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100m join global middle class

News, 04 April 2016

LONDON: Close to 100m households around the world have entered the consuming middle-class income bracket over the last two years, according to a new global survey.

The role of young consumers is an essential component of this development, but the worldwide adoption of ecommerce is also important as the proportion of internet users who shop online rose to 30% in 2015.

These are some of the headline findings from the "Emerging Consumer Survey" published by Credit Suisse, the financial services group, which worked with research firm Nielsen to conduct nearly 16,000 face-to-face interviews with consumers from nine emerging economies.

These countries were Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey. And the report identified India as the"biggest ecommerce opportunity".

"The average Indian respondent's income has increased by double-digits compared with a decline for the [emerging market] average, although income expectations going forward have moderated," the analysis said.

Although India has low brand penetration rates in most categories, the study pointed out that there is fast consumption growth in some areas, mostly for smartphones and feminine hygiene products, while sectors such as beer and perfumes are growing fast.

But it is in China where younger consumers have really made an impact, with the survey reporting that shoppers aged between 20 and 30-years-old are expected to contribute to 35% of the country's total consumption over the next five years, up from just 15% at the present time.

Based on the survey results, the report said that internet access among the research panel in China has now surpassed 80%, with smartphone penetration on 90% for this group.

Credit Suisse further estimated that online sales in China will grow between 20% and 26% year-on-year in 2016-18, and deliver 16% of the country's total retail sales in 2017.

Taken overall, the report concluded that there is relative optimism among consumers in India, China and Saudi Arabia, but relative negativity prevails in Russia, South Africa and Brazil.

Commenting on the analysis, Stefano Natella, head of global markets research at Credit Suisse, said: "Our analysis suggests that over the last two years, approaching 100m new households across our survey countries have found their way into the middle class.

"Aided by innovations in technology, ecommerce and an optimism broadly driven by the younger consumer, the analysis delivered in this report continues to suggest that even in a challenging economic cycle, structural investment opportunities will continue to benefit investors."

Data sourced from Credit Suisse; additional content from Warc staff