ZURICH: Consumers in emerging markets currently buy a broad mix of local and foreign products, but rising affluence will ultimately benefit overseas brands, Credit Suisse has argued.
The investment bank and ACNielsen surveyed 4,000 adults in eight fast-growth nations, finding that a majority of consumers there still buy unbranded products.
In all, 62% have purchased unbranded leather goods, totals that reached 60% for fashion and 45% for perfume. This fell to 28% for sports and shoe wear, 21% for cosmetics and dairy and 4% for soft drinks.
More specifically, some of the strongest local brands were in the dairy sector. Mengniu and Yili secured a penetration of 66% and 59% in turn in China.
Meanwhile, dairy brand Juhanya took a 54% reach in Egypt, while Pinar took 43% of the category in Turkey and Batavo 37% in Brazil.
Another leading performer was Efes Pilsen beer, accounting for 72% in Turkey. Natura cosmetics had a reach of 57% in Brazil and Tata Motors took 41% in the Indian auto category.
The most popular foreign-owned offerings included two soft drinks: Guaraná Antarctica, Anheuser-Busch InBev's soft drink, on 55% in Brazil, and PepsiCo's Mirinda, yielding 47% in Saudi Arabia.
Smirnoff vodka, made by Diageo, posted 35% in Brazil, as did Unilever's Pond's beauty range in Indonesia. Fair & Lovely, also from Unilever's, scored 39% in India, and Nokia, the mobile brand, had a 33% reach in Brazil.
The report further suggested that international brands are typically pre-eminent in certain categories, and tend to be more popular among comparatively high-earning shoppers.
For example, the difference between the number of affluent and lower-income consumers buying Sony's electronics stood at 22% in Russia, and came in at 15% and 12% respectively for Apple's iPhone in China and Brazil.
This gap was 15% for adidas sportswear in Russia, 19% for Johnnie Walker whisky in Brazil, and 17% for Budweiser beer in Turkey. Carlsberg, another beer brand, generated a comparative 12% rating in India.
Some emerging market brands have also been exposed to such a trend, as this metric climbed to 38% for Juhayna in Egypt, 35% for Botanico cosmetics in Brazil and 23% for the Chow Taifook fashion label in China.
"As incomes continue to improve international brands offer greater growth potential than their local peers in the discretionary space," Credit Suisse said. "However, the growth outlook for local brands should be at least as good as international brands for essential goods and services."
Data sourced from Credit Suisse; additional content by Warc staff