Guest post: Emerging market consumers still going strong
By Kate Moore, BofA Merrill Lynch
Economists have been talking about the great potential of the emerging market consumer for years. While developed market consumers face the spectre of government deleveraging and lower economic growth, EM consumers are often still experiencing rising incomes and improving living standards.
We believe that despite a slower pace of GDP and consumption growth in EM over the next five years, the EM consumer theme will remain compelling. Continue reading »
Trouble in the Great Mall of China?
Spending by wealthy Chinese tourists has become such a boost for stores in major capitals in Paris, London and Hong Kong in the past couple of years that it is hard to imagine the world of luxury without them.
But, by focusing on the exaggerated effects on Hong Kong’s retail sector, UBS economist Silvia Liu has underlined just how extraordinary the growth in 2010 and 2011 was. It was driven by an increasingly relaxed approach by the Chinese government to overseas travel by its citizens and the mainland Chinese love affair with luxury. Continue reading »
Indonesia: spending power of the poor
Selling jewellery to Asia’s newly rich or insurance to the emerging middle class might sound more glamorous than selling sachets of shampoo to the poor.
But in fast-growing Indonesia, lower-cost consumer goods are where it’s at, according to Standard Chartered. The combined spending power of those Indonesians making under $4/day adds up to some eye-catching numbers: they represent over half of household spending. Continue reading »
Got milk? Nestlé invests $5.7m in Moroccan dairy
Nestlé, the Swiss food group that last month swallowed Pfizer’s infant nutrition business for $11.85bn in order to enlarge its emerging markets presence, is at it again.
On Tuesday, the company said it planned to invest more than CHF5.3m ($5.7m) in the North African nation of Morocco in a bid to boost its milk collection and production in the region. Continue reading »
Nigeria: Guinness downer
A reminder that Africa isn’t all about positive growth stories.
Guinness Nigeria announced on Thursday a steep fall in profits during the nine months to the end of March – a fall of 24 per cent compared with the same period a year earlier. The reasons? Some are in the company’s control, others not so much. Continue reading »
India: Marlboro no, Jaisalmer ok
The big dilemma for smokers is normally over health or habit: whether to give up is the key question rather than which brand of cigarette. But if the Indian government has its way, those who prefer foreign brands like Marlboro and Benson & Hedges may no longer have that choice.
According to the Economic Times, two years after the government banned foreign direct investment in cigarette manufacturing, Delhi is considering curbing imports, though it won’t likely concede to the full ban that the Consortium of Indian Farmers has demanded, for fear of violating WTO obligations. Continue reading »
Avon: ding, dong, crash, bang
A rotten first quarter for Avon Products. Its earnings were expected to take a hit but nothing like this: net profits fell by 82 per cent compared with the first quarter of 2011, resulting in earnings per share of just 6 cents – vs 33 cents in Q1 last year – or 10 cents after one-off items. Compare that with the 28 cents consensus among analysts according to Thomson Reuters, and you just feel the disappointment. Continue reading »
BTG bulks up with Bodytech stake
With year-round sunshine and some of the world’s skimpiest bikinis, it’s no wonder Brazil is full of fitness clubs (as well as plastic surgeons and laser hair removal clinics).
But while Brazil has the second highest number of gyms after the US, it is only 10th in terms of revenue. And in the eyes of private equity investors, that means one thing: the potential for consolidation and profit.
It comes as no surprise then that BTG Pactual’s latest investment is in Bodytech, Latin America’s largest fitness chain by revenue with 33 gyms across Brazil. Continue reading »
TCL gets nod for TVs for Ikea
For those who moan endlessly about unsightly cables running out of the TV or DVD player, help may at last be at hand. Sweden’s Ikea and China’s TCL Multimedia have come up with an answer, furniture with built-in appliances. Continue reading »
India cut: will consumers react?
As beyondbrics reported earlier on Tuesday, the Reserve Bank of India’s surprisingly aggressive 50 basis points interest rate cut was a step in the right direction, but hardly a cause for celebration among investors.
The same goes for consumers, few of whom are likely to go running to their nearest car dealership, real estate agent or home appliance store to make a big ticket purchase, according to analysts. Continue reading »
S Korean water: floods of interest
The sale of Woongjin Coway, South Korea’s leading water purification company, is unexpectedly drawing huge interest from potential buyers.
Goldman Sachs, which is managing the sale process, recently sent a teaser letter to potential investors, amid market rumours that foreign investors such as Siemens, Philips, Amway and China’s Haier and private equity firms such as KKR, Blackstone, Affinity and Carlyle are interested in buying the company. Domestic conglomerates such as Lotte and Shinsegae and local private equity houses including MBK Partners are also rumoured to be interested. Woongjin aims to complete the 30 per cent sale by mid-2012. Continue reading »
Avon-Coty: it’s the distribution, stupid
Avon Products’ problems with order processing and a stale product line up in Brazil have been well documented, but they have not eclipsed its one big attraction in the eyes of a suitor that emerged this week: distribution.
Bart Becht, chairman of Coty, the fragrance group that launched an unsolicited $10bn bid for Avon on Monday, told beyondbrics that Avon’s network of door-to-door sellers was a big prize in a country where cosmetics are still dominated by direct sales. Continue reading »
Avon: not feeling the love in Brazil
With senior management changes and corruption probes, the last few years have not been pretty for Avon. But when the company started struggling to make a profit in Brazil, arguably one of the world’s most attractive consumer markets, it was clear something was seriously wrong.
Avon started having problems in its key Brazilian market around the middle of 2010. In the first half of that year, revenues rose 13 per cent on a constant currency basis but then only crept up 4 per cent in the second half. Continue reading »
Cussons hit by Nigerian unrest
Shares in PZ Cussons, the UK manufacturer of Imperial Leather and other toiletry and household cleaning brands, fell by 10 per cent on Tuesday morning in London after it warned pre-tax profits would be about £10m less than expected this year because of trouble in Nigeria. It cited violent unrest in the north, January’s partial removal of fuel subsidies and the nationwide strike it provoked. Continue reading »
Chart of the week: what’s next for emerging market consumer stocks?
What’s happened to emerging market consumer stocks? The general thesis was that developing nations would increasingly see consumer spending mushroom, with consumer companies – and their shareholders – reaping the rewards.
Last year was a bad one for EM stocks, but 2012 has seen rally that has, year to date, out-performed developed markets. And yet EM consumer stocks are missing out – why? Chart of the week takes a look. Continue reading »
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