantly lower than in developed markets.

Which are the major companies in the emerging economies theme?

The major public companies in the emerging economies theme include Asahi Group Holdings, General Mills, International Flavors & Fragrances, Nestle, Unilever, and The Coca-Cola Co.

Market report scope

Key Companies Asahi Group Holdings, General Mills, International Flavors & Fragrances, Nestle, Unilever, The CocaCola Co and Bacardi.
Value Chain Consumer drivers, brand and product attributes, and related industry topics.

This report is a thematic analysis of the emerging economies in consumers. It provides:

  • Emerging economies occupy a large percentage of the world population, resulting in an expanded labor force and consumer base, driving productivity and economic growth.
  • The population across most of these emerging nations tends to be younger compared to the one in the developed markets. For example, 44% of India’s 2020 population is aged 24 or younger, whereas only almost 30% of the UK’s population is 24 years old or younger. More educated people mean not only improved labor markets, therefore driving productivity and economic growth, but also an enhanced spending power.
  • Rising income levels and living standards due to a shift in employment from the agricultural sector to industrial and service sectors, as well as an emerging consumer middle class, will drive consumer demand and purchasing patterns. Real household consumption has increased in most emerging markets, growing particularly fast in China.
  • Emerging economies are improving their positioning in the World Bank’s ease of doing business rankings. Countries such as China, Egypt, India, Malaysia, Russia, Saudi Arabia, Turkey, Thailand, and the UAE have made significant progress in simplifying processes for setting up businesses.

Reasons to Buy

  • Understand the impact of the emerging economy’s theme on various industries, including FMCG, foodservice, and retail, using key trends and examples to help companies understand how they can adapt and understand this theme.
  • Understand consumers’ trends that are impacting this theme and rethink the business strategies accordingly.
  • GlobalData’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.

Key Players

Asahi Group, General Mills, International Flavors and Fragrances, Nestle, Coca-Cola, Unilever, Bacardi

Table of Contents

| Contents

Executive summary

Thematic briefing

Trends

Industry analysis

Value chain

Companies

Glossary

Further reading

References

| Our thematic research methodology

| About GlobalData

| Contact Us

Frequently Asked Questions

The value chain of the emerging economies is segregated into consumer drivers, brand and product attributes, and related industry topics.

Major public companies in the emerging economies theme include Asahi Group Holdings, General Mills, International Flavors & Fragrances, Nestle, Unilever, and The Coca-Cola Co.

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