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Emerging ConsumerSurvey 2014

Research InstituteThought leadership from Credit Suisse Research

and the world’s foremost experts

February 2014

Contents03 Introduction

04 The emerging consumer in 2014

10 Profiling the emerging consumer

19 Consuming passions

26 Technology focus: Mobile apps and

internet access lead the charge

28 A time to travel

32 Health and safety

38 Evolution of brand consumption

54 Brazil:

Missing a beat

56 China:

Consumer reforms ahead

58 India:

Rural revival

60 Indonesia:

Structurally strong, cyclical nerves

62 Mexico:

A future Brazil?

64 Russia:

Haves and have-nots

66 Saudi Arabia:

Spending potential narrowly based

68 South Africa:

Contrasting fortunes

70 Turkey:

Underlying potential remains

73 About the survey

75 Imprint / Disclaimer

For more information, please contact:

Richard Kersley, Head of Global Securities

Products and Themes, Credit Suisse

Investment Banking,

[email protected]

Michael O’Sullivan, Chief Investment

Officer, UK & EEMEA, Credit Suisse

Private Banking & Wealth Management,

michael.o’[email protected]

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EMERGInG COnSUMER SURvEy 2014_2

EditorialWe are delighted to publish the fourth edition of the Credit Suisse Research Institute “Emerging Consumer Survey” and its accompany-ing databook. With investor scrutiny squarely on the emerging world at present, we believe the timing of this year’s study is ideal. While many are discussing the macro outlook for emerging markets, this granular bottom-up analysis provides a reminder of how far from the mark top-down views alone can still be.

To undertake the project, we have again partnered with global market research firm nielsen, which has conducted nearly 16,000 face-to-face interviews with consumers across nine economies. The research is unique in benchmarking consumer behavior across countries in such a consistent and detailed manner. The reach of the survey has been extended to add Mexico, as it progresses its reform agenda, to the existing list of Brazil, China, India, Indonesia, Russia, Saudi Arabia, Turkey and South Africa.

In taking the temperature of the consumer for 2014, we find the outlook softer than a year ago and, in that respect, consistent with the broader macro cyclical backdrop. notably, fewer consumers are willing to make a major financial commitment at present. Politics as well as economics seems to have played a part in countries such as Turkey and Brazil, though South Africa particularly has its troubles given the deepening “fault lines” between the “haves” and “have-nots”.

However, we would not let the cyclical growth outlook wholly overshadow the structural story as incomes grow and wealth accu-mulates, particularly in Asian economies where consumption shares of GdP are very low and savings ratios high. We still believe we are climbing an S-curve of accelerating discretionary consumption. With this in mind, we draw on the expertise of the specialists in our research teams to discuss themes tied to this discretionary story – technology, healthcare, travel and brand development.

We introduce our Emerging Consumer Scorecard to provide a rounded and relative assessment of the respective countries, assessing the consumer’s perception of the current environment, his/her medium-term finances, income prospects and the threat from inflation. As we learnt with Egypt, food prices loom large in this respect. While China is always a major focus for investors, and a prevailing source of concern for many, it ticks nearly all the boxes to stand at the top of our list and perhaps confound market skepti-cism. This is before one considers any positive structural impact on consumers of the projected reforms announced in China last year.

Among the varied demographic trends we examine, one that stands out is a revival in the fortunes of the rural consumer, notably in India. Here, investment in rural infrastructure appears to be paying dividends and raising income expectations at a faster pace than their urban counterparts. While rural-urban migration and a rising middle class have been long standing themes, an emerging rural middle class is one for both investors and companies to consider.

Giles Keating, Head of Research and deputy Global CIO, Credit Suisse Private Banking and Wealth ManagementStefano Natella, Co-Head of Global Securities Research, Credit Suisse Investment Banking


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The emerging consumer in 2014The cyclical backdrop for emerging economies and capital markets has proved more challenging in 2013 and sentiment in our survey reflects this. However despite cyclical negatives, structural optimism is retained on our part. China tops our “scorecard.”Richard Kersley, Mujtaba Rana, Ashlee Ramanathan

A reversal of fortunesOur 2014 survey was conducted against a back-drop of unease as to the fortunes of emerging mar-kets as an asset class, their currencies and the economic growth premium they offer relative to developed economies and markets. Part of this has been driven by the improving fortunes of the latter. However, an absolute slowdown in the economic fortunes of the emerging world itself has also been apparent, both in the barometers of business and consumer confidence and also the measures of growth more broadly. In fact, on the basis of the projections of the International Monetary fund (IMf) reflected in figure 1, a contraction in the pre-mium emerging economies offer in gross domestic product (GdP) growth terms may be a more sus-tained feature going forward.

The findings of this year’s consumer study are compatible with this more sober picture, as we outline below. However, before reaching too nega-

Figure 1

OECD vs. emerging real GDP growth differential vs. MSCI EMF/World performanceSource: MSCI, OECd, IMf, Credit Suisse research

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tive a conclusion, two things are worth noting. first, the official economic indicators conceal a wide range of circumstances both within and between the key emerging economies. The find-ings of our proprietary survey allow us to distin-guish the make-up of consumers who are faring better rather than worse. The picture varies con-siderably to say the least. Moreover, we can iden-tify structurally underpenetrated product areas that can ride out adverse cyclical factors, as we explore in the third chapter.

Second, we should not lose sight of the struc-tural story. The structural outlook for the emerging consumer is determined as much by the nature of economic growth as its level. The theme of “rebal-ancing” growth towards consumption is the key issue in a number of these countries. figure 2 pro-vides a reminder of consumption as a percentage

Figure 2

Consumption share of GDP – current vs. difference to 20y averageSource: Credit Suisse Emerging Consumer Survey

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of GdP for key emerging economies, including those from the survey, and how they sit versus their own history. Their positioning versus the major developed economies is also visible.

In very simple terms, countries closer to the bot-tom left corner of the chart such as China arguably offer the broadest range of consumer opportunities – something that the recent reforms proposed at the Third Plenary Session of the 18th CPC Central Community may help unlock. However, this does not mean that consumer opportunities in countries closer to the top right have been played out. In many cases, these are countries with a low GdP per capita that should see a marked change in the nature of consumption as GdP per capita rises. It is in this context that the survey helps to identify underpenetrated market segments and the con-sumer’s disposition towards them.

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Figure 3

Expectations of personal finances over the next six monthsSource: Credit Suisse Emerging Consumer Survey

Figure 4

Net number of respondents expecting an improvement in their personal finances in the next six monthsSource: Credit Suisse Emerging Consumer Survey

Of the 146 questions posed to the nearly 16,000 consumers in the survey, there are a range of ways to assess the mood of the consumer. In previous surveys, we examined the consumer’s perception of his or her financial position over the next six months. While a positive balance was recorded for this question, it has fallen since last year. The net percentage of consumers surveyed across our nine countries who believe their financial position will improve relative to those who feel it will dete-riorate stands at a net 26% compared to 28% a year ago. figure 3 displays this for each country and (moving from left to right) ranks the countries accordingly.

Brazil emerges as the most optimistic consumer based on this yardstick with a net 58% of consum-ers looking for an improvement, followed by China and Indonesia, which both register net balances of 38%. At the other end of the scale, we find Turkey and South Africa with net balances of 4% and 12%, respectively. The new entry to our survey, Mexico, sits around the middle of the pack with a net balance of 25%. However, it is important not to look at these measures in isolation. They do not tell the full story for a number of reasons, in our view.

first, and as implied above, a number of read-ings have slipped, which has also contributed to changes in some of the relative rankings. figure 4 examines the changes in readings over time. While Brazil has retained its top spot, it has declined since last year, while China has barely moved. Mean-while, the readings for a couple of the poorly posi-tioned countries have actually improved – Russia and South Africa (though as we show later, this reflects little of the perceptions of the poor and wholly of the rich).

Second, we also feel it is worth considering the readings of countries relative to their own history as well as to other countries. Throughout the history of our survey, we have found at times a habitual level of respective optimism or pessimism in one country compared to another when judged on less immedi-ate assessments of confidence. In the simplest terms, and fearing any national stereotyping, Bra-zilians consistently emerge as optimistic and Rus-sians as pessimistic. When looking beyond the short term, longer-term perceptions of social and political policies may play a role.

Third, medium-term perceptions of fortunes and immediate decision-making can vary. This is argu-ably very relevant today, when adverse cyclical fac-tors have come into play. It is important to consider a broader range of indicators. Hence, in addition to being asked about their expectations for the next six months, we asked consumers whether “now is a good time to make a major purchase.” Across the survey as a whole, the net percentage of respon-

Taking the consumer’s temperature

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dents who suggested now was a good time is -3.8% versus -2.3% last year.

We are less focused on the precise number and more the relative movements year by year – both at an aggregate level and also within the surveyed countries, as shown in figure 5.While it is not the different relative ordering of the countries that emerges that is noteworthy, the lower positioning of the previously high scoring countries such as Brazil and Indonesia stand out. However, and arguably more interesting, is the sharp deteriora-tion in their own readings year on year. This may indeed reflect the nearer-term adverse cyclical, currency and social influences that emerged in these countries later in 2013. In contrast, China retains a robust picture followed by Saudi Arabia and India. P

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Figure 6

Time series of household income expectationsSource: Credit Suisse Emerging Consumer Survey

Figure 7

Inflation expectations over time Source: Credit Suisse Emerging Consumer Survey

Figure 5

Net percentage of respondents replying “yes” to “Is now a good time to make a major purchase?” Source: Credit Suisse Emerging Consumer Survey

fourth, we have highlighted the relevance of income expectations in previous surveys. Whether optimism is expressed or not, one can attach more or less trust in it depending on whether a solid underpinning from income growth exists or not. The relative rank-ings for income are similar to those for the six-month outlook for personal finances, as one would expect. But Indonesia, rather than Brazil, is the standout with 8% income growth expected in the year ahead, contrasting with the flat expectations in Turkey.

Alongside the current readings, figure 6 high-lights the readings over the history of the survey and how they have slipped against last year in every country except Russia and South Africa, noting here of course the same differences in the experi-ences of the “haves” and “have-nots” flagged above. More generally, the reduced expectations for income growth resonate with the more sober outlook for economic growth as a whole across emerging economies.

fifth and finally, we would see the influence of inflation expectations as important and to a certain extent interlinked with income. Of course, the per-ception of real incomes drops out from a combina-tion of these factors. However, changes in inflation doubtless influence the perception of volatility of income and can impact the timing of spending. lower and more stable inflation should be a posi-tive factor for confidence. Certainly our work in previous surveys that have analyzed the influence of food price inflation has made this point.

figure 7 ranks countries according to the con-sumer’s inflation expectations in the year ahead and shows how these have changed. The responses reflect the proportion of consumers who expect prices of goods and services to rise versus fall rather than an absolute inflation rate. Turkey emerges as the country with the lowest inflation expectations, and South Africa with the highest (and rising). The significant fall in India since last year is also notable.

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Figure 8

Rankings of countries based on four key factorsSource: Credit Suisse Emerging Consumer Survey

Having looked at this range of factors, figure 8 seeks to draw them together in a very simple – we stress the word “simple” – scorecard. We have ranked each country’s score based on the above factors and calculated an average. While far from scientific, we feel it offers a far more rounded assessment of the health of the emerging consumer.

It does not completely change the rankings of the initial chart displayed. However, the robust relative nature of the consumer story in China comes across loud and clear. It is among the top three in all the rankings and it is top of the table. We would stress that this survey was, of course, conducted before the announcement of policy reforms in China, which arguably can only rein-force this picture on a long-term view. Brazil’s ranking slips as a result of the immediate percep-tion of whether now is a good time to make a major

The emerging consumer scorecard

Ranking (6–12m horizon)

Personal finances

Inflation expectations

Income expectations

Time for a major purchase

Overall rank

China 2 3 3 1 1

Brazil 1 3 2 6 2

Indonesia 2 5 1 8 3

India 5 2 8 3 4

Saudi Arabia 6 7 5 2 5

Russia 7 6 6 4 6

Mexico 4 8 4 9 7

Turkey 9 1 9 7 8

South Africa 8 9 6 5 9

purchase or not. Mexico and South Africa are the countries that show the biggest and most adverse change, with South Africa now sitting at the bot-tom of the rankings.

As useful as this broader picture of these emerging countries in aggregate may be, it is also key to understanding the differences in the profile of the consumers that make them up – not only the differing characteristics between countries but also crucially within them. The ability to analyze the make-up (e.g. age, wealth, sex and location) of the consumer who is faring better rather than worse is a unique quality of the survey. It impor-tantly provides an understanding of the areas of potential growth in the categories of spending, which in turn influence the nature of specific investment decisions. We consider this in the next chapter.

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Figure 9

Household income distributionSource: Credit Suisse Emerging Consumer Survey, World Bank databook

Profiling the emerging consumerThe profile of the emerging consumer differs vastly within and between countries. Understandably this is key to unearthing relative growth opportunities. A new emerging theme for 2014 is the recovering “rural” consumer.Richard Kersley, Mujtaba Rana, Ashlee Ramanathan

Distribution of incomeThere is often a tendency to caricature the theme of the emerging consumer as one measured by the sales of luxury goods. Clearly, the growth in wealth and income seen in the emerging world, together with increased social mobility, has resulted in major growth for areas such as this and branded goods more generally. The Credit Suisse Global Wealth

report highlighted how the share of global wealth attributed to the emerging world rose from 12% in 2000 to 21% currently and should reach 23% by 2018. Such a backdrop is clearly a major support for this higher end spending.

However, a broader look at the nature of wealth and income characteristics and, importantly, their

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Figure 11

Expectations of personal finances over the next 6 months – 2012 surveySource: Credit Suisse Emerging Consumer Survey

Figure 10

Household income distributionSource: Credit Suisse Emerging Consumer Survey, World Bank databook

distribution highlights how different these countries are and hence the nature of the growth opportuni-ties for consumer markets differs accordingly. Growth potential is determined as much by the spending patterns of the low income consumer and the consequences for more basic products as by purchases by the rich of the highest big ticket items.

Clearly, the differing GdP per capita statistics shown elsewhere in the report, which range from as low as USd 4,000 (India) to as high as USd 31,000 (Saudi Arabia), provide a clear sense of the varying characteristics of these countries.

Our survey allows us to consider the distribution of income as well as the relative level. Using data on households from our survey, combining this with income distribution deciles from the World Bank and supplementing this with estimates from the Credit Suisse Global Wealth Report, we are able to

estimate and compare the number of households across the survey for given income levels.

figure 9 plots our estimate of the number of households by income, and figure 10 the percent-age of the total by income. One notable shift from previous years is the broad movement to the right of the graph, indicative of a burgeoning group of middle income earners. Indeed in comparing data with our 2011 survey, we estimate 27% of BRIC households earned between USd 1,000 and USd 2,000 a month. This figure has now risen to 32%, which represents an increase of roughly 60 million households into this middle income bracket. We would underline that these results are intended to provide a broad representation of the picture in the emerging world and, being based around our sur-vey, carry all the sampling health warnings one might expect.

As one would expect, the most populous coun-tries of India and China dominate the picture in fig-ure 10, though one important difference is appar-ent. India’s income mix is far more skewed towards the low income brackets than China’s. Hence, developments in low income groups are key to the nature of Indian consumer growth. China offers a far broader market opportunity across income groups. We would note that the Credit Suisse Global Wealth Report made a similar point, with broadly based wealth far more apparent in China than in India. Mexico contrasts to a degree with Brazil, with a greater “middle class” in Brazil and breadth of income and wealth more generally than the former. Our latin America economists are opti-mistic that the proposed reforms underway in Mex-ico should encourage greater social mobility and see Mexico move in Brazil’s direction. But for now, Brazil displays arguably a more obvious sizeable target market for products that appeal to the “mid-dle” and “upper” classes.

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Figure 12

Expectations of personal finances over the next 6 months – 2013 surveySource: Credit Suisse Emerging Consumer Survey

With such a strong divergence in the income profile of consumers, how these different income groups view the world is highly important when it comes to judging potential areas of consumer growth, both between countries and within them. The “score-card” mentioned earlier highlights the differing attri-butes of these countries in terms of income expec-tations. figure 11 contrasts high and low income groups within these countries.

The theme last year was how high income groups were more optimistic than their lower income counterparts in every country surveyed. This was not withstanding initiatives on minimum wages in certain countries, as figure 11 displays. As much as signaling which type of consumers are likely to deliver the strongest spending growth opportunities, such differences, where extreme, can potentially flag sources of social tension, or at least indicate where the issues are that social policy needs to address. Egypt reflected the reddest of red flags in our 2010 survey.

In the main, the differences in the perceptions of fortunes between low and high income groups flagged in last year’s survey still prevail, as figure 11 shows. To that extent, higher income emerging consumers offer the greatest growth potential and this therefore remains a theme. In terms of social dynamics along income grounds, Russia and South Africa remain particularly troubling. In fact, percep-tions of fortunes among the low income groups in these countries have only worsened. This provides an important context to view the improving overall measures reflected in the aggregate country esti-mates shown earlier, which are far from evenly dis-tributed. There is a notable widening of percep-tions in Turkey and Saudi Arabia, though this

Income and optimismreflects greater optimism in the higher brackets rather than deterioration in the lowest income groups.

However, two countries have seen significant changes – India and Indonesia. In India, perceptions of fortunes among the respective groups are now more closely aligned, while Indonesia has seen a reversal, whereby lower income groups are now more optimistic than their higher income counter-parts. India’s change is no less significant, in our view, given the very negative perceptions of fortunes among the poorer income brackets a year ago. Given the size of the populations in India and Indo-nesia, it underlines a significant uplift in consumer markets geared to the lower income consumer.


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Two other consumer traits are worth highlighting, particularly with a view to income characteristics – region and age. The rural consumer has consis-tently been perceived as the poor relation within the theme of emerging consumption. Rural-to-urban migration has underpinned this view and observa-tion. It was also readily apparent when we exam-ined the issue in previous surveys. However, signs of a change have emerged in this year’s edition – by no means across the board, but relevant in a couple of significant examples.

figures 13 and 14 examine the different income growth expectations of consumers living in rural and urban areas. (The chart measures the propor-tion expecting an increase versus a decrease.) A country such as Brazil conforms to the image of a consumption story driven by the urban consumer with expectations for income growth far surpassing those in rural areas. However, in contrast, con-sumer expectations for wage increases in two of the largest and most populous economies – India and China – are significantly higher in rural com-munities than in urban areas. figure 14 shows how this has changed from 2012, with better momen-tum in the rural areas for six of the eight countries. This, of course, does not provide any indication of the level of income but does give a sense of direc-tion – important nonetheless.

There are other instances where a positive gap is apparent, though in these two cases, the gap is very material, and we can also show in the survey that it is backed by solid responses to the question of whether “now is a good time to make a major pur-chase” and perceptions of future financial circum-

Figure 13

Income expectations – rural vs. urban consumersSource: Credit Suisse Emerging Consumer Survey

Figure 14

Income expectation momentum 2013 vs. 2012Source: Credit Suisse Emerging Consumer Survey

The rural consumer and the young consumer

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stances. In India’s case, it is very much in keeping with the research of Credit Suisse Investment Bank analysts, who as part of their extensive research on the rural economy highlight how increased infra-structure investment and minimum wages are ben-efitting rural incomes at a time when incomes in urban professions such as technology software and services appear to have peaked (India: The Silent Transformation, 13 March 2013). The sweeping agenda of social policy reforms recently announced in China provides an added context here.

Where age is concerned, the theme is similar to last year, but is still highly important considering the likely spending categories that certain consumer groups will focus on. In a large proportion of the emerging countries surveyed and in contrast to the developed world, young consumers earn more than the middle to older age groups. This age and income profile also matches the relative optimism in the countries. While one might argue that this would always be the case (young people being optimistic), a backdrop of high youth unemploy-ment in Europe might suggest otherwise and rep-resents a significant contrast.

According to our survey, figure 15 shows the income level of the 18–29 age bracket versus the 56–65 age bracket and also the 18–45 age group versus the 46–65 age bracket for each country. In all but two cases, the youngest age brackets earn more than the oldest age groups. In the 18–45 ver-sus 46–65 age bracket, the distinction is less marked, but countries such as China, Russia, Indo-nesia and Mexico show the youthful consumer as having the edge in terms of income level. Indonesia

Figure 15

Total household monthly income after tax Source: Credit Suisse Emerging Consumer Survey

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Figure 16

Income by age – ChinaSource: Credit Suisse Emerging Consumer Survey

Figure 18

Breakdown of household income expectations by location, age and levelSource: Credit Suisse Emerging Consumer Survey

India Indonesia China South Africa Mexico Turkey Brazil Russia Saudi Arabia

Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net

Total 37 21 16 69 3 66 40 5 35 42 19 23 42 14 28 23 14 9 32 5 27 33 8 25 45 6 39

Area Urban 35 22 13 71 3 68 36 5 31 42 20 22 42 16 26 23 11 12 35 5 30 31 7 24 46 6 40

Rural 48 18 30 68 2 66 49 5 44 44 17 27 43 12 31 25 18 7 23 5 18 35 9 26 38 2 36

Age 18–29 38 21 17 73 3 70 50 4 46 45 20 25 45 16 29 24 14 10 65 3 62 41 6 35 48 6 42

30–45 37 21 16 73 3 70 41 5 36 42 19 23 42 14 28 24 14 10 66 4 62 35 8 27 46 6 40

46–55 38 20 18 65 6 59 33 5 28 41 16 25 40 16 24 21 14 7 56 7 49 29 11 18 40 5 35

56–65 39 19 20 58 4 54 27 6 21 32 20 12 32 16 16 21 17 4 47 8 39 19 10 9 32 10 22

Income low 18 21 -3 65 5 60 28 10 18 25 21 4 40 12 28 18 14 4 55 13 42 21 6 15 39 7 32

Medium 39 21 18 76 3 73 36 6 30 45 21 24 42 19 23 38 16 22 65 5 61 33 9 23 57 7 50

High 44 17 27 83 3 80 48 3 45 61 13 48 47 26 21 50 9 42 75 3 72 27 3 24 56 2 54

% of respondents; breakdown by area, age and income (high, medium, low) Cell is highlighted green if the net rural value is above urban

also offers the added benefit of recording the strongest income growth in the survey.

India and Saudi Arabia are the more obvious exceptions to the rule here. The results for Saudi Arabia are not surprising given the nature of owner-ship and distribution of wealth in the country. How-ever, a different dynamic is at work in India, which in our view potentially relates somewhat to the urban versus rural context.

does this matter? All things being equal, the age of the income earners should influence the outlook for elements of discretionary spending (e.g. branded products and property) versus more precautionary spending such as healthcare. younger, wealthier consumers are likely to spend more on the former, while older wealthier consumers arguably the latter. This is apparent when we explore the relatively stronger versus weaker spending categories in the following section. (We devote a specific chapter to its relevance in the healthcare section.)

In the case of China, where this pattern is most pronounced, there is an added and highly significant consideration stemming from the potential ending of the one-child policy, which by definition will have an impact on the spending patterns of a specific demo-graphic with property certainly relevant. The 18–29 and 30–45 age groups in our survey represent Chi-na’s most likely young parents or parents “to-be.”

To this extent, they represent a structural boost to consumption that could potentially be released, underpinning the immediate positive readings for spending observed in our survey. While very long term, we note that Credit Suisse’s China consumer investment banking analyst estimates the potential for incremental consumption demand at Cny 2–4 trillion over the course of the next 18 years, or 3%–8% of 2012 GdP.

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Income by age – USSource: US Census data, 2012

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India Indonesia China South Africa Mexico Turkey Brazil Russia Saudi Arabia

Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net Up Down Net

Total 37 21 16 69 3 66 40 5 35 42 19 23 42 14 28 23 14 9 32 5 27 33 8 25 45 6 39

Area Urban 35 22 13 71 3 68 36 5 31 42 20 22 42 16 26 23 11 12 35 5 30 31 7 24 46 6 40

Rural 48 18 30 68 2 66 49 5 44 44 17 27 43 12 31 25 18 7 23 5 18 35 9 26 38 2 36

Age 18–29 38 21 17 73 3 70 50 4 46 45 20 25 45 16 29 24 14 10 65 3 62 41 6 35 48 6 42

30–45 37 21 16 73 3 70 41 5 36 42 19 23 42 14 28 24 14 10 66 4 62 35 8 27 46 6 40

46–55 38 20 18 65 6 59 33 5 28 41 16 25 40 16 24 21 14 7 56 7 49 29 11 18 40 5 35

56–65 39 19 20 58 4 54 27 6 21 32 20 12 32 16 16 21 17 4 47 8 39 19 10 9 32 10 22

Income low 18 21 -3 65 5 60 28 10 18 25 21 4 40 12 28 18 14 4 55 13 42 21 6 15 39 7 32

Medium 39 21 18 76 3 73 36 6 30 45 21 24 42 19 23 38 16 22 65 5 61 33 9 23 57 7 50

High 44 17 27 83 3 80 48 3 45 61 13 48 47 26 21 50 9 42 75 3 72 27 3 24 56 2 54

Cell shaded grey for the age group with the highest net optimism of wages Cell shaded orange for the income group with the most optimism

Know your customerThe absolute level and distribution of income dic-tates the nature and size of consumer market opportunities between countries. It varies consider-ably across the countries in our survey and across the emerging world more generally. Typically, higher income and growth expectations underpin greater optimism and with it, growth opportunities for con-sumption. The latter certainly influences the relative rankings of the countries themselves. However, the aggregate statistics for the countries surveyed con-ceal huge differences – troublingly so in some cases (e.g. South Africa), though improving in oth-ers (India). It is important to understand this before using top-down information to make bottom-up assessments. As a theme, it is important to monitor and consider where these consumers live. After the prolonged story of and focus on the tastes of the

urban migrant worker, there are signs of building optimism in some rural communities (e.g. India, China and Indonesia).

If it matters where consumers live, their age is also a key consideration given the contrast with the developed world, whereby younger consumers often have the spending power. How this plays out in spending terms will depend on how forward thinking this consumer is. does the money burn a hole in his or her pocket and drive discretionary spending, or does a precautionary view of the future support healthcare and encourage savings? We look at this in more detail later, though the evi-dence is in favor of the former. Of course, in China, the view of the future may look wholly different given the potential for a new demographic profile to emerge.

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The theme typically tracked by us through previous surveys has been the development of discretionary spending relative to more staple or essential spend-ing. The Megatrend of emerging consumption is rooted in the view of rising GdP per capita in the emerging world hitting a tipping point, when discre-tionary spending accelerates.

We won’t reprise this analysis in detail here (please see previous Emerging consumer surveys, together with other Credit Suisse Investment Bank-ing research reports such as Consumption Patterns in Emerging Markets, february 2010, and APAC: Consumption S Curve, August 2012). However, a key observation driven by historic analysis of the development of the patterns of consumer spending among now developed markets such as the USA, france and japan, was how a move towards and beyond levels of GdP per capita of broadly USd 8,000–10,000 typically marked a point of accelerat-ing spending on discretionary products.

figure 19 illustrates a notional “S-curve” driven from this analysis. A “sweet spot” emerges where the acceleration in discretionary spending really kicked in, though increases continued beyond that. We estimate GEM GdP per capita at around USd 8,400 and heading toward USd 11,500 by 2018 on IMf projections, which conveys the message that we are in the broad phase where this theme has its relevance. Of the major populated nations, China is in the “zone” with India and Indonesia rap-idly heading towards it.

Consuming passionsIn last year’s survey, the theme of accelerating discretionary spending came across loud and clear. The picture is less clear in this edition. In 2014 as cyclical negatives have emerged, the focus is more product specific and country specific.Richard Kersley, Ashlee Ramanathan

The MegatrendFigure 19

Discretionary product spending vs. 2013E GDP per capita Source: IMf, Credit Suisse Research

Pro

duct

spe

ndin

g

GDP per capita0 40,00020,000 30,00010,000

Saudi Arabia

Russia

TurkeyMexico

Brazil

South Africa

China

Indonesia

GEM

India

Sweet spot of accelerated discretionary spending

not all of our countries are in the specific “sweet spot.” However, as we explained in previous sec-tions, the differing income and demographic char-acteristics between and within countries provide a major overlay for visualizing how the top-down theme materializes on the ground. The fact that P

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some of our countries sit at the bottom or at the top of the curve does not rule out the discretionary or essential consumer markets or product oppor-tunities. However, the size of the market opportu-nity may be shaped by where the country sits on the curve.

If the above reflects the structural theme, where are we now?

figures 20 and 21 look at the historical and pro-spective momentum of spending in product catego-ries across the survey. To reflect this, we have first plotted for 2012 the number of respondents who said they had bought/will buy the specific product categories and compared these to responses given a year before. (We would stress that negative responses do not necessarily mean absolute declines in spending, but more often lower rates of increase.) The top quadrant in figure 20 reflects those sectors that saw stronger growth in spending in 2012 but also those that expect growth to accel-erate in 2013. The bottom left-hand quadrant reflected the opposite view.

Categories that populated the top quadrant tended to be geared to accelerating income and in this respect consistent with the caricatured dis-

Figure 20

Spending momentum in 2012 surveySource: Credit Suisse Emerging Consumer Survey

cretionary driven Megatrend. Spending on areas such as smartphones, cars, meat and holidays stood out. Momentum had been strong in 2012 and was expected to remain so in 2013. In con-trast, the relative momentum of the more staple categories such as dairy and beverages was less pronounced with many resting in the bottom left-hand quadrant.

While spending in 2013 largely lived up to these expectations, as we fast-forward to this year, we find the outlook in 2014 for a number of the discretionary categories has become more mixed with their perceived relative strength now being displaced by a number of the staple catego-ries. The bar chart in figure 21 focuses on for-ward-looking momentum alone (the y-axis of the chart above) and draws this out more clearly.

In keeping with the weakening in the responses as to whether now “was a good to time to make a major purchase,” we have notably seen a decline in the forward-looking intentions for a number of the larger-ticket discretionary items. Cars, consumer durables and property/property-related spending are the typical big-ticket items for most consumers. forward-looking intentions are certainly weak for cars. A similar pattern is apparent for Tvs and desktop computing, though the structural influence

-2 0 2 4 6 8 10 12

% respondents who plan to increase spending over the next 12 months

% respondents who increased spending over the last 12 months

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FashionProperty

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Jewellery Watches

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PerfumeSports shoes

Beer

LCD TVNotebook PC


Figure 21

Spending intention momentum (2013 vs. 2012) for key spending categoriesSource: Credit Suisse Emerging Consumer Survey

Figure 22

Net expectations of house price increases (net increase versus decrease)Source: Credit Suisse Emerging Consumer Survey

of increased internet penetration providing alterna-tive ways to view content and mobility arguably compounds matters.

In contrast, the momentum of discretionary spending is in the smaller-ticket segment – per-fume, sports shoes, watches, jewellery and fashion items. All perhaps segments playing to the appetite of the wealthier younger consumer. There is argu-ably another dimension here, i.e. the growing and structural brand consciousness of the consumer that is perhaps associated with this segment.

If the trends in some big-ticket items have suffered like cars, it does beg the question as to the relative resilience of property – the larg-est of big-ticket items – which has slipped only marginally. In simple terms, there seems to be an explanation in terms of the expectations of house price increases across the emerging world, see figure 22. They remain very robust, with prices expected to rise in all countries bar Indonesia. In fact, our survey average is higher this year, with an average of 49% expecting local year. The readings on China are consistent with the record home sales in 2013 alongside a 19% rise in house prices. Moreover, the new administration appear to have removed policies designed to cap house prices.

20122013

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IndonesiaChina

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-15 -10 -5 0 5 10 15

% of respondents who intend to increase spending (2013 GEM average vs. 2012 GEM average)

Cars

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Education

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Holiday

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Cosmetics

Healthcare

Carbonated drinks

Property

Beer

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Spirits

Dairy

Fashion

Jewellery

Watches

Sports shoes

Perfume


The above charts of course reflect the overall survey. Much lies below the surface for all the rea-sons highlighted elsewhere in the report. While plenty of granularity can be found within our Databook exploring this and specifically the demographic features profiled earlier, the tables below highlight some key features.

figure 23 breaks down the future spending intentions for the prime categories of consumer activity (goods and services) highlighted above, but breaks them down first by country but also throws a spotlight on the urban/rural theme flagged earlier. We also separate spending into groups of essential spending (e.g. dairy, water), useful spending (e.g. computing, medicines) and purer discretionary spending (e.g. spirits, holidays). The individual per-centages in the table represent the percentage of respondents who intend to spend more over the next 12 months in a given category. We also show the average for the survey, which is consistent with the earlier bar chart, of course.

The green and red shaded cells denote where there is significant positive or negative momentum versus 2012, either in terms of country, category or the level of intentions. This shading only highlights outliers, of course, and a country like China that is strong across the board for useful and most discre-tionary goods is itself equally notable.

The consumption mapThere are a few notable highlights:

• The theme of meat/protein is strongest in India and China.

• Sportswear is strong across the board with particular momentum in India, Indonesia, China and Saudi Arabia.

• Saudi Arabia, Turkey and South Africa are strong prospective dairy markets.

• Smartphone markets look strongest in Saudi and China, but both exhibit negative momentum compared to a year ago.

• The Chinese consumer ranks among the keenest prospective holidaymakers.

• Spending intentions for discretionary goods in Brazil are high but not increasing.

• India is the exception to the rule of declin-ing momentum in cars.

• There are bright spots in Russia – a previ-ously negative consumer story.

The lower part of the table serves as a reminder of a specific theme of the report – namely the revival of the rural consumer in a number of countries. Here, we have selected three countries – India, China and Mexico – and shown purchase intentions divided into rural consumers and urban consumers. The table simply highlights the categories in which rural spending intentions outstrip spending inten-tions in urban areas. In India, this is in ten out of 14 categories. In China, it is in seven out of 14. Mex-ico has been picked to show the opposite. Urban spending intentions are higher in every category. P

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Figure 23

Spending intentions heatmapSource: Credit Suisse Emerging Consumer Survey

Essential goods and services Useful goods and services Discretionary goods and services

do

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India 67% 34% 47% 28% 12% 18% 8% 7% 9% 46% 77% 4% 29% 40%

Indonesia 41% 51% 33% 20% 30% 3% 5% 17% 10% 29% 56% 49% 58%

China 44% 34% 23% 22% 23% 11% 13% 24% 21% 55% 59% 9% 52% 58%

South Africa 64% 32% 55% 41% 14% 15% 17% 14% 14% 55% 55% 15% 61% 37%

Mexico 35% 36% 16% 19% 17% 8% 10% 13% 10% 38% 31% 7% 50% 38%

Turkey 34% 30% 28% 16% 14% 8% 3% 22% 12% 54% 81% 10% 29% 41%

Brazil 39% 31% 28% 15% 24% 3% 15% 21% 21% 45% 71% 7% 46% 57%

Russia 23% 13% 6% 20% 10% 18% 7% 11% 9% 41% 78% 8% 31% 69%

Saudi Arabia 61% 55% 54% 27% 17% 8% 5% 31% 21% 54% 85% 64% 73%

Survey avg. 45% 35% 32% 23% 18% 10% 9% 18% 14% 46% 66% 9% 46% 52%

India Urban 34% 33% 47% 27% 10% 18% 7% 6% 9% 48% 77% 3% 31% 31%

Rural 32% 38% 49% 30% 16% 20% 11% 7% 12% 42% 77% 6% 25% 36%

China Urban 41% 33% 23% 20% 23% 11% 13% 24% 21% 54% 57% 8% 52% 55%

Rural 53% 39% 23% 25% 23% 9% 13% 25% 20% 56% 66% 12% 51% 51%

Mexico Urban 38% 40% 18% 21% 19% 9% 12% 13% 11% 41% 36% 8% 52% 42%

Rural 28% 27% 13% 17% 13% 6% 7% 9% 7% 31% 22% 4% 43% 27%

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While the previous tables focused on where the cur-rent momentum lies in spending terms, where is longer-term spending potential? While the answer to this question obviously lies in many of the demo-graphic features referred to throughout this study, considering ownership or penetration rates for spe-cific categories can provide a guide. We have indeed seen evidence of high ownership statistics influenc-ing demand. High penetration rates in mobiles have kicked in as a constraint in certain countries, point-ing to a change in product mix or cycles to drive growth. Smartphones have filled the gap.

figure 24 highlights potential areas of untapped potential. We proxy this by looking at the categories in which consumers have registered purchases in the last 6–12 months based on country. Similar to the consumer intentions heatmaps, we have divided spending into three categories: essential spending, useful spending and discretionary spending. We have also included credit card usage and life insur-ance to indicate the penetration of financial ser-vices. The answers to these questions have been collated as percentages in figure 24. At the bottom of each category, we display the average penetra-tion across the survey.

We have color-coded countries that are particu-larly underpenetrated in red, i.e. their readings are more than one standard deviation below the survey average. In contrast, we highlight countries that are highly penetrated in green, i.e. their readings are more than one standard deviation above the mean. The countries have been sorted in ascending order according to their GdP per capita; it comes as no

Untapped potential

Essential spending Useful spending Discretionary spending

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ry

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Car

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India 90% 73% 8% 90% 9% 25% 69% 73% 84% 37% 19% 31% 6% 31% 43%

Indonesia 72% 92% 17% 75% 6% 7% 3% 72% 57% 17% 5% 25% 18% 56%

China 76% 78% 4% 67% 16% 51% 23% 81% 27% 89% 31% 72% 18% 75% 52%

South Africa 95% 44% 10% 92% 14% 32% 26% 75% 38% 32% 39% 46% 17% 49% 28%

Mexico 75% 76% 12% 92% 13% 29% 8% 72% 32% 41% 29% 40% 17% 30% 38%

Turkey 89% 76% 15% 76% 13% 65% 5% 60% 22% 63% 31% 59% 18% 39% 37%

Brazil 90% 59% 10% 94% 15% 66% 8% 75% 24% 76% 54% 81% 30% 42% 40%

Russia 93% 80% 9% 61% 20% 31% 2% 91% 4% 83% 49% 84% 47% 37% 64%

Saudi Arabia 98% 100% 12% 97% 15% 44% 5% 47% 37% 94% 94% 92% 94% 70%

GEM avg. 86% 75% 11% 83% 13% 39% 17% 72% 36% 59% 39% 59% 22% 46% 48%

Figure 24

Spending category penetrationSource: Credit Suisse Emerging Consumer Survey

surprise that the bulk of the underpenetrated cat-egories are located in the top half of our table, in countries such as India, Indonesia and (still) China. Saudi Arabia shows the opposite.

We highlight a number of categories and countries:

• Meat/protein remains a source of struc-tural potential across most countries and ties in with the rural theme.

• The penetration of financial services is low. Credit card usage in Indonesia, for exam-ple, barely registers, while our analysts’ view on the structural growth potential of life insurance in the emerging world complies with the data.

• At 22%, spirits is one of the lowest pene-trated discretionary categories with India the standout versus the more highly pene-trated Russian market.

• Smartphones are a mixed bag. Penetration rates are rising in China and are practically saturated in Saudi Arabia, but remain low in Mexico, India and Indonesia in keeping with low internet penetration. We discuss this in more detail later on.

• Many consumers take holidays, if to vary-ing degrees. However, a point to stress is the small proportion of vacations that are foreign holidays - an area we discuss in a separate section.

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Adverse cyclical factors have impacted the struc-tural story of the move to more discretionary spend-ing, though by no means across the board. If economic uncertainty persists, and consumer sen-timent here is to be followed, the bigger ticket items seem to be the areas to be most concerned about – cars, consumer durables and higher end/ticket technology.

However, for those looking beyond the influ-ences of the cycle, there remain markets of sub-stantial under-penetration. A short cut to consider investment opportunities would be to focus on areas where penetration rates are relatively low and spending momentum relatively robust. A broad range of opportunities tend to emerge in China, India and Indonesia which of course resonates with their positioning on the S-curve earlier.

However, we would highlight a few specifics:

• Sportswear across most emerging markets. • Smartphones in Mexico and Russia. • Spirits in China. • Cars in India and Indonesia. • Holidays in China. • Meat consumption (South Africa has strongest momentum outside Asia).

If these are general trends, specific products that catch the consumer’s eye are a key consideration. The following section considers the role brands play across the spectrum of our sur-veyed consumers as we drill down further into the data.

Concluding thoughts

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At first sight, momentum in smart-phones and mobile apps looks to have moderated in this year’s survey relative to the explosive growth registered in previous years. However, we believe this moderation is a reflection of only a cou-ple of markets. The features provided to consumers mean that this is a structural growth theme offering further significant potential across the emerging world.

There are significant implications from this survey for handsets, par-ticularly smartphones, and broader telecom equipment. With ample opportunities for increasing smartphone use in emerging markets, the survey underscores our belief that the under USd 200 average selling price (ASP) segment of the smartphone market will continue to see the greatest growth in the coming years. Much of the growth in smartphones is a direct result of the fact that they continue to be the most popular consumer device. Consumers

Figure 25

Smartphone penetration still has upsideRespondents asked: “do you own a smartphone?”; Source: Credit Suisse Emerging Consumer Survey

Kulbinder Garcha, Vlad Rom, Achal Sultania

Technology focus: Mobile apps and internet access lead the charge

are drawn to smartphones for the appli-cations, which in turn have increased the need for faster data speeds (58% of people say their next phone will have 3G), creating further competition among carriers to upgrade their net-works. In this respect, we believe the combination of a period of underinvest-ment in wireless networks, especially in Western Europe, and new deployments in emerging markets, such as in Brazil, point to upside for wireless capex spending through 2014.

Smartphones see greater adop-tion with room for growth; they are still the most popular device. The survey shows that emerging market consumers are increasingly buying smartphones. Consumers were asked if their current phone was a smartphone (see figure 25) and the results reveal higher rates of adoption in Saudi Arabia (94%), China (77%), and South Africa (56%). Conversely, the countries with

lower adoption rates are Brazil (44%), Russia (37%), India (32%), and Indone-sia (24%). On balance, we believe this shows that ample opportunities for greater penetration exist, especially in lower-price segments. While smart-phones that sell for USd 200 or less accounted for only 19% of total units in 2011, we believe this will increase to over 50% by 2015.

not surprisingly, the growth in smart-phones is driven by the fact that it is by far the most popular consumer electronic device to buy. As part of the survey, respondents were asked which electronic device, if any, they were most likely to buy in the next year. Among people intending to buy a handset, 28% stated they would buy a smartphone, over-whelmingly the most popular item. In China and Turkey this was notably higher, at 40% and 45% respectively (figure 26). This likely indicates a reliable, fast replacement cycle in these markets.

Clearly, emerging consumers also want smartphones because they can download applications, which suggests a desire for faster data speeds. The survey shows that apps emerge as the number one reason for consumers buy-ing smartphones in these markets, with nearly 50% of respondents selecting this as the key driver for a smartphone purchase. Additionally, on average, a further 58% of respondents stated that their next device will have 3G speeds. We believe this shows penetration is still low at faster data speeds, but the desire is present. As 3G becomes more com-mon in the geographic regions, pene-tration of higher-speed devices will increase, and in the longer term, con-sumers will ultimately gravitate toward long term evolution (lTE) devices.

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The need for faster data speeds is supportive of a capex upturn. As we mentioned earlier, there is likely to be an uptick in service provider spending on capital expenditure (capex) through 2014, especially in wireless infrastruc-ture, in an effort to deploy faster cellular data speeds, most notably lTE. This is a theme in developed and emerging mar-kets of course. While consumers will adopt 3G technology before lTE becomes mainstream in emerging coun-tries, countries like Brazil have begun deployments, with recent auctions push-ing up spending. In the longer term, the GSM Association (GSMA) states that by 2017, nearly 50% of all lTE connec-tions will be in Asia.

Apple is a minority in EMs, but Samsung gains popularity. With the exception of China (29%) and Saudi Arabia (26%), a relatively low percent-age of people said they would buy an iPhone as their next phone, ranging from 5% to 11% of respondents. How-ever, Samsung has proven to be the most popular phone in emerging mar-kets, with 30% of respondents saying next time they would buy a Samsung phone. not surprisingly, Blackberry con-tinues to be in the minority (only 8% of respondents). While nokia’s devices business faces increased uncertainty following the Microsoft acquisition, with a large selection of lower-priced smart-phones and even feature phones, at present 18% of respondents said they would buy a nokia next time. It remains to be seen if this will change.

Figure 26

Smartphone is the most popular consumer devicePercentage of respondents planning to buy a smartphone in the next 12 months; Source: Credit Suisse Emerging Consumer Survey

Figure 27

Samsung is the most popular brand in emerging marketsRespondents asked “Which brand of handset will you buy next?”; Source: Credit Suisse Emerging Consumer Survey

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A time to travelAlthough we note a slowdown in some other areas of spending, the aspirational quality and a general desire to travel remains. As emerging market consumers grow richer, we expect this desire to trickle further down the income scale and overall spending to strengthen more broadly.Tim Ramskill, Mujtaba Rana

Figure 28

Propensity to take holidays is rising by about 250 bp per annumHave you been on holiday in the last 12 months? Source: Credit Suisse Emerging Consumer Survey

Figure 29

With increased focus on international travelWhere did you go on your last holiday? % of those responding international Source: Credit Suisse Emerging Consumer Survey

While the background for discretionary spending may have been under slightly more pressure in 2013, the structural appetite for travel among emerging consumers remains an important theme in our view. In fact, the perceived deceleration in momentum that appeared in figure 21 earlier conceals a broad range of countries showing an acceleration.

Structural growth continues despite a mixed company experience

The structural growth dynamics of travel among emerging consumers are supported by the findings of our survey, despite softer hotel industry trends experienced in 2013. We see this as more a func-tion of subdued business confidence/leadership change rather than an underlying behavior of con-sumers. Across the countries surveyed since 2010, the propensity to take holidays has risen by 2.5% per annum to 53% in 2013, with 6% growth implied by the 2012 and 2013 survey responses. The greatest changes were seen in China (propen-sity to holiday +14% in 2013 versus 2012) and Saudi Arabia (+11%), with weakness in Indonesia (–19%) and India (–1%). Based on spending expectations, the propensity to holiday should rise to 57%, implying 8% growth in 2014.

Holidays are an aspirational purchase

Across all country surveys (except India), our respondents expect to increase spending in holi-days in the coming year relative to the prior year. This optimism is consistent with our previous expectations. Comparing the gap between for-

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A broader horizon

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Figure 31

Mix of international travel varies greatly from country to country% of those responding international; Source: Credit Suisse Emerging Consumer Survey

Figure 32

Holiday spending momentum by countrySource: Credit Suisse Emerging Consumer Survey

ward-looking spending expectations and actual prior-year behavior gives us a good indicator as to the “aspirational” dynamic of travel; however, this measure has eased or is flat relative to 2012 in all markets except Russia.

Spending momentum is generally strong

Consistent with the dynamics of structural growth and consumer aspirations, we note spending momentum is generally increasing. As shown in figure 32, this momentum is especially strong in China, with Indonesia the notable exception.

Holiday activity remains largely domestic: The majority of vacations are still domestic. Our survey indicates that 25% of holidays are spent at home, 65% are taken elsewhere in the home country and just 10% are international. This is further underlined by consumers’ choice of transport with 77% using cars, trains or buses to undertake their journey.

International travel potentially reaches an inflection point: despite the current domestic bias in the holiday market, we highlight a series of encouraging data points in our survey that suggest an inflection point may have been reached with positive consequences for international travel. This should be supportive of major listed companies with exposure to emerging consumer travel, notably global hotels, Asian airlines and airports and travel retailers. Key points: 1) 10.4% of respondents holidayed abroad compared to 8.6% in 2012, implying 20% volume growth in 2013 – a signifi-cant increase compared to just 2% growth on aver-age between 2010 and 2012 (figure 29); 2) con-sumers expect international travel intentions will be further prioritized going forward, with the survey indicating 20% growth in 2014 (figure 30); 3) the proportion of consumers using flights to travel to their chosen holiday destination has risen to 19.6%, up 13% year-on–year (figure 30); and 4) we highlight the increased significance of international travel in Saudi Arabia and Russia in figure 32, but also the expected momentum from

Figure 30

Although 77% of holiday-based transport is cars, buses and trains What was the main form of transport you used to reach your holiday destination? Source: Credit Suisse Emerging Consumer Survey

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China. Overall, we expect intraregional travel will continue to dominate the evolution of international Asian consumer travel, whereas Russian and Middle Eastern consumers prioritize intra-EMEA destinations.

Income growth is the structural driver: As almost all of our survey participants provide details on household monthly income, we can assess the income elasticity for holidaying, taking flights and travelling abroad. We note that 1) the tendency to take holidays is 65% correlated with income, with an income elasticity of 0.2x, and a 1% rise in vaca-tioning requires an average monthly household income increase of USd 125; 2) we estimate that the propensity to travel by air on holiday is 79% correlated with income levels, has an income elas-ticity of 0.8x, with a household income increase of USd 107 per month needed to add 1% to the ten-dency to fly; and 3) the survey data point to a 70% correlation between income levels and taking inter-national holidays. The highest assessed income elasticity is 0.9x and we believe a 1% rise in inter-national holidays requires a USd 170 increase in monthly household income.

figures 33 to 35 plot various measures of travel penetration against monthly income. Each scatter point represents a specific income group in one of the nine countries surveyed. As the charts display, the tendency for each group to travel (the further up they are on the y-axis) is highly correlated to their respective income level (the further down they are on the x-axis).

Within the survey, countries with higher GdP-per-capita levels exhibit a greater propensity to take holidays, however, plans to increase actual spend-ing show strong momentum in most regions sur-veyed. domestic travel may be the focus at present but more will be accounted for by international tour-ism as time progresses. Our survey, in many ways, highlights that consumers are now close to such an inflection point. As in other areas of discretionary spending, income growth will remain the key driver of this shift.

Figure 33

Tendency to take a holiday 65% correlated with income levels, with elasticity of 0.2xx-axis monthly household income (USd) vs. y-axis % taking a holiday in last 12 months Source: Credit Suisse Emerging Consumer Survey

Figure 34

Tendency to fly 79% correlated with income levelsx-axis monthly household income (USD) vs. y-axis % flying when going on holiday in last 12 months Source: Credit Suisse Emerging Consumer Survey

Figure 35

Tendency to take an international holiday 70% correlated with income levelsx-axis monthly household income (USd) vs. y-axis % taking an international holiday in last 12 months Source: Credit Suisse Emerging Consumer Survey

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Growth in sales in emerging markets is a key driver for all multinational pharmaceuticals companies and despite a disappointing slowdown in 2013 sales, all the key players expect to see growth reaccelerate next year as one-off problems no longer mask underlying demand growth.

from a healthcare perspective in this year’s sur-vey, we have continued to look at access to state-funded healthcare, the level of direct payments for services, the willingness to pay a premium for inter-national brands and we have added – for the first time this year – a question on the consumer’s atti-tude towards the safety and efficacy of local brands.

Access to state-funded healthcare: This sur-vey shows a small overall increase in access to state-funded healthcare (with decreases in India,

Health and safety

Figure 36

Reported access to state-funded healthcare split into rural and urban areasSource: Credit Suisse Emerging Consumer Survey

In healthcare, we note that there is a trend towards government programs increasing access for the consumer. Within the environment of a growing GdP, we would expect this to be supplemented by increased individual spending. Mounting concern over the safety of local brands is mirrored by a foreign brand ‘premium’ beginning to take hold, as consumers look more towards the products offered by multinationals.Jo Walton

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Figure 37

Healthcare spend per capita rises with wealthSource: World Bank (Healthcare),IMf (GdP)

Saudi Arabia and Turkey, but increased access reported in Brazil and South Africa). Of note is a narrowing of the differential access to state-funded healthcare between urban and rural China and an apparent deterioration in rural access in Russia. Access to prescription pharmaceuticals and vac-cines follows the overall healthcare trend, but access remains at a significantly lower level than emergency medical care in hospitals in all countries bar Brazil. The decrease in reported access to state-funded healthcare in India could be a perverse response to greater utilization of private healthcare, perhaps because of concerns over quality. Govern-ment programs are theoretically increasing access, but the decrease in reported access to state-funded healthcare in India has been matched by an increase in the proportion of the population who reported they paid for healthcare themselves.

Spending on healthcare/medicines: We observed a small increase in overall healthcare spending as a percentage of disposable income,

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Figure 38

Reported access to state-funded healthcare country dataSource: Credit Suisse Emerging Consumer Survey

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Figure 39

Attitude to local brands, % who expressed opinion Source: Credit Suisse Emerging Consumer Survey

Figure 40

Premium for international brands versus element of doubt associated with local brands Source: Credit Suisse Emerging Consumer Survey

based on a population-weighted analysis and an absolute increase in per-capita spending of +4% purchasing power parity (PPP) (+1% USd) for those who regularly purchase medicines. Out-of-pocket spending fell markedly in Saudi Arabia and Turkey, and grew in Brazil and China, although growth in both countries was driven largely by the highest income cohorts with no change in spending for aver-age income families. We expect individual spending to be supplemented by a growing government provi-sion, with data continuing to support increased spending based on growing GdP (figure 37).

Attitude to brands: The highest level of trust in local pharmaceutical brands was seen in Indonesia, where respondents reported they were more than 80% satisfied with the safety and efficacy of local drugs, closely followed by Brazil with nearly 80%. China, India, Russia and Turkey all recorded an overall trust level of only around 50%, with China exhibiting notable concerns about safety as well as efficacy, whereas concern in India focuses on safety, in particular.

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SEMERGInG COnSUMER SURvEy 2014_35

Willingness to pay a premium price: This survey shows the expected link between an overall lack of trust in local brands and a willingness to pay a pre-mium price for international brands. In Brazil and Indonesia, where trust is high, less than 5% of the population said they would pay more than a 10% premium for an international brand. In Russia, China, Mexico and South Africa, this figure was around 10%. In most markets, at least 30% of sur-vey respondents would consider paying a 0%–10% premium for international brands, but less than 10% would consider paying a premium greater than 10%. This may give MnCs little incremental pricing power given their generally higher cost structure compared to locals.

Brazil is not a strong key driver: In contrast to western markets, where the elderly consume significantly more healthcare/pharmaceuticals than younger age cohorts, we continue to see a much more moderate increase in consumption with age in all the surveyed EM markets. We believe that this reflects the concentration of wealth in the hands of the young in these EM countries, which contrasts to the west, where wealth is seen to be more in the hands of the elderly. In this survey, the elderly have a higher unit consumption but not a greater con-sumption value, suggesting a trade-down in price or greater price sensitivity with age. The expected removal of the one-child policy in China may further reinforce spending in the hands of the young in this important market.

Expectations for future spending: Once again, the proportion of respondents who expected

to pay less for medicines next year was higher (32%) than those who said they expected to pay more (13%). Over 40% of Brazilians, Chinese and Mexicans expect to pay less for medicines next year. Similarly optimistic responses in the 2012 survey were not linked to an actual reduction in spending reported in 2013.

Expectations for EM pharmaceuticals mar-ket growth: 2012 and 2013 were disappointing years for MnC growth in EMs with some market-wide issues (e.g. China’s review of marketing prac-tices) and company-specific issues (e.g. Sanofi in Brazil) depressing growth (figure 44).

Industry audit data continues to suggest that growth in emerging markets will be one of the key drivers of overall pharmaceuticals growth over the next five years, contributing around 4% per annum to an aggregate growth rate of only 5% -6%, which indicates a minimal contribution from developed markets. Our own forecasts for European-based MnCs show lower overall growth of only 2% -3% until 2017, with EMs making a significant contribu-tion to growth.

We expect the traditional drivers of demand growth, namely increasing wealth and increasing healthcare infrastructure, to drive demand; how-ever, we also expect governments will try to direct as much investment as possible into supporting local generic producers and that MnCs will con-tinue to lose shares to domestic-based competition in these growing markets. However, the theme of domestic brand competition is an issue that argu-ably exists beyond healthcare as we see later. P

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Figure 41

Will you pay more or less over the next 12 months for medicines?Source: Credit Suisse Emerging Markets Consumer Surveys 2013 and 2014, Credit Suisse estimates

Figure 43

Credit Suisse forecast contribution to global growth for EU majors (ex acquisition growth)Source: Credit Suisse estimates

Figure 42

IMS health forecasts of growth components 2008–2017Source: IMS Health (IMS Institute for Healthcare Informatics, The Global Use of Medicines Outlook through 2017. nov. 2013), Credit Suisse estimates

Figure 44

Underlying pharma growth for EU pharma companies (each region calculated on its own)Source: Company data, Credit Suisse estimates

Figure 45

Average spend on healthcare indexed to 18–29 cohort EM vs. US 2009 census dataSource: Credit Suisse estimates

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Evolution of brand consumptionThe evolution and momentum of brands is an aspect central to both global and local consumption. We believe the practice of trading-up to branded goods and premiumization will ultimately remain secular trends among emerging consumers across the income scale.Eugène Klerk, Karim Salamatian, Mujtaba Rana,Nic Sochovsky, Rogerio Fujimori

Over the course of the four surveys, we have been able to use the survey data to analyse the role and impact of brands. We have asked consumers to higlight specific brand names they have both pur-chased, and are planning to purchase, in the autos, consumer discretionary, HPC, staples, and tech-nology spheres. In aggregate, this accounts for over 700 local and foreign brands, for which we have annual purchase data over the entire income scale. We provide a detailed look at some of the key emerging market brands by category in figures 64 and 65. Below we leverage this data to explore the drivers of brand preferences and specifically income. The low income consumer is becoming an important player.

You pay for what you get

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Figure 49

Percentage point change in momentum for spending intentions (2013/2012 vs. 2012/2011)Source: Credit Suisse Emerging Consumer Survey

Positive outlook for lifestyle brands and spending

Figure 46

Change in intention to spend more (2013 vs. 2012)Source: Credit Suisse Emerging Consumer Survey

Figure 47

Change in intention to spend more (2013 vs. 2012)Source: Credit Suisse Emerging Consumer Survey

Figure 48

Intention to spend more (2013)Source: Credit Suisse Emerging Consumer Survey

Lifestyle brands are about fulfilling promises and creating loyalty, and nowhere is this more apparent than in emerging markets. Consumers look to brands because of their aspi-rational qualities, but the nature of this aspiration is changing with greater demand for smaller, niche and even less well-known brands. It is critical for investors to align their portfolio exposure with consumers’ more discerning brand preferences. Our survey suggests some clear developments for brands.

• firstly, the survey shows that purchase momen-tum for categories in which brands are more rele-vant such as discretionary goods in fashion apparel, perfumes and leather goods (figure 47) is stronger than it is for more basic goods (figure 46). In addi-tion, we note that absolute intentions to spend on

luxury items are also higher than they are for sta-ples (figure 48). This is consistent with the analy-sis of spending by category shown earlier and of course the environment of improving wealth. Asia is the stand out in this context. • Secondly, intentions to spend, especially on more

expensive discretionary items, are not only strong for higher income levels but are also rising fast for lower and medium income groups. furthermore, our 2013 survey shows that this momentum for lower income groups is stronger this year that it was in our 2012 survey. The base of brand aware-ness is widening. • Thirdly, our summarized survey on brand-related

spending intentions do not differ greatly from coun-try to country. That said, we note that the results for China and India appear slightly more bullish than those for Russia and Brazil.

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Figure 50

Spending intentions in ChinaSource: Credit Suisse Emerging Consumer Survey

Figure 51

Spending intentions in IndiaSource: Credit Suisse Emerging Consumer Survey

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Spending intentions in BrazilSource: Credit Suisse Emerging Consumer Survey

Figure 53

Spending intentions in RussiaSource: Credit Suisse Emerging Consumer Survey

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Figure 54

Emerging market consumers still generally prefer domestic over western brands … Source: Credit Suisse Emerging Consumer Survey

The foreign vs. domestic brand battleOne new addition to this year’s survey is a broader assessment of consumers’ preference for western versus domestic brands. It allows us to explore one of our lond standing themes of for-eign vs domestic brand appetite in more detail.

Aspirations and needs

The overall results suggest a preference to “buy local” save notable exceptions in Russia and Saudi Arabia. Given the majority of emerging market con-sumer spending decisions relate to basic needs (consumer staples) as average income levels are low, this is perhaps no surprise. domestic brands

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… but aspirations for western brand purchases run high for discretionary items, except in Jewellery. Source: Credit Suisse Emerging Consumer Survey

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Figure 56

Local brands outperform international brands in 2013 vs. 2012 …Change in penetration rates of lower income levels, 2013 vs. 2012. *Penetration defined as the percentage of people having bought local or international brands in the last 6–12 months. Source: Credit Suisse Emerging Consumer Survey

Figure 57

… and to a greater extent than in 2010–2013 Change in penetration rates of lower income levels, 2010 vs. 2013. *Penetration defined as the percentage of people having bought local or international brands in the last 6–12 months. Source: Credit Suisse Emerging Consumer Survey

have a dominant and, if anything, increasing share of this market. Certain countries such as India and Indonesia, in fact, have domestic preference levels way beyond this – at 76% and 67%, respectively (figure 54).

However, when we look at aspirational behavior of emerging market consumers, it more heavily points in the direction of western brands (figure 55). Around 51% of consumers surveyed across all markets planned to purchase western brands for discretionary categories in the next 12 months, with fashion apparel, sports shoes & wear, per-fumes and leather goods being the highest. On average, between these four areas, 58% expect to buy western goods. Sports shoes, in particular, attract a 73% western brand preference – a level potentially explained by the dominance of produc-ers such as nike, Adidas and Puma.

Certain exceptions apply, of course, with Brazil-ians favouring domestic perfumes (60%), Indians planning on purchasing local leather goods (76%), and Chinese consumers having a preference for domestic apparel (60%).

jewellery, as a sector, reflects a domestic bias across the board with only 24% of consumers planning to buy western brands. 63% of consum-ers, conversely, are planning on purchasing domes-tics goods (with the remainder undecided) – the highest level of local ‘loyalty’ seen in our consumer discretionary categories. The reasoning behind this is, in our view, two-fold 1) the purchase of jewellery is primarily motivated by the commodity value in emerging markets; 2) western branded jewellery penetration is low in emerging markets.

Where are local brands winning?

If international brand recognition and momentum remains the key trend in the discretionary space, we have highlighted in previous surveys that domestic brands have plenty to offer in more staple products. It was implicit in the data above of course. An important feature to stress here is that not only does it remain the case in this survey, but the international brands have if anything been steadily losing traction as figures 56 and 57 reflect.

The charts show the difference in the growth rates of market penetration for international versus domestic brands in the various consumer staple categories both in 2013 and over the 2010–13 period. 2013 has seen a major fall-off in a range of categories – soft drinks, water, cosmetics and beer. The caveat with the latter is of course that many “local” beer brands are ultimately produced and owned by the large international brewers. Interestingly, within this region, ABI’s brand activa-tion as part of the fIfA Confederations Cup (seen as a dry run for the World Cup in 2014), has had the desired effect with Skol, Brahma and Antarc-tica (seen as ‘local’ beers) all showing higher pen-etration rates relative to a year ago.

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Figure 58

Changes in consumers’ purchase intentions for leather goods (2013 vs. 2012) – red are niche brandsSource: Credit Suisse Emerging Consumer Survey

Figure 59

China – brands worth paying more for (change in ranking 2013 vs. 2012) Source: Credit Suisse Emerging Consumer Survey

Figure 60

Russia – brand purchases in last three months (change 2013 vs. 2012 survey)Source: Credit Suisse Emerging Consumer Survey

We have reviewed the survey to look for any change in consumers’ appetite for niche versus heavily-mar-keted luxury brands. discerning emerging consum-ers may be looking less and less for the logos they are familiar with. Rather, exclusivity and uniqueness are the new ‘logos’. This certainly becomes appar-ent for higher value discretionary categories.

It seems the motivation is less about showing conspicuous consumption with popular logos than about showing discernment and individuality through understated, but broadly known, niche brands. figure 58 shows leather goods brands with arguably high profile product branding (louis vuitton, dior, fendi) faring less well in momentum terms than those with lower profile logos (dunhill, Bally, ferragamo). One wonders to what extent counterfeiting may be impacting the higher profile brands?

By asking consumers which brands they would ‘be willing to pay more for’ in general (fashion, leather goods, shoes, jewellery etc), we are able to evaluate brand `rankings’ relative to each other (figure 59). The likes of louis vuitton still hold their own. Hermes is notable for rising in the rank-ings here and also strong in spending intentions in figure 58.

In line with developments seen across the devel-oped world, we expect the smaller nice labels to gain market share in developing countries as con-sumers begin to differentiate, especially as their spending power increases.

Luxury brands – new niche brands emerging?

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% change in planned purchases 2013 vs. 2012 (survey average)4.0

3.0

-3.0

-2.0

-1.0

0.0

Hermes

0Hugo Boss

0Polo Ralph

0Dolce & Gabbana

0Prada

0Gucci

0Burberry

-1Lacoste

2

-1Valentino

-1Calvin Klein

1Pierre Cardin

1Giorgio Armani

1Louis Vuitton

1Dunhill

1Christian Dior

1Versace

-4Parlament

-3Nemiroff

-2Baileys

-1Putinka

-1Russian Standard

3Jack Daniels

3Medoff

4Chivas Regal

4Mernaya

Zelyonaya Marka 8


Sector Country Brand % penetration Parent company

2010 2011 2012 2013

LOWER income

Soft drinks Brazil Guarana Antarctica 36% 42% 43% 59% Ambev Pn

Soft drinks India Mirinda 25% 27% 27% 32% PepsiCo Inc.

Soft drinks Saudi Arabia Mirinda 39% 40% 44% 52% PepsiCo Inc.

Autos India Honda 0% 0% 0% 33% Honda Motor Co ltd

fashion Brazil Hering 2% 4% 7% 13% Cia. Hering

fashion Saudi Arabia Givenchy 2% 3% 7% 10% lvMH

fashion Saudi Arabia zara 11% 13% 19% 24% Inditex

fashion Saudi Arabia H&M 0% 6% 8% 20% Hennes & Mauritz AB

Handsets India Samsung 9% 9% 21% 30% Samsung Group

Handsets Indonesia Blackberry 0% 1% 2% 8% Research In Motion limited

Handsets Indonesia Samsung 3% 3% 8% 9% Samsung Group

Handsets Saudi Arabia Samsung 1% 3% 18% 53% Samsung Group

Handsets China Samsung 10% 11% 12% 21% Samsung Group

HIGHER income

Beer Brazil Heineken 12% 12% 13% 22% Heineken

Spirits Brazil Absolut 5% 9% 25% 34% Pernod Ricard

Spirits India Royal Stag 8% 16% 18% 25% Pernod Ricard

Bottled water Indonesia Aqua 84% 95% 100% 100% Groupe danone

Cosmetics Brazil nivea 16% 18% 40% 40% Beiersdorf AG

fashion Saudi Arabia H&M 0% 7% 14% 26% Hennes & Mauritz AB

Sportswear China Adidas 37% 37% 42% 46% Adidas AG

Handsets Brazil Apple 2% 2% 8% 22% Apple Inc.

Handsets India Samsung 10% 17% 28% 35% Samsung Group

Handsets Saudi Arabia Apple 4% 9% 30% 34% Apple Inc.

Handsets Saudi Arabia Samsung 1% 4% 20% 37% Samsung Group

Handsets China Apple 4% 6% 15% 37% Apple Inc.

Tv/computers Saudi Arabia Apple 4% 18% 22% 43% Apple Inc.

Tv/computers China Apple 11% 29% 37% 37% Apple Inc.

Figure 61

Brands with steadily growing penetration ratesSource: Emerging Consumer Survey 2014

Against the background of these various themes (staples vs. discretionary, international vs. domestic), we use our last four surveys to identify companies (and their brands) that have managed to consistently increase penetration in either the lower or the higher income categories, or those that have been losing it. In figures 61 and 62, we show the absolute pene-tration of various brands in specific countries (as measured by the percentage of respondents who purchased that brand over the last year. We show brands that have shown either increases or decreases in every consecutive year since 2010.

Positive-momentum companies: Structurally rising penetration

Across staples, we find products from PepsiCo and Ambev, whereas in discretionary brands, Samsung continues to increase its penetration with handset sales to lower income groups in India, Indonesia, Saudi Arabia and China, while also hav-ing traction in some higher income markets as well. Structural-growth brands among higher income groups broadly include Heineken, Pernod Ricard (Absolut / Royal Stag) and Beiersdorf (Nivea)

Brand momentum and brand erosion


Sector Country Brand % penetration Parent company

2010 2011 2012 2013

LOWER income

dairy China yili 64% 56% 51% 41% yili Group

Soft drinks Brazil dolly 25% 24% 22% 14% dolly

Soft drinks Indonesia fanta 67% 58% 47% 47% The Coca-Cola Company

Soft drinks Turkey Coca-Cola - 77% 77% 63% The Coca-Cola Company

Soft drinks Turkey Pepsi Cola - 29% 25% 30% PepsiCo Inc.

Soft drinks China Pepsi Cola 46% 35% 33% 29% PepsiCo Inc.

Beer Turkey Efes Pilsen - 90% 84% 71% Anadolu Efes

Beer China Peroni 9% 7% 7% 0% SABMiller

Bottled water Russia Aqua Minerale 28% 23% 22% 13% PepsiCo Inc.

Bottled water Turkey Erikli - 30% 29% 27% nestle S.A

Autos Brazil ford 12% 10% 9% 6% ford Motor Company

Autos Saudi Arabia ford 11% 8% 8% 8% ford Motor Company

Autos Turkey ford - 12% 9% 9% ford Motor Company

Autos Turkey Renault - 21% 19% 16% Renault S.A.

Cosmetics Turkey Avon - 42% 36% 34% Avon Products

Cosmetics Turkey nivea - 25% 23% 16% Beiersdorf AG

Handsets Indonesia nokia 60% 48% 45% 34% nokia Corporation

Handsets Saudi Arabia nokia 82% 52% 36% 21% nokia Corporation

Handsets Turkey nokia - 66% 56% 44% nokia Corporation

Handsets China nokia 38% 36% 25% 17% nokia Corporation

HIGHER income

dairy Russia veselyi Molochnik 25% 24% 22% 21% PepsiCo Inc.

dairy Indonesia Indomilk 36% 31% 22% 18% Indofook CBP

dairy Saudi Arabia Pasture 80% 79% 78% 56% Almarai

dairy China Mengniu 69% 68% 63% 57% China Mengniu dairy Company limited

Beer Brazil Brahma 46% 43% 42% 41% Anheuser-Busch InBev nv

Bottled water Russia Aqua Minerale 39% 39% 34% 33% PepsiCo Inc.

noodles Indonesia Indornie 96% 82% 81% Indofood Sukses Makmur Tbk P

Autos India TATA 16% 13% 9% 9% Tata Motors ltd

Autos Turkey Renault - 15% 8% 7% Renault S.A.

Autos China Honda 13% 11% 9% 8% Honda Motors

Handsets Brazil Motorola 37% 19% 12% 2% Google

Handsets India nokia 72% 62% 49% 47% nokia Corporation

Handsets Saudi Arabia nokia 73% 36% 15% 7% nokia Corporation

Handsets Turkey nokia - 70% 50% 6% nokia Corporation

Handsets China nokia 47% 43% 22% 12% nokia Corporation

Handsets South Africa nokia - - 30% 29% nokia Corporation

Tv/computers Indonesia Acer 67% 38% 37% 13% Acer Inc.

Tv/computers Saudi Arabia dEll 15% 9% 8% 6% dell Inc.

Figure 62

Brands with steadily declining penetration ratesSource: Credit Suisse Emerging Consumer Survey


Ticker Company Criteria

Trend Dominating

Low income High income Low income High income

AdSGn f Adidas

1929 HK Chow Tai fook jewellery

HMB ST Hennes & Mauritz

ITx MC Inditex

AMAR3 Marisa lojas SA

nESn vx nestle

PEP US PepsiCo Inc.

PM US Philip Morris

UHR vx Swatch

UnSP BO United Spirits

Figure 63

Companies with positive penetration rates across all incomes and leading market shares Source: Credit Suisse Emerging Consumer Survey

in consumer staples and Apple from the consumer discretionary sector. The global retailers such as H&M and Zara (Inditex) are continuing the momen-tum we have shown in previous surveys.

Samsung does not have the same appeal among higher income groups as Apple. Apple is the handset manufacturer that not only increased its penetration in each of the last four years with high income earners in China but now also ranks above Samsung with a 37% share, suggesting that it benefits most from a continuing rise in income levels across emerging markets.

Negative-momentum companies: Structurally falling penetration

To analyse where momentum has been fading, in figure 62 we look at companies that suffer from a structural decline in penetration amongst emerging market consumers. Brands affected by this trend in the lower income consumer segment in various countries include Fanta (Indonesia and Turkey), Ford (Brazil, Saudi Arabia and Turkey) and Nokia (Indonesia, Saudi Arabia, Turkey and China).

Among the higher income groups, we find that nokia also suffers from market share losses. While there is evidence of weakness in international sta-ples brands in areas such as bottled water, we would note the weaker trends in dairy brands at Indofood (Indonesia) and Mengniu Dairy (China). This ties in well with spending patterns highlighted earlier. TATA Motors (India) would be reflective of the weakening of local discretionary brands.

Brand growth, consistency and footprint

When it comes to highlighting a company’s overall brand strength, we have wanted to combine momentum in brand penetration with the footprint of the companies concerned. The comprehensive tables in figures 64 and 65 provide detail to do so. Each table shows the category of spending, a key brand and its penetration in both income groups within the market. Since this is now our fourth survey, we calculate the full 3-year trend in momentum – essentially showing the percentage growth or decline in the penetration of brands from 2010 to 2013.

Below in figure 63, we provide a very simple and far-from-perfect drill-down. We have analyzed those brands that have momentum, akin to the tables pre-viously, but also considering the companies’ broader brand portfolios and also their footprint across the income scale. The ten companies that emerge and own a range of brands that have momentum across both the low and high income scale but also have a significant footprint among these consumers (as defined by a top three market share in that cate-gory, and country). The latter consideration arguably has an eye to growth and momentum.

We would stress that the criteria to arrive at this short list are very onerous and in that respect by no means a mutually exclusive list of brand strength and potential. for example, few of the luxury brands that are simply the preserve of the higher income brackets would be included (e.g. LVMH, BMW, Apple). Equally, some of the brands that have reso-nance at the low income end and command growth potential for that reason miss the cut (e.g. Toyota, Cia Hering, Samsung). Hence, the more detailed tables and our databook merit examination.


To conclude, trading up to branded goods and pre-miumization should remain secular trends among emerging consumers. Rising income trends should continue to support an ongoing shift from non-branded to branded goods among emerging con-sumers. Within each product segment, we believe that emerging consumers will continue to trade up to brands offering superior value-added (functional or emotional). And it is really in the consumer dis-cretionary space that international brands (still) have a significant edge over local brands, with the broad-based rising trends in purchase intentions

Concluding remarks... rewards and risksrevealed in this year’s survey boding particularly well for them.

However, the ongoing international brand ero-sion in essential items remains a trend to observe along with the risks and challenges to the strate-gies of global consumer goods companies. not only do companies and investors need to be con-scious of a switch away from staple to more discre-tionary items, but the share the global companies command of this staples market can also be at risk. Their corporate strategies have to be positioned to deal with this.P

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Figure 64

Food and beverages – brand market penetration according to income groupSource: Credit Suisse Emerging Consumer Survey

Sector Brand/country % penetration at lOWER income

% penetration at HIGHER income

Average % penetration

Parent company (if applicable) listed/private

2012 2013 3-year growth


2012 2013

dai

ry

danone (Brazil) 45% 33% 0% 46% 47% 1% 46% 40% danone Bn fPnestle (Brazil) 55% 51% 12% 78% 64% -2% 67% 58% nestle S.A nESn vxvigor (Brazil) 35% 16% -4% 25% 31% 10% 30% 23% jBS jBSS3Parmalat (Brazil) 29% 34% -6% 47% 42% -3% 38% 38% lactalis Group PlT.MIdomik v derevne (Russia) 24% 32% 11% 59% 46% 11% 42% 39% PepsiCo Inc. PEP USAmul (India) 32% 45% -4% 54% 56% 4% 43% 51% GCMMf PrivateBritania (India) 12% 25% 20% 33% 18% 11% 23% 21% Britannia Industries limited 500825Mother daily (India) 16% 25% 5% 25% 17% 4% 21% 21% national dairy development Board Privatefrissian flag (Indonesia) 51% 67% 2% 56% 43% -10% 54% 55% frieslandCampina PrivateKraft (Saudi Arabia) 33% 33% -1% 37% 36% -10% 35% 35% Kraft foods Group KRfTMengniu (China) 67% 55% -13% 63% 57% -12% 65% 56% China Mengniu dairy Company limited 2319 HKyili (China) 51% 41% -23% 59% 45% -13% 55% 43% yili Group StateBright (China) 16% 17% -3% 36% 33% -2% 26% 25% Bright food (Group) Co., ltd Statenestle (South Africa) 57% 15% n/A 65% 32% n/A 61% 24% nestle S.A nESn vxClover (South Africa) 87% 47% n/A 96% 70% n/A 92% 59% Clover Industries limited ClR Sj

Cig

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Marlboro (Brazil) 7% 47% n/A 28% 32% n/A 18% 40% Philip Morris International Inc. PMHollywood (Brazil) 18% 11% n/A 14% 21% n/A 16% 16% British American Tobacco BATSGold flake (India) 45% 12% n/A 41% 56% n/A 43% 34% ITC limited ITC Indji Sam Soe (Indonesia) 17% 14% -1% 24% 28% 2% 21% 21% Hanjaya Mandala Sampoerna Tbk PT HMSP IjGudang Garam Surya (Indonesia) 22% 16% -4% 23% 3% -33% 23% 10% Gudang Garam GGRM IjSampoerna A Mild (Indonesia) 15% 17% 5% 51% 36% -7% 33% 27% Hanjaya Mandala Sampoerna Tbk PT HMSP IjMarlboro (Saudi Arabia) 30% 41% n/A 11% 57% n/A 21% 49% Philip Morris International Inc. PM USdunhill (South Africa) 16% 10% n/A 21% 29% n/A 19% 20% Souza Cruz SA CRUz3 BzPeter Stuyvesant (South Africa) 60% 46% n/A 62% 42% n/A 61% 44% British American Tobacco BATS ln

Sof

t drin

ks

Guarana Antarctica (Brazil) 43% 59% 23% 74% 65% 10% 59% 62% Ambev Pn AMBv4 Bzdolly (Brazil) 22% 14% -11% 8% 12% -1% 15% 13% dolly PrivatePepsi Cola (Russia) 19% 54% 29% 30% 30% 8% 25% 42% PepsiCo Inc. PEP USCoca-Cola (India) 21% 30% 11% 37% 26% -1% 29% 28% The Coca-Cola Company KO US7-Up (Saudi Arabia) 60% 70% 8% 60% 68% 1% 60% 69% dr Pepper Snapple Group dPS USCoca-Cola (Saudi Arabia) 23% 28% 7% 30% 39% 11% 27% 34% The Coca-Cola Company KO USPepsi Cola (Saudi Arabia) 74% 82% 11% 74% 82% 4% 74% 82% PepsiCo Inc. PEP USCoca-Cola (Turkey) 77% 63% n/A 83% 63% n/A 80% 63% The Coca-Cola Company KO USPepsi Cola (Turkey) 25% 30% n/A 37% 5% n/A 31% 18% PepsiCo Inc. PEP USCoca-Cola (China) 61% 56% -5% 68% 69% 1% 65% 63% The Coca-Cola Company KO USfanta (China) 23% 21% 6% 27% 23% 0% 25% 22% The Coca-Cola Company KO USSprite (China) 54% 47% 2% 36% 52% 5% 45% 50% The Coca-Cola Company KO USCoca-Cola (South Africa) 69% 68% n/A 84% 81% n/A 77% 75% The Coca-Cola Company KO USSprite (South Africa) 33% 35% n/A 50% 41% n/A 42% 38% The Coca-Cola Company KO USSparletta (South Africa) 56% 13% n/A 77% 25% n/A 67% 19% The Coca-Cola Company KO US

Bee

r

Heineken (Brazil) 1% 2% 2% 13% 22% 10% 7% 12% Heineken HEIASkol (Brazil) 44% 67% 4% 62% 68% -4% 53% 67% Anheuser-Busch InBev nv ABI BBBrahma (Brazil) 23% 47% 12% 42% 41% -5% 33% 44% Anheuser-Busch InBev nv ABI BBAntarctica (Brazil) 18% 28% 9% 43% 25% 15% 31% 27% Ambev Pn AMBv4nova Schin (Brazil) 55% 42% 20% 6% 11% 6% 31% 27% Brasil Kirin PrivateItaipava (Brazil) 24% 16% 1% 29% 16% -11% 27% 16% Grup Petropolis ltda. Privatezhigulevskoe (Russia) 21% 22% -5% 23% 12% 6% 22% 17% Carlsberg Group CARl AHaywards (India) 34% 14% 9% 18% 13% 9% 26% 14% SABMiller SAB lnKingfisher (India) 84% 49% -28% 62% 42% -28% 73% 46% United Breweries ltd UBBl InTuborg (Turkey) 22% 45% n/A 43% 60% n/A 33% 53% Turk Tuborg Bira ve Malt Sanayii A.S. TBORG TIEfes Pilsen (Turkey) 84% 71% n/A 70% 67% n/A 77% 69% Anadolu Efes AEfES TIBudweiser (China) 6% 5% -2% 31% 31% -1% 19% 18% Anheuser-Busch InBev nv ABI BBPeroni (China) 7% 0% -9% 11% 0% -13% 9% 0% SABMiller SAB lnTsingtao (China) 40% 37% 0% 51% 46% 6% 46% 42% Tsingtao Brewery Co. 168 HKyanjing (China) 22% 23% -14% 25% 26% -2% 24% 25% Beijing yanjing Brewery StateSnow (China) 44% 54% 17% 39% 43% 8% 42% 49% China Resources Enterprise StateAmstel (South Africa) 7% 6% n/A 43% 10% n/A 25% 8% Heineken HEIA nA

Spi

rits

johnnie Walker (Brazil) 10% 8% -20% 45% 42% 9% 28% 25% diageo plc dGE lnSmirnoff (Brazil) 57% 30% -13% 42% 40% 1% 50% 35% diageo plc dGE lnAbsolut (Brazil) 7% 6% 4% 25% 34% 29% 16% 20% Pernod Ricard RI fPBacardi (Brazil) 8% 6% 5% 12% 12% 9% 10% 9% Bacardi limited Private5 Ozer (Russia) 19% 6% -4% 31% 9% -4% 25% 8% Alcohol Siberian Group, Inc PrivatePutinka (Russia) 9% 6% 2% 11% 9% 0% 10% 8% Moscow distillery Cristall StateMc’dowells no.1 (India) 22% 46% 29% 13% 35% -20% 18% 41% United Breweries ltd UBBl InRoyal Stag (India) 14% 0% -38% 18% 25% 17% 16% 13% Pernod Ricard RI fPjack daniels (Turkey) 18% 7% n/A 41% 17% n/A 30% 12% Brown-forman Corporation Bf/A USj&B (South Africa) 13% 4% n/A 28% 18% n/A 21% 11% diageo plc dGE lnjack daniels (South Africa) 10% 1% n/A 24% 22% n/A 17% 12% Brown-forman Corporation Bf/A USSmirnoff (South Africa) 22% 14% n/A 20% 9% n/A 21% 12% diageo plc dGE ln

Bot

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er

Bonafont (Brazil) 26% 14% 11% 18% 25% 9% 22% 19% Groupe danone Bn fPAqua Minerale (Russia) 22% 13% -15% 34% 33% -6% 28% 23% PepsiCo Inc. PEP USEvian (India) 9% 1% 1% 4% 2% 2% 7% 2% Groupe danone Bn fPnestle (Saudi Arabia) 31% 33% 0% 42% 54% 13% 37% 44% nestle S.A nESn vx

Brazil Russia India Indonesia Saudi Arabia China South Africa Turkey not

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Sector Brand/country % penetration at lOWER income

% penetration at HIGHER income

Average % penetration

Parent company (if applicable) listed/private



2012 2013

Aut

os

fiat (Brazil) 48% 38% -2% 32% 32% 6% 40% 35% fiat S.p.A. f IMvolkswagen (Brazil) 18% 41% 11% 18% 15% -14% 18% 28% volkswagen AG vOW3 Gyford (Brazil) 9% 6% -6% 10% 11% 8% 10% 9% ford Motor Company f USGM (Brazil) 7% 14% -1% 8% 13% -4% 8% 14% General Motors Co GM USlada/vAz/zhiguli (Russia) 24% 48% 16% 21% 7% -5% 23% 28% Renault S.A. RnO fPHyundai (India) 26% 3% -1% 18% 13% -2% 22% 8% Hyundai Motor Co 005380 KSMaruti Suzuki (India) 64% 19% -52% 43% 45% -1% 54% 32% Maruti Suzuki India ltd MSIl In TATA (India) 5% 0% 0% 9% 9% -7% 7% 5% Tata Motors ltd TTM USdaihatsu (Indonesia) 0% 30% 22% 8% 16% -21% 4% 23% daihatsu Motor Co., ltd. 7262 jPMaruti Suzuki (Indonesia) 11% 7% -12% 43% 5% -32% 27% 6% Maruti Suzuki India ltd MSIl In Toyota (Indonesia) 11% 34% 23% 17% 30% 7% 14% 32% Toyota Motor Corporation 7203 jPford (Saudi Arabia) 8% 8% -3% 13% 11% -2% 11% 10% ford Motor Company f USToyota (Saudi Arabia) 36% 36% 2% 31% 10% -17% 34% 23% Toyota Motor Corporation 7203 jPfiat (Turkey) 15% 19% n/A 11% 16% n/A 13% 18% fiat S.p.A. f IMford (Turkey) 9% 9% n/A 13% 4% n/A 11% 7% ford Motor Company f USRenault (Turkey) 19% 16% n/A 8% 7% n/A 14% 12% Renault S.A. RnO fPHyundai (China) 19% 9% 7% 11% 8% 4% 15% 9% Hyundai Motor Co 005380 KSvolkswagen (China) 21% 18% 9% 20% 17% 5% 21% 18% volkswagen AG vOW3 GyToyota (South Africa) 14% 41% n/A 24% 19% n/A 19% 30% Toyota Motor Corporation 7203 jP

Cos

met

ics

natura (Brazil) 44% 46% 14% 69% 66% 12% 57% 56% natura Cosmeticos SA nATU3 BzOriflame (Russia) 28% 25% -3% 9% 4% -12% 19% 15% Orliflame Cosmetics S.A. ORI SSl’oreal (Russia) 13% 7% 2% 17% 20% 8% 15% 14% l’Oreal SA OR fPAvon (Russia) 16% 15% -3% 8% 6% -6% 12% 11% Avon Products AvPfair & lovely (India) 30% 37% -15% 46% 36% -8% 38% 37% Hindustan Unilever limited HUvR InGarnier (India) 7% 4% -2% 20% 13% 1% 14% 9% l’Oreal SA OR fPlux (Saudi Arabia) 53% 35% -18% 46% 17% -30% 50% 26% Unilever UlvR lnnivea (Saudi Arabia) 35% 37% 4% 33% 24% -5% 34% 31% Beiersdorf AG BEI GRAvon (Turkey) 36% 34% n/A 29% 52% n/A 33% 43% Avon Products AvP USnivea (Turkey) 23% 16% n/A 22% 4% n/A 23% 10% Beiersdorf AG BEI GRl’Oreal (China) 11% 12% -1% 27% 29% -1% 19% 21% l’Oreal SA OR fPdabao (China) 24% 21% -2% 13% 9% 2% 19% 15% johnson & johnson jnj USdove (South Africa) 38% 13% n/A 35% 24% n/A 37% 19% Unilever UlvR lnPonds (South Africa) 51% 32% n/A 32% 8% n/A 42% 20% Unilever UlvR ln

fash

ion

Hering (Brazil) 7% 13% 11% 24% 10% -2% 16% 12% Cia. Hering HGTx3 BzC & A Marisa (Brazil) 48% 54% 17% 26% 30% 8% 44% 42% Marisa lojas SA AMAR3Renner (Brazil) 12% 27% 6% 29% 34% 13% 23% 31% lojas Renner lREn3Bata (India) 7% 30% 3% 13% 22% -21% 12% 26% Bata India ltd BATA InPolo Ralph lauren (Indonesia) 8% 4% 0% 19% 30% 22% 9% 17% Ralph lauren Corporation RlBurberry (Saudi Arabia) 8% 4% 3% 7% 14% 9% 8% 9% Burberry BRBy lnGivenchy (Saudi Arabia) 7% 10% 8% 5% 17% 17% 7% 14% lvMH lvMHzara (Saudi Arabia) 19% 24% 13% 14% 29% 10% 18% 27% Inditex IdExy USH&M (Saudi Arabia) 8% 20% 20% 14% 26% 26% 11% 23% Hennes & Mauritz AB HM Bzara (Turkey) 9% 7% n/A 22% 0% n/A 9% 4% Inditex IdExy USBurberry (China) 4% 3% 1% 3% 5% 4% 4% 4% Burberry BRBy lnCalvin Klein (South Africa) 5% 1% n/A 22% 6% n/A 12% 4% PvH Corp PvH USGuess (South Africa) 22% 10% n/A 24% 26% n/A 29% 18% Guess GES US

Spo

rtsw

ear

Adidas (Brazil) 21% 67% 22% 48% 44% 11% 27% 56% Adidas AG AdS Gynike (Brazil) 40% 32% 21% 32% 56% 39% 30% 44% nike, Inc nKE USAdidas (India) 15% 27% 14% 30% 43% 10% 28% 35% Adidas AG AdS Gynike (India) 20% 15% 10% 15% 16% -1% 12% 16% nike, Inc nKE USnike (China) 15% 18% 0% 38% 46% 10% 33% 32% nike, Inc nKE USPuma (South Africa) 30% 14% n/A 15% 25% n/A 23% 20% PPR PP fP

Han

dset

s

Samsung (Brazil) 16% 20% 8% 32% 30% 10% 24% 25% Samsung Group SMSdApple (Brazil) 0% 6% 6% 8% 22% 20% 4% 14% Apple Inc. AAPlSamsung (Russia) 30% 45% 15% 34% 18% 3% 32% 32% Samsung Group SMSd lIApple (Russia) 3% 0% 0% 27% 26% 26% 15% 13% Apple Inc. AAPl USBlackberry (Indonesia) 2% 8% 8% 22% 26% 26% 12% 17% Research In Motion limited RIMM USSamsung (Indonesia) 8% 9% 6% 9% 13% 8% 9% 11% Samsung Group SMSd lIApple (Saudi Arabia) 10% 9% 9% 30% 34% 30% 20% 22% Apple Inc. AAPl USnokia (Turkey) 56% 44% n/A 50% 6% n/A 53% 25% nokia Corporation nOK1v fHApple (China) 1% 13% 12% 15% 37% 33% 8% 25% Apple Inc. AAPl USnokia (China) 25% 17% -21% 22% 12% -35% 24% 15% nokia Corporation nOK1v fHSamsung (South Africa) 21% 21% n/A 21% 28% n/A 21% 25% Samsung Group SMSd lI

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dEll (India) 22% 17% 10% 49% 12% -8% 36% 15% dell Inc. dEll USlG (India) 14% 0% -12% 29% 2% -47% 22% 1% lG Corp. 066570 KSAcer (Indonesia) 22% 35% -38% 37% 13% -54% 30% 24% Acer Inc. ACId lIApple (Saudi Arabia) 23% 14% 9% 22% 43% 39% 23% 29% Apple Inc. AAPl USdEll (Saudi Arabia) 8% 9% -14% 8% 6% -9% 8% 8% dell Inc. dEll USApple (China) 31% 13% 8% 37% 37% 26% 34% 25% Apple Inc. AAPl USlenovo (China) 21% 17% -7% 16% 16% -2% 19% 17% lenovo Group limited 992 HKlG (South Africa) 29% 13% n/A 26% 4% n/A 28% 9% lG Corp. 066570 KSSamsung (South Africa) 26% 21% n/A 22% 28% n/A 24% 25% Samsung Group SMSd lI

Figure 65

Discretionary spending – brand market penetration according to income groupSource: Company data, Credit Suisse estimates

Brazil Russia India Indonesia Saudi Arabia China South Africa Turkeynot

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Credit Suisse Emerging Consumer Survey 2014

BRAZIL (9%*)GdP USD 2190 bn

Consumption USD 1367 bn (62 %)

GdP growth (2013E) 2.5 %

MExICO (9%*)GdP USD 1,327 bn



TURKEY (9%*)GdP USD 822 bn



number of respondents: 15,873

Across 9 countries

71 % in urban areas; 29 % in rural areas

Note: 1. Total GDP for the country shown in nominal USD2. * % of survey sampled from this country3. Country GDP from IMF4. Consumption from Oxford Economics


RUSSIA (9%*)GdP USD 2,118 bn

Consumption USD 1,084 bn (51%)


SAUDI ARABIA (10%*)GdP USD 718 bn



SOUTH AFRICA (10%*)GdP USD 354 bn



CHINA (16%*)GdP USD 8,939 bn

Consumption USD 3,379 bn (38 %)


INDIA (16%*)GdP USD 1,758 bn



INDONESIA (10%*)GdP USD 867 bn




Emerging Consumer Survey 2014


Across 5 geographic locations


The structural optimism among Brazil-ians again comes across in our survey, but near-term risks do emerge. Brazilian consumers remain the most upbeat when judged by the balance of respon-dents who see their personal finances as likely to improve in the next six months.

However, the more immediate per-ceptions are less bullish. When asked whether it was a good time to make a major purchase, Brazilians were the third most pessimistic in our survey – with a net –10% figure claiming it was a bad time. This would be consistent with the prevailing environment of slower economic growth (2% in 2013), social unrest, higher inflation and lower real income growth. To a large degree, the buoyant nature of the longer-term opti-mism might be explained by the ongoing low unemployment rate and its positive impact on real wage growth. Moreover, the high level of optimism may also be supported by ongoing government

sponsored initiatives, including social programs such Bolsa familia, Minha Casa Minha vida (housing subsidies for low-income consumers) and Minha Casa Melhor (subsidies for purchases by low-income consumers), and ample credit availability.

Unsurprisingly, however, the actual year-on-year decline in the degree of optimism has been most acute at the lower end of the income spectrum, as evidenced by a 16% and 36% year-on-year decrease in confidence in the two lowest income brackets we surveyed. This may be primarily explained by the substantial increase in food inflation dur-ing 2013 (5.5% in the last 12 months – the highest level among all the econo-mies surveyed).

With regard to consumption, momen-tum continues to favor the discretionary end. The following sectors showed the greatest momentum in spending: smart-phones (+17% versus +11% in our 2012 survey), fashion apparel (+10%),

computers (+6%), internet access (+5%) and smartphone penetration is still relatively low at 45%, suggesting further ample room for growth, with respondents showing net +8% growth over the coming year. Categories which showed strong forward growth in our 2012 survey, however, are not forecast to grow as strongly this year – autos (+26% versus –4%), meat (+6% versus –13%) and spirits (+3% versus –5%) to name but a few. While penetration of the other categories is already high, we expect them to continue growing at lower rates. More basic spending on beer, carbonated drinks and dairy prod-ucts declined, which may be explained by the negative impact of food inflation on lower income consumers.

BrazilMissing a beat

Key economic and demographic indicatorsSource: IMf, EIU, Un

GdP (2013E) USd 2,190 billion

GdP per capita (2013E) USd 12,118

Population (2013) 200 million

Geographical area 8.51 million km2

number of cities 12 (in excess of 2 million people)

Gini coefficient (2009) 55

Average inflation (2013E) 6.3 %


Real GdP growth (2013E) 2.5 %


Real private consumption growth 2.0 % (2013E)


Consumption as a % of GdP 62.4 % (2013E)

Alexandre Amson, Andrew Campbell, Tobias Stingelin

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Spending momentum and market penetrationSource: Credit Suisse Emerging Consumer Survey

Monthly spending by category (%)Source: Credit Suisse Emerging Consumer Survey

Savings by distribution channel (%)Source: Credit Suisse Emerging Consumer Survey

Nominal growth in household income (%)Source: Credit Suisse Emerging Consumer Survey

Consumer confidence indicatorsSource: Credit Suisse Emerging Consumer Survey

State of personal finances over next six monthsSource: Credit Suisse Emerging Consumer Survey

60

40

50

30

20

-10

10

Personal finances Inflationexpectations

Income expectations

Good time to makea major purchase

Brazil Survey average

0

This survey average

Nominal growth (%) in household income – next 12 months 14.0

12.0

10.0

8.0

4.0

2.0

0.0

6.0

0 2000 4000 6000 8000

Last survey average Income (BRL)

20

15

10

5

-5

-15

-10

0 2010 30 40 50 60 70 80 90

0

100

Dairy

2013 respondents that own or have bought each item (%)

Recorded spending in 2013 vs. 2012

Holidays

Spirits

TV

Cosmetics

Internet access

Mobile phones

Computers

EducationCarbonated drinks

Smartphone

Beer

Cars

Property

30%

20%

25%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

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Educ

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ings

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perty

+lo

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Clo

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-tic

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item

s

Oth

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Aut

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Brazilian monthly spending Overall survey average

0%

60

50

40

30

20

10

Ban

k ac

coun

t

Life

insu

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Sto

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Pro

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No

extra

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Mut

ual f

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% of respondents saving by each method

0

Income (BRL) This survey average Last survey average

Balance better vs. worse70%

60%

50%

40%

500 800 1400 2400 4100 5600 7300 >8200

30%






China emerges across a wide range of indicators in the survey as robustly posi-tioned, despite some broader macro concerns about growth that prevail in China. Our broad barometer of opti-mism measuring the perception of financial conditions six months ahead has remained unchanged at 38%, leav-ing China second in our rankings. This is also backed by a rise in the percent-age of respondents who thought now was a good time to make a major pur-chase, which at over 15% is the highest in the survey.

for most Chinese, incomes are still rising. 40% more respondents said that their income was better rather than worse. Their future expectations are ranked third in the survey. However, compared to the 2012 survey, there are signs of income growth beginning to slow as in other emerging economies.

As in previous surveys, one distin-guishing characteristic of Chinese con-sumers is their much higher savings ratio compared to other countries (over

30%). This is probably partly due to cul-tural factors, as well as the desire of young Chinese to own property and the savings needed to support such a pur-chase. food is one item that Chinese consumers spend less income on com-pared with many other countries. This is in keeping with the dramatic improve-ment in China’s agricultural productivity in the last 30 years.

The ongoing momentum behind dis-cretionary spending – notably on cars, holidays and smartphones – is marked both in terms of China’s own history and the other emerging economies sur-veyed. However, while the latter should continue, we note that penetration rates are now relatively high, potentially con-straining future growth.

This survey was conducted before the recent announcement of structural reforms at the Third Plenary Session of 18th CPC of the Central Committee. These have the potential to support the theme of growth rebalancing towards consumption in the medium term, not

least via the influence of the planned changes to China’s one-child policy. A key factor here is the potential stimulus to those in the crucial younger age brackets in our survey (18–29 and 30–45). These groups are already optimistic and, as we have shown, have greater purchasing power in any event.

for example, 12% of people in the 18–29 age bracket see now as an “excellent” time to spend compared to 5%–8% in previous years. In the 39–45 age group, those of prime chil-drearing age, spending willingness has reached a new high: 18% think now is an “excellent” time to spend, versus 10%–14% in 2010–2012. The under-lying reason is the improvement in their financial outlook.

ChinaConsumer reforms ahead



Population (2013) 1.36 billion












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50

40

30

20

-10

10


Income expectations


China Survey average

0

This survey average

8.0

7.0

6.0

5.0

3.0

2.0

1.0

0.0

4.0

2000 4000 6000 8000 10000 12000

Last survey average Income (RMB)

Nominal growth (%) in household income – next 12 months



20

15

10

5

-5

-100 2010 30 40 50 60 70 80 90

0

100

Smartphone

Holidays

Cars

SpiritsTV

Property

Mobile phones

Computers

Beer Dairy

Carbonated drinks

Extra educationn

CosmeticsInternet access

35%

30%

25%

20%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

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Educ

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ings

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perty

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-tic

ket

item

s

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Aut

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Chinese monthly spending Overall survey average

-5%

0%

90

80

70

60

50

30

40

20

10

Ban

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Life

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Mut

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0

Income (RMB) This survey average Last survey average


40%

30%

20%

10%

0%

<2500 3500 4500 5500 6500 7500 9000 >10000












With a net percentage of Indians expect-ing their financial position to improve in the next six months, India ranks fifth in our list of countries, despite optimism slipping four percentage points since last year. However – and as flagged ear-lier in the report – these headlines con-ceal a great deal about India, not least the significant trends of relative improve-ment across the income scale and in the rural/urban dynamic.

Beneath the headline readings, there are signs of an underlying improvement. More people believe this is a good time to purchase big ticket items (a net bal-ance of 7% versus 5% last year) and more people now expect inflation to fall – a sign that that entrenched high infla-tion expectations may moderate.

The rural versus the urban consumer emerges as a key contrast in this survey. The responses show rural areas seeing a much bigger improvement than urban in most categories, in turn closing pen-

etration gaps (out of 15 categories, rural areas outscore urban in 11 of them for forward-looking spending inten-tions). driving this is far greater opti-mism with regard to incomes between the rural and urban communities. for example the net balance of those expecting income to rise rather than fall was +6% in rural areas versus –15% in urban areas. 11% of respondents saw increases in excess of 20%.

In terms of spending categories, we have seen more growth in discretionary categories such as smartphones (sup-ported by more investment in internet access) and cars in 2013 – even if the rates of increase lag those in other coun-tries such as China and Brazil. However, the improving trend is expected to con-tinue going forward, alongside areas such as watches and branded goods. In fact, there was a sharp fall in consumers wish-ing to buy unbranded items as consumers become more brand conscious. More

IndiaRural revival

generally, trading up seems to be the theme. People are buying smartphones rather than conventional mobiles and fewer people bought entry-level cars.

looking to the long term, structural positives appear for the Indian con-sumer. The savings ratio at 12% remains relatively high versus other EM coun-tries, as does the emphasis on educa-tion with nearly 10% of income kept aside for additional spend. Meanwhile, the country has one of the lowest pen-etration levels across categories of the nine emerging markets surveyed. India has one the lowest consumption rates for items like beer, spirits, meat and cigarettes and its internet penetration rate is the lowest in the survey.



Population (2013) 1.24 billion












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60

40

50

30

20

-10

10


Income expectations


India Survey average

0

This survey average


4.0

6.0

5.0

3.0

2.0

-1.0

-2.0

-3.0

0.0

1.0

5000 10000 15000 20000 25000 30000 35000 40000

Last survey average Income (INR)

10

8

6

4

2

-2

-6

-4

0 2010 30 40 50 60 70 80 90

0

100



Holidays

Cars

Spirits

TV

Cosmetics

Internet accsess

Mobile phonesComputers

Beer

Dairy

Carbonated drinks

Smartphone

Two‐wheelers

Property

35%

20%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

t

Hea

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Educ

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Indian monthly spending Overall survey average

0%

100

80

70

90

60

50

40

30

20

10

Ban

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Life

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0

Income (INR) This survey average Last survey average


35%

30%

25%

10%

5%

0%

15%

<6250 8750 12500 17500 25000 35000 >40000

20%












Indonesia is still one of the most positive structural stories in the consumer survey with broad-based optimism supported by strong momentum in future income expectations (as the charts suggest). However, the confidence level has slipped slightly since last year’s survey. The net proportion of consumers who expressed confidence in their finances for the next six months stands at 38%. While this is enough to rank Indonesia third in our survey, it represents a 2% drop compared to a year ago. The per-centage of respondents who thought now was a good time to make a major purchase (net –13%) also declined.

However, we would stress that these nearer-term observations should be set alongside the positive structural story. Indonesian consumers have the most optimistic view of their income pros-pects. Around 44% of those surveyed expect their household income to improve in the next twelve months, building on the ongoing momentum of previous years.

not surprisingly, those in rural areas are more optimistic than those in urban communities. Optimism mostly stems from the lower-income group, which received a huge increase in the mini-mum wage this year (nationwide aver-age was 18% in 2013 versus 8% in 2012 and 9.5% in 2011), while those in urban areas are more skeptical, per-haps given the expectation of an eco-nomic slowdown, the weakening of the rupiah, as well as the upcoming parliamentary and presidential elections in 2014. Wage momentum may mod-erate now given the base effects, and the survey reflects this. We would note that the government has announced a 10% increase in wages for the jakarta region.

Indonesians are still spending more on food than other emerging econo-mies. It accounts for around 35% of the household budget. food inflation was higher in 2013 than in 2012, mainly due to the removal of a fuel subsidy in june. Structurally, this has a relative

impact on other areas of household spending (e.g. autos, housing, enter-tainment, healthcare, and education) and also on the money that can be set aside for savings.

Spending on discretionary items continues to be reflected in prefer-ences. notably, spending on autos is higher than the average for the coun-tries surveyed because public transport is limited. Spending on housing is lower, which is ascribed to the introduction of a higher minimum downpayment for property purchases, which came into force at the end of September, amid fears of a property bubble. Technology is a standout theme in the survey, with a huge increase in spending on internet access, and a shift from conventional mobile phones to smartphones.

IndonesiaStructurally strong, cyclical nerves

GdP (2013E) USd 867 billion














Ella Nusantoro, Priscilla Tjitra, Jahanzeb Naseer

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Structurally strong, cyclical nerves 60

40

50

30

20

-20

-10

10


Income expectations


Indonesia Survey average

0

This survey average

12.0

11.0

10.0

9.0

7.0

5.0

6.0

4.0

8.0

1000 3000 5000 90007000 11000

Last survey average Income (IDR)

Nominal growth (%) in household income – next 12 months 20

15

10

5

0

-5

-10

-20

-250 2010 30 40 50 60 70 80 90

-15

100



Internet access

Smartphone

Computers

TVEducation

Cars

Cosmetics

Holidays

PropertyMobile phones

Two-wheelerCarbonated drinks

Diary

40%

35%

20%

30%

25%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

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Hea

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Educ

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Indonesian monthly spending Overall survey average

0%

50

40

30

20

10

Ban

k ac

coun

t

Life

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Sto

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No

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Mut

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0

Income (IDR) This survey average Last survey average


40%

30%

20%

10%

0%

<1000 1250 1750 2500 4000 6250 8750 >10000












This is the first year we have included Mexico in our survey. There is a natural tendency to benchmark it with Brazil. Indeed, our team of economists and analysts in the region can identify demographic, socioeconomic and politi-cal factors capable of driving a steady rise in the middle-income bracket, simi-lar to that seen in Brazil over the last decade with a similar potential impact on the fortunes of the Mexican con-sumer as we look ahead.

However, there are headwinds today that stand in the way of this structural potential, which are reflected in the cautious near-term measures of opti-mism. With a net 25% of consumers expecting an improvement in their financial position in the next six months, Mexico ranks fourth in the survey and well below Brazil. The proportion of consumers who view now as a good time to make a major purchase is also low at -20% (net weighted average).

The cautiousness is most apparent among low-income consumers. The net

balance of respondents in this segment is roughly on a par with those who do not expect an improvement. This may well be driven by low government expenditure at the beginning of this year, and weak job creation in the private sector as well.

Interestingly, Mexico scores the low-est in the survey in terms of the number of respondents that perceive their gov-ernment to be very effective or quite effective at solving problems that relate to the population (17% of the total), which might be an indication that we are in the very early stages of the new administration’s reform agenda and the structural changes proposed in areas such as education and labor markets, among others. A fierce debate on reforms and perhaps some skepticism is natural, although it is still too early to forecast positive results. The new admin-istration began in december 2012.

Given this is Mexico’s initial inclusion in the survey, we cannot assess spend-ing momentum. We can, however, gauge the backward looking penetration of

spending and also the forward looking intentions. Although carbonated drinks (unsurprisingly) have been bought by much of the population over the past 12 months, only 16% plan to do so going forward; categories that look to have stronger growth going forward, however, include smartphones and internet. Spending on cars has been high (29%), but is set to decline next year (10%).

not surprisingly, monthly spend allo-cated to savings is still one of the cate-gories with the largest gaps relative to the rest of the economies in our survey, with Mexican consumers allocating around 5% of their income to savings, whereas the average across our survey stands at close to 15% (which is partly explained by the low penetration of financial products in Mexico).

MexicoA future Brazil?















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70

40

50

60

30

20

-20

-10

10


Income expectations


Mexico Survey average

0

This survey average


3.0

5.0

4.0

2.0

1.0

-2.0

-3.0

-4.0

-1.0

0.0

0 20000 40000 60000 80000

Last survey average Income (MXN)

60

50

40

30

20

10

0

2010 30 40 50 60 70 80 900 100



Holidays

Smartphone

Computers

Internet access

CosmeticsProperty

Cars

Dairy

Carbonated DrinksBeer

Spirits

35%

30%

25%

20%

15%

10%

5%

Hou

sing

+pu

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util

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Food

Trav

el &

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Mexico monthly spending Overall survey average

0%

50

40

30

20

10

Ban

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Life

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No

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Mut

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0

Income (MXR) This survey average Last survey average


30%

20%

10%

0%

<3400 6000 10000 13200 29500 75500 >107000












Although Russia exhibits the greatest structural weakness in consumption among the BRICS countries, it has dem-onstrated some improvement in expecta-tions this year. Alongside South Africa, Russia is the only other country surveyed in which personal finance expectations have strengthened relative to last year. Going forward, we expect a strong per-formance in a number of discretionary areas. We expect this to be driven entirely by the higher income bracket, as we note that a further divergence between rich and poor is taking place. We note a 5% drop in lower income earners expecting an improvement in their personal finances since the last survey.

The net percentage of people expect-ing an improvement versus a deteriora-tion in their own financial position rose marginally from 16% last year to 18% this year. Although positive in its own right, on an absolute basis, this degree of optimism continues to be far lower than that seen in Brazil, China and Indonesia (with readings of 64%, 42% and 37%,

respectively). On average, income growth expectations grew marginally this year, with nominal growth of around 2.3% (from 1.9%). Again, the richest expect the biggest growth, with about 4% nom-inal growth estimated for this year. How-ever, with projected inflation above these levels – Credit Suisse forecasts 6.7% for 2013 – we believe any income growth will be negative in real terms, even for the wealthiest end of the spectrum.

Internet access and smartphone spending have shown the greatest momentum relative to other sectors, each having grown more than 10% in 2013. On the ground, an almost com-plete 3G network, growing 4G network, and declining handset prices should all support further growth in smartphone penetration and the data market. Cate-gories geared to the poorer consumer such as beer, dairy and carbonated drinks largely showed insignificant increases, while those areas related to higher-income individuals (e.g. autos, comput-ers and holidays) have seen at least 5%

RussiaHaves and have-nots

growth over 2013. Alcoholic consump-tion failed to drop significantly despite regulatory changes aimed at decreasing consumption - a ban on advertisements and an excise tax increase. forecast alcohol consumption over the next year registers a small increase, even in the face of further excise growth. Our ana-lysts suggest beer companies will need to raise prices by 5%, and spirit compa-nies by 10%, to offset this.

On average, savings represent a little less than 8% of monthly spending – 3% shy of the survey average. Sophisticated investment vehicles – such as the stock market or mutual funds – remain insig-nificant. Given the large number of high net worth individuals, however, we firmly suggest wealth accumulation is biased towards the rich.















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60

40

50

30

20

-10

10


Income expectations


0

Russia Survey average

This survey average


2.5

3.5

3.0

2.0

1.5

1.0

0.5

0.0

0 20000 40000 60000 80000 100000

Last survey average Income (RUB)

14

12

10

8

6

4

2

-2

-6

-4

0 2010 30 40 50 60 70 80 90

0

100



Smartphone

Internet access

Computers

HolidaysCars

Cosmetics

Spirits

Dairy

Mobile phones

PropertyTV

Education

Beer

Carbonated drinks

35%

30%

20%

25%

15%

10%

5%

Hou

sing

+pu

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util

ities

Food

Trav

el &

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men

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Educ

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Russian monthly spending Overall survey average

0%

60

50

40

30

20

10

Ban

k ac

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Life

insu

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No

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Mut

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0

Income (RUB) This survey average Last survey average


20%

10%

0%

-10%

-20%<5000 7500 15000 25000 40000 60000 85000 >100000













Gini coefficient (2009) n.A.












The Saudi Arabian consumer has slipped in our survey and is now the sec-ond least optimistic, with a weighted balance of just 18% of respondents expecting to see improvements in the state of their personal finances. This is the second consecutive drop in opti-mism seen within the region. Overall optimism is now touching on 12% of respondents expecting a financial improvement for the poorest. Higher income earners, however, register a net figure of around 40%, substantially more upbeat.

The fall in optimism goes hand in hand with a decline in income. Saudi real household income growth over the next 12 months is only positive for the upper half of earners, with the wealthi-est expecting around 3% growth. This cements our view of the rich Saudi con-sumer (effectively the small “local” pop-ulation as opposed to the huge number of resident foreigners) as being an almost distinct entity to the remainder of the country’s citizens. disposable

income for this local population carries on growing as the government contin-ues to increase salaries and benefits for them. The picture is less rosy for the lowest earners, and even with the growth in higher income brackets, when averaged across the sample, household income growth is flat in real terms (a drop of 2% since this time last year).

Against this backdrop of income pressure, discretionary spending looks challenged. Smartphones, internet access, computers and healthcare stand to suffer in 2014. Whilst these catego-ries registered positive momentum last year, this was again most likely driven by the wealthy “local” population. The holi-day/travel market also displays potential growth and is most likely driven by the aspirational value attached to it by wealthier consumers. This is evident from the sales growth of travel compa-nies based in the region. One surprise in the survey is the decline in the momen-tum of auto spending. Even with the enhanced access to credit in the region,

expenditure on autos has been poor over the last 12 months (–2%), and looks to remain so over the next 12 months (–13%).

One key theme this year was the deportation of illegal workers in Saudi Arabia – amounting to over 500,000 people. Worries as to whether this would have a negative effect on consumer demand are unfounded, given that in reality these people generally belonged to the very low income bracket. However, this certainly has had an effect on the cost side for some consumer companies utilizing this cheap labor and which may now have to pay more for legal labor. The question is whether the extra cost is going to be passed to the consumer or not. The third highest inflation reading in our survey would suggest so.

Saudi ArabiaSpending potential narrowly based


Mujtaba Rana

PH

OTO

: IS

TOC

KP

HO

TO.C

OM

/SW

ISS

HIP

PO


70

60

50

30

40

20

-10

10


Income expectations


Saudi Arabia Survey average

0

This survey average

Nominal growth (%) in household income – next 12 months12.0

10.0

8.0

6.0

4.0

2.0

0.0

2500 6500 10500 14500 18500 22500

Last survey average Income (SAR)

15

10

5

0

-5

-10

-150 2010 30 40 50 60 70 80 90 100



Holidays Smartphone

ComputersInternet access

Cosmetics

Property Cars

Mobile phones Dairy

Carbonated drinks

TVEducation

25%

20%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

t

Hea

lthca

re

Educ

atio

n

HP

C

Sav

ings

Mob

ile p

hone

Pro

perty

+lo

cal t

axes

Clo

thin

g

Big

-tic

ket

item

s

Oth

er

Aut

os

Saudi monthly spending Overall survey average

0%

70

50

60

40

30

20

10

Ban

k ac

coun

t

Life

insu

ranc

e

Sto

ck m

arke

t

Cas

h

Sta

te T

reas

ury

bill-

bond

Pro

perty

Col

lect

able

s

Gol

d an

dje

wel

lery

No

extra

mon

eyfo

r sav

ing

Mut

ual f

und


0

Income (SAR) This survey average Last survey average


30%

20%

10%

0%

<5000 6250 8750 11250 16250 >20000

























This is the second year in which South Africa is featured in our survey. Con-sumer optimism levels in South Africa have gone up relative to last year, but with high income earners entirely driving this momentum.

Consumers, on a net weighted-aver-age calculation, expect their financial prospects to improve by 28% over the next six months, compared to 26% in the previous survey. Similarly, high earn-ers expect a 35% improvement. low income earners, however, continue to expect their financial prospects to dete-riorate, but by an even greater amount than in the previous survey – those earning around zAR 1,500/month expect a sizeable 31% drop in the state of their upcoming personal finances. This is likely a reflection of an economy that, despite creating jobs, has not done so at a pace sufficient to absorb all new job entrants at the low end.With inflation expected to average 5.7% in 2014, all consumers except the very poor, should benefit from an increase in

real income growth. Tellingly, South African consumers registered the high-est expectation of forward inflation in our survey (a net balance of 74% of respondents expecting it to be higher than last year).

With regards to spending, activity has been supported in most categories over the last year. A large percentage of the expected increase in income looks likely to be spent on essentials such as hous-ing (with net +4% expecting to increase spending over the next year), utilities and food, which together account for approximately 40% of monthly spend-ing. Expenditure in these areas has been driven higher by large increases in administered prices (electricity, fuel, municipal taxes, etc.) in recent years. Other essential spending, notably on dairy and carbonated drinks, looks bet-ter than the survey average.

discretionary spending, again driven in most part by the upper end of income earners, was robust. Consumption of smartphones, holidays and autos was

South AfricaContrasting fortunes

strong over the last 12 months – with around net +5% of respondents increasing spend in each area – and looks resilient going forward. Internet penetration, an aspect we pointed to last year as being necessary to support wider growth in the discretionary space, has shown the highest level of growth of all categories (+17% increasing spend).

lastly, South Africans continue to save less than their EM peers, although there has been some improvement over the past year. Savings continued to be held in transaction-type facilities, but the profile has changed somewhat. depos-its at banks accounted for 60% of total savings compared to 90% a year ago. Cash holdings account for 20% com-pared to 10% a year ago.


Carlos Teixeira

PH

OTO

: IS

TOC

KP

HO

TO.C

OM

/RA

PId

Ey

E


80

70

60

50

40

30

-20

-10

20

10


Income expectations


South Africa Survey average

0

This survey average

Nominal growth (%) in household income – next 12 months10.0

8.0

6.0

4.0

2.0

0.0

-2.0

0 10000 20000 30000 40000 50000

Last survey average Income (ZAR)

20

15

5

10

0

-5

-100 2010 30 40 50 60 70 80 90 100



Smartphone

Cosmetics

Internet access

Property

Cars

Mobile phones

Dairy

Education

Spirits

Beer

Carbonated drinks

Computers

Holidays

30%

20%

25%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

t

Hea

lthca

re

Educ

atio

n

HP

C

Sav

ings

Mob

ile p

hone

Pro

perty

+lo

cal t

axes

Clo

thin

g

Big

-tic

ket

item

s

Oth

er

Aut

os

South African monthly spending Overall survey average

0%

70

50

60

40

30

20

10

Ban

k ac

coun

t

Life

insu

ranc

e

Sto

ck m

arke

t

Cas

h

Sta

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reas

ury

bill-

bond

Pro

perty

Col

lect

able

s

Gol

d an

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wel

lery

No

extra

mon

eyfo

r sav

ing

Mut

ual f

und


0

Income (ZAR) This survey average Last survey average


25%

15%

5%

-15%

-25%

-35%

-5%

<1000 1500 2500 4000 6000 8500 >10000

0%












On the broad gauge of optimism we use across the survey, reflecting future con-fidence in the consumer’s financial posi-tion, Turkey remains at the lower end of our rankings. The political backdrop doesn’t help. However, this fact con-ceals some positive underlying mes-sages in Turkey, which are in keeping with the degree of optimism our analysts and economists hold with respect to Turkey’s macro outlook.

We would flag that Turkey is one of the countries in the survey that shows a habitual conservatism in optimism read-ings versus the economic outcome. Holding its own in this survey when con-fidence elsewhere has slipped is per-haps positive in its own right.

We highlight three positives. first, the views of high-income earners have improved markedly, making them the most optimistic in the survey, though we note that low-income earners are under pressure. Second, there was a sharp improvement in the percentage of respondents who said now was a good

time to make a purchase. Third, Turkey displays the lowest expectation for price increases in the survey, though this now pre-dates the sharp currency deprecia-tion the lira has seen post-dec 2013.

Expenditure on more discretionary items continues to beat spending on more essential goods, such as carbon-ated soft drinks, dairy products and alcoholic drinks. low-income consum-ers are the drivers of the latter trend and higher-income earners drive the former.

These trends are in line with the pos-itive sales momentum for major cyclical items observed by us. After a temporary slowdown in june (when street protests took place in some major cities), domes-tic auto sales and demand for white goods stayed at record highs between july and October.

The recent political developments in Turkey will likely yield another cautious consumer environment. Consumer senti-ment in december was weak. We expect sequentially weaker sentiment for janu-ary 2014. However, we continue to

TurkeyUnderlying potential remains

believe the underlying drivers of Turkish consumer spending (particularly for underpenetrated discretionary items) will remain strong. Spending appetite should quickly turn into actual sales once the political visibility improves. In terms of the spending mix, smartphones, com-puters, internet access, holidays and (despite the high base of previous years) autos have recorded some of the stron-gest gains. The modest level of auto, smartphone and holiday penetration suggests further scope for growth.

There has been a year-on-year increase in the percentage of people claiming they have free cash or have invested in the stock market. The gov-ernment’s recent stimulus package for private pension also looks to have been effective.




Geographical area 783,562 km2











Onur Muminoglu

PH

OTO

: IS

TOC

KP

HO

TO.C

OM

/IM

AG

Ed

EP

OTP

RO


60

40

50

30

20

-20

-10

10


Income expectations


Turkey Survey average

0

This survey average


5.0

4.0

3.0

1.0

0.0

-1.0

-2.0

2.0

800 1600 2400 3200 4000 4800 5600

Last survey average Income (TRY)

10

5

0

-5

-10

-150 2010 30 40 50 60 70 80 90 100



Holidays

Smartphone

Computers

Internet access

Cosmetics

Property

Cars Mobile phones

Dairy

TV

EducationSpirits

Beer

Carbonated drinks

25%

20%

15%

10%

5%

Hou

sing

+pu

blic

util

ities

Food

Trav

el &

ente

rtain

men

t

Hea

lthca

re

Educ

atio

n

HP

C

Sav

ings

Mob

ile p

hone

Pro

perty

+lo

cal t

axes

Clo

thin

g

Big

-tic

ket

item

s

Oth

er

Aut

os

Turkish monthly spending Overall survey average

0%

60

50

40

30

20

10

Ban

k ac

coun

t

Life

insu

ranc

e

Sto

ck m

arke

t

Cas

h

Sta

te T

reas

ury

bill-

bond

Pro

perty

Col

lect

able

s

Gol

d an

dje

wel

lery

No

extra

mon

eyfo

r sav

ing

Mut

ual f

und


0

Income (TRY) This survey average Last survey average


45%

35%

25%

5%

0%

-5%

15%

<1000 1500 2500 4000 6000 >8500








PH

OTO

: IS

TOC

KP

HO

TO.C

OM

/PE

ETE

Rv


About the surveyThis report has been produced using market research gathered by The nielsen Company. This has given the Credit Suisse Research Institute the ability to conduct a consistent multi-region survey while also incorporating questions specific to the countries surveyed in the report.nielsen is a leader in data measurement and information across a wide range of industries and regions. Their expertise has complemented the analysis the Research Institute has conducted in this report. nielsen’s input has helped develop a more complete view of the competitive consumer landscape across emerging markets. The original AC nielsen was founded in 1923 by Arthur C. nielsen, Sr., who

invented an approach to measuring com-petitive sales results that established the concept of “market share” as a practical management tool. for nearly 90 years, they have advanced the practice of mar-ket research and audience measurement for the benefits of their clients in a con-stantly evolving marketplace. nielsen has a presence in approximately 100 coun-tries, and holds positions within estab-lished and emerging markets. Their operating model is grounded in a simple, open and integrated approach that deliv-ers a broad portfolio of services and solutions for their clients. The Credit Suisse Research Institute would like to thank The nielsen Company for their invaluable assistance in this project.

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Global Wealth Report 2012October 2012

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Credit Suisse Global Investment Returns Yearbook 2012january 2012

The shale revolutiondecember 2012

Emerging Consumer Survey 2013 january 2013

Credit Suisse Global Investment Returns Yearbook 2013february 2013

SugarConsumption at a crossroadsSeptember 2013

Global WealthReport 2013October 2013


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AUTHORSAlexandre Amson Andrew CampbellRogerio fujimori Antonio Gonzalez AnayaRichard Kersley Eugene KlerkRebecca Kwee Arnab MitraAlex Molloy Onur Muminoglujahanzeb naseer Stefano natellaArmando Perez victoria PetrovaMujtaba Rana Ashlee RamanathanKarim Salamatian Akshay Saxenanic Sochovsky Tobias StingelinCarlos Teixeira Priscilla Tjitra

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