Hany Mwafy, Managing Director North Africa and James Russo, Vice President Global Consumer Insights presented today at Nielsen’s Consumer 360 conference on how the center of gravity is shifting away from North America and Europe. In the decades to come, emerging economies will deliver more growth – and more profits. Below are some key takeaways from their presentation.
Trends to watch:
By 2030, the developing world’s middle class will be larger than the total populations of Europe, Japan and the United States combined.
The female economy – as more women enter the workforce, their earning power increases, as does their power within their household. Women now control almost $12 trillion of the $18 trillion in global consumer spending.
- Mobile phones are bringing the Internet to previously unconnected consumers.
- Average daily TV viewing worldwide in 2009 was a record 192 minutes, and with TV viewership comes growing acceptance of multinational brands.
The Middle East, in particular, is experiencing phenomenal growth. One quick measure: The number of passenger cars sold is doubling every 3-4 years.
Egypt’s population of 80 million is very diverse and very young (the median age is 24). It is a society of contrasts: The highest 10% earn 30% of the income while the lowest 20% live below the poverty line of less than $2/day. Fifty-seven percent of the population lives in rural areas. Thirty-percent are illiterate.
But the middle class is growing and is increasingly connected. Fifty-eight-million Egyptians are mobile subscribers. Half of all youth have Internet access.
To tap into this growing opportunity, however, marketers need a nuanced understanding of local consumers. In Egypt, those at the top of the pyramid spend a large percentage of their income on education, drive Mercedes and VW, shop at malls or Carrefour, drink their Starbucks coffee and use iPhones and Blackberries.
Those in the middle value high status brands, dress to impress with face Diesel or local brands, and tend to buy expensive mobile phones, albeit second hand. KFC and McDonalds are popular. They do their shopping in malls and traditional trade.
Those at the bottom of the socio-economic pyramid tend to shop in open markets, congregate in local cafes and parks.
Although Egypt is still a traditional trade market, dominated by small mom-and-pop shops with the most informal business practices, organized trade is growing quickly. In terms of square footage, organized trade has grown by 150% since 2002. Carrefour, in particular, is investing in the market and expanding aggressively.
The opportunity for packaged goods companies in Egypt and other emerging markets is large and growing. Marketers need to be able to tolerate both risk and complexity, and take a long-term view given the uncertain political climate in so many of these countries. For those willing to take the challenge on, the rewards can be enormous.
Listen and learn. You need a global perspective but local expertise. Over time, emerging market innovations will spur change in mature markets.
Set expectations: Don’t assume you’ll be able to easily take a leadership position. Competition is strong. (It took Coca-Cola 20 years to achieve parity with Pepsi in Egypt.)
Don’t overreact to political and economic changes.
Adapt. Flexibility is key.
- Between 2008 and 2014, BRIC nations (Brazil, Russia, India and China) are expected to grow 61.3%, compared to only 12.8% growth in the G7 (U.S., U.K, France, Italy, Germany, Canada and Japan.)
- By 2030, the developing world’s middle class will be larger than the total populations of Europe, Japan and the United States combined.
- Women control almost $12 trillion of the $18 trillion in global consumer spending.
- Mobile phones are proliferating in the developing world, bringing internet access to consumers who have never had a PC or been online.
- TV is still king: Average daily TV viewing time worldwide in 2009 was a record 192 minutes.