ZURICH: Increasing affluence in emerging markets will boost "aspirational brands" like Coca-Cola, the soft drink, and Nike, the sportswear range, Credit Suisse has suggested.
The financial services group argued these operators, as well as Johnnie Walker, the whiskey, and adidas, the sportswear brand, stand to gain ground as incomes "rise to significantly higher levels".
"We can of course identify the genuine global brands that dominate high income luxury categories in areas, such as spirits ... and cars, when a switch from local preferences to global becomes most pronounced," it said.
Local brands can benefit from rising affluence, the study added, if they achieve "critical mass at the low end, but sustain it or increase it up the income scale."
Mengniu and Domik v Derevne, in China and Russia's dairy sectors respectively, and Castle lager in South Africa seem set to attain this status.
Such arguments were based on a poll of 14,000 people in eight markets - Brazil, China, India, Indonesia, Russia, Saudi Arabia, Turkey and South Africa - conducted with Nielsen, the research firm.
This found that greater prosperity does not usually impact household penetration for local brands when discussing consumer staples, but typically exerts a major influence in discretionary categories.
As an example, the share of car purchases taken by local brands in Russia falls from over 75% when households earn below $1,000 a month to under 5% when this surpasses $6,000.
L'Oreal, the French cosmetics brand, also has a 27% penetration in wealthy Chinese homes, versus 11% in less wealthy residences. These totals hit 13% and 24% in turn for Dabao, a local brand now owned by Johnson & Johnson.
However, Natura, a Brazilian eco-friendly cosmetics manufacturer, provides a model for local brands. It has a 69% penetration in affluent homes, and a 44% reach for their lower income counterparts.
By contrast, Dove, made by Unilever, posted 38% and 15% respectively on the same terms, and is lagging behind Natura's growth rate in this area.
Elsewhere, the analysis revealed that only 2.5% of beer sales go to "unbranded" offerings on average in the featured markets, as do 5.3% for soft drinks, some 10.1% for spirits and 13.1% for dairy.
Figures on this metric hit 16.3% for cosmetics and 41% for perfumes. Fully 53.7% of acquisitions in the fashion sector are also attribtuable to unbranded lines, declining to 47.6% for leather goods and 23.3% for sports shoes and apparel.
"Unbranded goods are a key part of consumption at very low income levels, but, as income levels improve, the preference for branded goods picks up," the analysis said.
Data sourced from Credit Suisse; additional content by Warc staff