Credit Suisse unveils EM 'Consumption Map'
by Amy Williams on Jan 17, 2011 at 13:08
The Credit Suisse Research Institute has released the findings of its recently conducted emerging market consumer survey, revealing spending trends from across emerging markets.
Produced in collaboration with global market research firm AC Nielsen, the survey explores the spending profiles of consumers within Brazil, Russia, India, China, Egypt, Indonesia and Saudi Arabia, garnering 13,000 responses from varying locations, genders and income levels.
It concludes that income disparities, which are already wide, are set to increase as the high income brackets are expected to continue to see much greater growth than the low income brackets in all markets.
The survey also reveals that there is a clear and consistent pattern in consumption of branded goods as income levels improve. The survey found that international brands have the upper hand in the premium ratings at the discretionary end of the spectrum (cars, perfume and fashion, for example). But, for essential items (such as bottled water and dairy products), the preference for international brands over local brands is not particularly strong whatever the income.
From the study results, the team at the Credit Suisse Research Institute has created an emerging market 'consumption map’, the country highlights of which are cited below;
Brazilian consumers rank as the most optimistic: 63% of respondents to the survey said they expected an improvement in their personal finances over the next six months. A far greater prioritisation of healthcare (per household) spending is also striking. At 9.8% of income, Brazil’s expenditure is nearly twice that of China, which stands at 5.7%.
Real income growth in China is skewed towards the high income bracket; with the top end income bracket in China expressing more optimism than any income bracket in the whole survey. Despite the growth in consumption, the desire to save still stands out. The survey suggests over 30% of income in China is saved, and the propensity to save rises with higher income. Reflective of such a savings focus, over 80% of respondents possessed a bank account – a feature apparent in both low and high income earners.
Egypt is the only country in the survey that registers net negative expectations for the respondents’ personal finances in the six months ahead. Egyptian consumers appear particularly downbeat on their prospects: 38% predicting a worsening versus 12% forecasting some improvement in their financial position over the next six months.
Food price inflation has been a major negative for the Indian economy. Current spending and spending intentions remain heavily skewed towards essential items. Nevertheless, a priority that stands out for the Indian consumer is education. Household spending on education is by far the highest within the survey at around 7.5% (more than twice that of Russia, at 3.1%).
Spending intentions in Indonesia indicate continued strong relative demand for essential items (such as dairy and bottled water) but there are signs of broader types of consumption developing given the support from positive real income growth.
In Russia, the survey showed that only 24% of households in Russia had bank accounts compared to 37% in Indonesia and 80% in China. Stock market investments or life insurance policies barely register for the average household. The opportunities for the banking sector to expand both in reach and product offering seem considerable.
In Saudi Arabia, only 52% of households in the survey indicated that they had a bank account. There is clearly scope for financial services to expand: Intentions for rising credit card usage and mortgage financing suggest they will.
On the findings Stefano Natella, head of global equity research at Credit Suisse, said: 'The survey provides both regional and global investors a unique bottom-up perspective of the drivers at the heart of the emerging consumption story. In introducing the Credit Suisse Consumption Map, the report sets out the considerations for what to invest in and where.' |
