Marketing Random

What’s next for emerging markets?


New report from Nielsen “What’s next for emerging markets?” has provided convincing evidence that consumers in Brazil, Vietnam, Argentina, Ghana and Côte d’Ivoire are increasingly willing to spend more.

This report combines Nielsen data on snacks and beer with macroeconomic indicators and forecasts to identify these growing markets.

“Beer and snacks are not just entertainment foods. These two categories also show indicators that buying these two categories is chosen by consumers even when they are not in demand. “They are essential to them. Furthermore, we also observe that countries with good macroeconomic conditions will be favorable environments for these two industries to grow.”, the judgment of Regan Leggett, Executive Director, Thought Leadership Division, Nielsen.

According to the International Monetary Fund, in the past 10 years, developing markets have contributed to the development of the global economy, contributing more than 80% to global growth. Today, the FMCG sector in Nielsen-measured markets consistently outperforms growth significantly, two to four times that of developed countries.

But that doesn’t mean that all growth will be easy or guaranteed.

“Many of our customers are finding that the strategy and tactics for implementing business plans in developing markets must change faster than they did in the past. In developing markets and competitors becoming wiser, nimble and more innovative To win today and tomorrow, you must always change your strategy to catch up. keep up with constantly changing practices in these markets “, Pat Dodd, President, Development Markets, Nielsen comment.

In developing markets, global beer trends always have the opportunity for strong growth, such as premium beer products, craft beers, cider and cider beers. taste. Looking at the history of beer sales over the past few years, we find that these product lines in developing markets are showing the same growth as a global trend. In Ghana, consumers are gradually shifting their use of barley and lager beers to fruit-flavored beers and other flavors like lemon-flavored beers (shadies) and beer-flavored drinks – drinks that are very appealing to those who do not like the taste of traditional beer. These product groups are leading in terms of growth, increasing by 51% and 21% in sales respectively.

Snack is a product that is very popular with consumers around the globe. Indeed, in 2017, the products business grew by nearly $ 3.4 billion worldwide. The growth in snack demand has been driven by domestic manufacturers offering affordable prices to attract consumers. In fact, in Argentina, since 2016, snack sales of local manufacturers have seen double-digit growth while global manufacturers have shown sluggish growth (47% y / y). with 2%, according to the order).

Four opportunities for emerging markets

Luxury brands and private labels: Revenue from premium brands and individuals both tend to increase. Consumers see that private label products are improving quality and are willing to exchange their signature brands for those who are willing to spend with this value. High-end merchandise can still deliver strong value and provide consumers with a unique experience.

  • High-end brands, private labels and local manufacturers are driving growth in Argentina. Even throughout 2016 – during the worst inflation – production of premium products increased by 12.9%, nearly double the regional average, while the rest of FMCG is falling.
  • Brazil is making steady progress toward a stronger economy, driven by private brands, high-end products, and brands created by domestic firms. In 2016, domestic brands contributed nearly 90% to the creation of new low-cost brands and private labels, increasing the number of items with similar prices up to 28%.
  • Even during the economic crisis, the amount of super-premium beer in Brazil still saw a growth of 30% and premium beer increased by 7% (compared to between July 2016 and July 2015).

Connect: Consumers in developing markets are trending in digital behavior, mobile phones and e-commerce – not just in their own countries but on a global scale. These consumers are ignoring the traditional systems that once existed in developed markets.

Rural Vietnam will remain a potential source of growth for FMCG companies.

  • Digital purchases and shopping behavior will become the norm for Brazilians.
  • And brands have grasped this point. In 2016 and 2015, the Nielsen Digital Ad report showed a 15.9-fold increase in ad campaigns using mobile phones as one of the major platforms. Mobile advertising, specifically, increased from 8% in 2015 to 58% in 2016, in all measured campaigns.

Traditional Trade: While modern trade is growing, in the countryside – where the greatest opportunities for growth – traditional trade remains an important foundation.

  • Manufacturers and retailers in the country as well as in rural areas are the hot factors for the Vietnamese market. Local retailers are slowly reshaping the retail landscape. According to Retail Measurement data from Nielsen, in the first 10 months of 2017, more than 600 modern commercial stores were opened. Among those stores, three domestic brands have opened 275 stores.
  • On Ivory Coast, consumers buy two-thirds of FMCG products in traditional department stores including kiosks, convenience stores and traditional markets – places they regularly visit. several times a week. A quick look at some of the most popular categories, we will see that kiosks are driving the majority of growth. However, groceries still hold a market of their own, and last year has seen strong and consistent growth in those categories.

Urbanization in rural areas and cities with an average population density: Rural and mid-densely populated cities will be the next stop. As infrastructure and job opportunities improve in these developing regions, new malls will also be established.

  • According to the United Nations, much of Ghana’s growth will occur in urban areas, by 2025 and 39% of the population will live in mixed densities, from 1 to 1. 5 million people.
  • Rural Vietnam will remain a potential source of growth for FMCG companies. Last year, sales in rural areas outperformed growth in urban areas, 7.7% compared to 5.0%, respectively (MAT Q3 2017), but the growth was not steady. .

“We conduct research on this report to help retailers and manufacturers discover key growth potentials and help them understand what’s happening next in their industry. How global and consumer orientation and developing market opportunities may change in the coming years“, Pat Dodd added.

For more details, download the full report here.

* Source: Nielsen

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