Coke, Nike score in emerging markets

19 January 2011

BEIJING: Brands including Coca-Cola, Danone and Nike enjoy the "broadest established appeal" among emerging market consumers, a study has argued.

Investment bank Credit Suisse and research firm ACNielsen polled nearly 13,000 adults in Brazil, China, Egypt, India, Indonesia, Russia and Saudi Arabia.

Brazilian respondents were the most optimistic, as 63% thought their personal finances would improve during the next six months, decreasing to 45% in China and 43% in India.

The average stood at 38%, slipping to a 27% in Russia and 12% in Egypt.

Approximately 28% of panellists reported their nominal income had grown in the last year while 12% experienced a contraction, as Brazil again led the pack, and Egypt and Russia bought up the rear.

Turning to purchase intent, Credit Suisse said demand for discretionary items, rather than necessities, typically rises dramatically once monthly household income surpasses $1,000.

Some 176.8m Chinese residences now fall below this benchmark, compared with 66.6m earning a minimum $2,000.

Totals came in at 198.1m and 37m respectively in India, but 91%, or 51.1m, Indonesian homes dipped beneath the lower score, as did 85%, or 16.1m, of their Egyptian counterparts.

Elsewhere, 18m Russian households possessed limited discretionary expenditure and 11.7m boasted greater flexibility, numbers reaching 32.9m and 10.8m in Brazil.

Overall, the proportion of residences bringing in at least $2,000 a month peaked at 80% in Saudi Arabia.

Variations also existed concerning savings rates, hitting 31% in China, 21% in Saudi Arabia, 17% in India, 13% in Russia, 12% in Indonesia, 10% in Brazil and 7% in Egypt.

Two-thirds of Egyptians planned to increase spending on aerated soft drinks in 2011, as did 55% of Indonesians, 46% of Indians, 42% of Saudi Arabians, 31% of Chinese shoppers, 24% of Brazilians and 6% of Russians.

Brazil, Russia and Saudi Arabia constituted the only nations where a majority of participants were not predicting heightening their outlay on dairy goods.

Bottled water received the strongest interest in Indonesia, yielding 67%, and Saudi Arabia, recording 49%.

More than half of Indians, Indonesians and Egyptians contributors expected familial spending on feminine hygiene products to rise, a position held by 44% of Chinese interviewees.

Egypt and Brazil displayed the heaviest enthusiasm for branded sports shoes and apparel, delivering 68% and 63% respectively.

Regarding traditional mobile phones, Brazilians proved the sole group posting double-digits on this metric, a role assumed by Saudi Arabia and China when discussing smartphones.

Chinese customers appeared most likely to acquire a computer, on 15%, as Saudi Arabia generated 13% and Indonesia registered 12%.

Passenger car sales should witness a particularly impressive lift in Indonesia and Egypt, where 28% of prospects hoped to buy or replace a vehicle, ahead of 26% in Brazil.

Almost 100% of Indians earning $1,000 a month or less anticipated choosing a local marque, measured against 60% of Russians and a third of Chinese respondents in the same demographic.

As income topped $3,000, indigenous operators secured around 10% in Russia and China, and just over 50% in India, with further declines as salaries climbed.

This trend is also observable for fashion and perfume.

Roughly 60% of the BRIC sample preferred domestic or unbranded dairy ranges, remaining largely consistent by salary, suggesting familiarity beats status and "brand power" for staples.

"The growth outlook for local brands is at least on a par with the growth outlook for international brands for essential goods and services," Credit Suisse said.

"International brands probably offer greater growth potential than their local peers in the discretionary space."

Adidas, BMW, Coca-Cola, Danone, Honda, Nike and Rolex were among the global players carrying the "broadest established appeal", it added.

Data sourced from Credit Suisse; additional content by Warc staff