Deloitte global powers of consumer products 2013
Post on 07-May-2015
DESCRIPTIONThe opportunity for consumer products companies to manage their brands online, engage with consumers at an individual level, and drive sales through digital channels is significant. The question is how to do it well. Take a look at this year's report to see which consumer goods companies are on the Top 250 list. Then keep reading to see what approaches the industry is likely to take to engage this new, digitally empowered consumer. Find out which companies are where on this year's Top 250 list by downloading the complete report
- 1.Global Powers ofConsumer Products 2013Engaging the connectedconsumer
2. ContentsGlobal Powers of the Consumer Products Industry 20131Global economic outlook 2Global trends affecting the industry in 20137Top 250 highlights 11The changing face of the consumer products 36industry, 2006-2011Q ratio analysis 39Study methodology and data sources 41Contacts 42 3. Global Powers of the Consumer Products Industry 2013Deloitte Touche Tohmatsu Limited (DTTL) ispleased to present the 6th annual Global Powers ofConsumer Products. This report identifies the 250 largestconsumer products companies around the world basedon publicly available data for the fiscal year 2011(encompassing companies fiscal years ended throughJune 2012).Deloitte published the first Global Powers report forthe consumer products industry six years ago, whichcovered the 2006 fiscal period. This years report, inaddition to analyzing the industrys performance in2011, will look back over the intervening years at thechanging landscape of the consumer products industryand the history behind some of its largest companies.The report also provides an outlook for the globaleconomy, an analysis of market capitalization in theindustry, and an assessment of the increasing impactthat digitally empowered consumers are having onthe industry.Global Powers of Consumer Products 2013 1 4. Global economic outlookThe economic situation for consumer products companies Each time it appears that the global economy isAgain, the impact is to discourage private credit about to accelerate, something happens to throwmarket activity. Finally, the huge uncertainty about a wrench into the wheels of growth. In 2012, thatthe economic future of Europe has led businesses to wrench was the crisis in the Eurozone. With much ofcurtail capital spending. Europe in recession, European demand for imported goods declined, thereby having a negative impact onMeanwhile, negotiations continue on the best many of the worlds leading economies. It is often path forward for the Eurozone. There is general forgotten that the EU remains the worlds largestagreement that failure would entail huge and economy, indeed larger than the U.S. and of greatunacceptable costs in the form of a severe economic importance to global commerce. In 2012, we saw the downturn. Thus, the Eurozone must be fixed. But economies of the U.S., China, Japan, India, and Brazil how? The consensus is that the Eurozone requires slow down as the long arm of the European crisis three forms of integration to succeed. First, there reached across the globe. Moreover, the slowdown needs to be a banking union with a central authority in these critical economies influenced economicto supervise and recapitalize banks. Negotiations performance in their neighborhoods. For example, have been under way among EU members to achieve many economies in East Asia were negativelythis goal. The EU leadership hopes to achieve a influenced by the slowdown in China. banking union in 2013. Observers who speak of the end of globalization areSecond, some mechanism will be needed to assure clearly wrong. Those who believe that the fate ofsovereign debt repayment that is not overly onerous emerging economies is no longer tied to that of thefor member countries. Currently, efforts at fiscal developed economies are also incorrect. Thus, what consolidation are backfiring in that they are leading to happens in Europe in the coming year will likely havefurther suppression of economic activity, thus leading a significant impact on the rest of the world. to reduced tax revenue and still large fiscal deficits.If Eurozone debt could be consolidated, shared, or The good news is that there is light at the end of replaced by Eurobonds, repayment would be far the tunnel. Europe is likely to recover modestly ineasier especially if a dedicated stream of revenue 2013, thereby having a positive impact on its tradingcould be secured to fund debt servicing. However, partners. Moreover, growth is likely to continue atopponents fear that, unless there is a central authority a decent pace in the U.S., China is likely to reboundwith the power to enforce fiscal probity, such debt from its relatively slow growth of 2012, and Japan consolidation would be a bottomless pit. is set to embark on a new policy that could bear significant fruit. Finally, some form of fiscal and political union willprobably be needed, making the Eurozone more Western Europe like a single national entity rather than simply a As of this writing, much of Western Europe is in fragmented monetary union. The problem is that recession. This results from several factors. First, such a move is politically difficult. Such nation nearly every country on the continent is cutting its building usually entails decades or even centuries to fiscal deficit through tax increases and spendingevolve. Yet Europe has a few years at most to achieve reductions. This has a negative impact on economic this goal before the whole enterprise unravels. activity. Second, the fear that the Eurozone will fail led to a perception of currency risk within the What is the alternative to success? For the time Eurozone. This means that lenders require a risk being, the alternative is to simply muddle along from premium in order to provide credit in countriesone crisis to another, with slow economic growth perceived at risk. These include Spain, Portugal,and continued economic uncertainty. Yet such a Italy, and Greece. The result is a decline in credit situation cannot last indefinitely. Failure to grow market activity in these countries. Third, the EU hascould ultimately lead voters to reject political parties compelled banks to recapitalize through reductions that favor the continuation of the Eurozone. In the in lending and the sale of assets. long-run, failure is the only real alternative to furtherintegration.2 5. Notably, there are some positive things happening Industrial production was up a relatively modestin Europe today. First, the value of the euro has amount in 2012. This meant that Chinas economyfallen significantly in the past few years, leading tobecame weaker than had been expected. The worryincreased competitiveness on the part of European was that the much anticipated soft landing wouldexports. In addition, wage restraints combined with turn into a hard landing. Fortunately, this didntproductivity improvements in Southern Europe hashappen.helped to restore some of the lost competitivenessthat was at the heart of the crisis in the first place. To deal with the slowdown in economic activity, thegovernment took a variety of actions. The centralSecond, the European Central Bank has promisedbank cut the benchmark interest rate and reducedto undertake unlimited purchases of sovereign banks required reserves, thereby boosting bankdebt from countries that submit to conditionallending. In addition, the government increasedbailouts from Europes new bailout facility. Just the public investment in infrastructure. The result ofexistence of this promise, which has not yet been these measures was positive. Bank lending increased,implemented, has been sufficient to significantly although not as much as had been hoped. The rise inlower sovereign bond yields for such countries as credit market activity was very likely due to the cutsSpain and Italy. The ECB program thus has drastically in interest rates and the reduction in banks requiredreduced the risk of imminent failure, thereby buyingreserves. Indeed the broad money supply acceleratedtime for Europe to engage in longer-term solutions. as well. The question now is where policymakers willMoreover, the ECB program has led to a decline in go from here. With a change of leadership havingrisk spreads (although they remain high), an end to taken place in late 2012 and early 2013, majorcapital flight from Southern Europe, a stabilizationdecisions are now awaited that will have both short-of bank deposits, and a notable recovery in businessand long-term consequences. Still, most analystsconfidence. expect better growth in 2013 than in 2012.Nevertheless, many problems remain. Political Longer term, China faces some serious challenges:troubles in Spain, Italy, and Greece periodicallythreaten to unravel the progress that has beenFirst, too much of Chinas economic activity hasmade. Austerity in these countries leads to recession,been investment in fixed assets such as factories,declining government revenue, and worsenedshopping centers, apartment complexes, officedeficits. It seems to be a self-defeating circle. Thus, buildings, and highways. This accounts fora combination of Europe-wide reforms as well as 48percent of GDP. Much investment has hadnational reforms (such as labor market liberalization)negative returns, resulting in large losses forwill be needed to bring these countries out of theirstate-run banks. Such investment fails to boostdoldrums. growth and represents a serious imbalance in theeconomy. Normal, sustainable growth will comeChina from shifting resources away from investment andBy late 2012, Chinas economy appeared to betoward consumer spending. To accomplish thisturning the corner following a rough year ofgoal, China will have to privatize state-run banksdecelerating growth. Indeed in 2012 the Chinese and companies, liberalize credit markets, alloweconomy grew 7.8 percent, the slowest rate of more currency appreciation, allow further increasesgrowth since 1999. The main problem was exports,in labor compensation, and provide a greaterwith Europe as the main culprit. By mid-2012, safety net in order to discourage high saving.exports to the EU were down 12.7 percent from ayear earlier. Chinese imports were down as well,partly due to declining commodity prices, but alsoreflecting weakening demand in China.Global Powers of Consumer Products 2013 3 6. Second, Chinas demographics are changing Among these are a substantially reduced level ofrapidly. Labor force growth is slowing. This will debt and debt service payments, thereby significantlyresult in slower economic growth. It will also create improving consumer cash flow; increased wealthshortage of labor, thus boosting wages. Indeedthrough good performance of the equity market;this is already happening. The result is that Chinas accelerating employment growth and steady, ifvast pool of cheap labor is dwindling. Chinas cost very modest, income growth; and finally, muchadvantage for global manufacturers is declining.increased confidence as measured by the leadingIn fact, the wage differential with Mexico forindices of consumer confidence. All of this conspiredmanufacturing workers has nearly disappeared. to create modest growth of consumer spending,Consequently, many manufacturers are shifting especially spending on automobiles. In addition,export oriented production out of China and intothe housing market has gone from severe negativeother countries such as Mexico and Vietnam. influence on economic growth to modest positiveinfluence. Activity in the housing market has turnedThird, Chinas next phase of growth will requirearound, although it remains far below the levelsbetter human capital, more efficient capitalreached during the last economic expansion. Homemarkets, and freer flow of information. These prices have risen, construction has accelerated,attributes will require economic and politicaland turnover among new and existing homes hasreforms that will challenge the privileges of Chinas increased all creating the conditions for moreelite. As such, it will be politically difficult. spending on things related to the home.Of course 2012 saw significant negative factorsUnited States as well. The recession in Europe led to a declineAs of this writing (mid-March, 2013), negotiationsin U.S. exports to Europe and, consequently, aare under way to avoid a shut-down of the Federal sharp slowdown in the growth of industrial output.government. Periodic crises involving budgetMoreover, concerns about Europe and uncertaintynegotiations have become a common feature ofabout its future caused U.S. companies to cut backU.S. governance lately. The last crisis, the so-calledon capital spending. The result was a slowdown infiscal cliff, was averted at the last minute, but the the growth of economic activity in mid-2012 and,resolution did involve an increase in the payroll tax.indeed, renewed fears of a double dip recession.The next crisis, the sequestration, was unresolvedYet it appears as of this writing that the economyand automatic spending cuts went into effect in early is doing better, especially as a European recoveryMarch. Despite these episodes of fiscal contraction,is expected. Industrial production has started tothe economy appears to be on a positive path. recover and there are indications that businessAssuming that nothing any worse takes place, here isspending on capital goods is about to increase asa view of how the U.S. economy is likely to perform well.in 2013 and beyond.It seems likely that 2013 will be a moderately goodThe economy will probably grow a bit faster inyear for the U.S. economy. Growth should pick up,2013 than it did in 2012. U.S. consumer spendinginflation should remain subdued, and the policycontinues to increase despite the payroll tax environment might even be benign. However,increase, and the housing market is showing signs what about the longer term? What can consumerof significant strength. Consumers have experienced product companies expect of the U.S. economicseveral positive factors lately.environment?4 7. First, it is interesting that growth in 2012 cameFinally, a very positive aspect to the U.S. outlooklargely from consumers rather than exporters. Itisconcerns energy. Due to a massive increase ininteresting because this is not how the recovery production of natural gas and oil through newbegan in 2009 and is not what one should expecttechnologies, the U.S. is expected to become thegoing forward. Consumer spending remains anworlds largest producer of hydrocarbons by the endunusually and probably unsustainably high shareof the decade, and will be a net exporter of energy.of GDP following the debt-fueled boom of the lastThis will have several implications. First, low energydecade. Now, as consumers continue to deleverage,prices will boost U.S. manufacturing competitiveness.and as banks continue their effort to restore healthySecond, there will be a sizable improvement in thebalance sheets, it seems unlikely that consumertrade balance. Third, investment in energy will boostspending can again grow as fast as it did in recentemployment significantly. Finally, the switch fromyears. Rather, consumer spending is likely to declinecoal to natural gas will significantly reduce carbonas a share of GDP while exports and business emissions.investment boost their share. The stage is already set.U.S. manufacturers are already more competitive dueJapanto a declining dollar, declining relative energy prices, Japans economy is on the verge of s...