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Emerging Consumer
Survey 2012
January 2012
Tugt eadersip frm Credit Suisse Researc
and te wrds fremst expertsResearc Institute
Emergig Maret
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Tabe fcntents3 Editorial
4 The consumer in 2012
5 Two-fold ratioale for overall
declie i otimism
7 Cyclical eadwids slow discretioary
sedig
11 Te aetite for tecology
12 Te role of brads
12 Wo are te wiers?
14 Mergers ad acquisitios
14 Tradig u: Ubraded to braded
ad beyod
17 Structural wiers ad structurally
calleged
20 Brazil
Livig for today
22 China
A savigs culture
24 Egypt
Cage but o cage
26 India
Goig bac to scool
28 Indonesia
O a fast trac
30 Russia
Te weaest BRIC i te wall
32 Saudi Arabia
Te oil rice edge
34 Turkey
Feelig te squeeze
37 About the survey
39 Imprint/Disclaimer
COvERphOTO:ISTOCkphOTO
.COM/phOTOMORphIC,phOTO:ISTOCkphOTO.COM/ITSSkIn
For more information, please contact:
Micael OSulliva, head of Uk Researc
ad portfolio Aalysis, Credit Suisse
private Baigmicael.o'[email protected]
Ricard kersley, head of Global Researc
product, Ivestmet Baig Researc
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EditriaWe are deligted to ublis te secod editio of te Credit Suisse GlobalEmergig Cosumer Survey. At a time we ivestors debate te sesitiv-ity of emergig ecoomies to a otetial recessio i te wester world,te aalysis carried i tis reort, togeter wit te accomayig GlobalEmergig Cosumer Databoo, rovides isigts ot available from ublicsources of ecoomic iformatio to el form teir judgemets.
Te 2012 sure goes furter ta last ears iaugural editio iextedig our sure to eigt coutries Brazil, Cia, Egt, Idia,Idoesia, Russia, Saudi Arabia ad ow Ture. To udertae tis roj-ect, te Credit Suisse Researc Istitute as agai egaged te leadigglobal maret researc firm AC nielse to coduct rimar researc oits bealf, tis ear iteriewig 14,000 cosumers across coutriestat togeter accout for 3.5 billio eole.
Credit Suisse aalysts ave draw out te ey treds ad coclusiosfrom te data. Te survey igligts te ifluece of major icome addemograic differeces ad cultural ad social drivers across te emerg-ig world. Te imortace of uderstadig suc factors could ot bemade clearer ta witessig last years evets i Egyt. Our 2011 surveyflagged acute essimism amog Egytias uderscored by te severeiequalities of icome overlooed by may.
I tis 2012 editio, we fid te emergig maret cosumer stillexressig ealt otimism about te ear aead, wic is ecourag-ig gie te cocers oer global growt. howeer, exectatios areudeiabl more subdued ta last ear. Cofidece imroed i ol
two of te coutries sureed Idoesia ad Egt. Egts recoeris from a excetioall low base toug. I fact, desite te dramaticolitical cage i Egt, te Egtia cosumer still remais te mostessimistic i te sure.
Our survey igligts tree major fidigs: First, our aalysis i tereort suggests two iflueces beid te more cautious toe i 2011 dameed exectatios for wages ad risig food rices. Te cosum-ers i coutries exosed to eiter or bot of tese ave tyically revealedte most cautious resoses. Saudi Arabia is te excetio tat asroved te rule. Looig ito 2012, te cyclical outloo still admittedlyoses cocer for wage exectatios. however, our researc suggeststat te exected ea i food rice iflatio ca deliver a ositive offset
for te emergig cosumer ad el te global outloo.Secod, te sure seds ligt o te structural treds at woramog cosumers i te emergig world. A moe awa from te esse-tial items of sedig towards more useful ad discretioar items issowig a structural cage i cosumer. Two areas ae stood out tatare smtomatic of tis tred - a icreased riorit o educatio adte icreased eetratio of tecolog, suorted b strog growt imobile oes, smartoes ad comuters as well as icreasedaffordabilit ad ig-seed iteret access.
Tird, our reort rerises a teme te Researc Istitute aalzed ite 2010 reort Te power of Brad Iestig. I our ew sure, weloo i detail ito te growig sigificace of local brads ad teimact of te most owerful global brads. Were do local ad regioal
brads old te greater tractio ad ae growt otetial? Could tebe a focus for te acquisitie Wester coma? Were could tebecome te ew global stadard?
Stefano Natella, head of Global Equit Researc, Iestmet Baig
Giles Keating, head of priate Baig Global Researc
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Te cnsumer in 2012Our sure suggests tat cofidece amog emergig cosumers is stillreasoabl strog. Of just oer 14,000 adults icluded i te sure acrosseigt marets, 35% tougt teir ersoal fiaces would imroe oerte ext six mots ad 9% exected some deterioratio. howeer,comared to last ear, cosumer cofidece is ot as strog as igeriflatio ad slower growt ae tae teir toll.
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Otimism o te fiacial outlook is strogest i Bra-zil, Idia ad Cia. I Brazil, 58% of resodets tote survey said tey exected a imrovemet i teirersoal fiaces over te ext six mots. Te Rus-sia cosumer is te most essimistic of te BRICcoutries.
At te oter ed of te scale, te greatest degree ofessimism i fiacial rosects was recorded i Egtad Ture. Desite te radical cage i te oliticalsituatio, Egtia cosumers remai te most dow-beat amog te coutries icluded i our sure, wit25% redictig a worse fiacial ositio oer te extsix mots comared to 24% exectig some imroe-met. Te icture i Ture was ot muc better: 12%of resodets exected teir fiacial ositio toworse ersus 16% wo exected it to imroe. Wewe comare te aggregate results i our latest surewit last ears sure, tere is o doubt tat cosum-ers, o aerage, are less otimistic. I Brazil, te bal-ace of cosumers exectig better rater ta worsefiacial rosects oer te ext six mots as fallefrom 59% i 2010 to 53% i 2011. I Cia, tesame statistic as slied from 39% to 31%, ad iIdia it as falle from 40% to 36%. Te mood asimroed i ol two of te marets. I Idoesia, a et31% ow exect ersoal fiaces to imroe oer teext six mots comared wit 28% last ear. Wilete Egtia cosumer is muc more ubeat com-ared wit last ear, tis is clearl off a er low basead still oor i absolute terms (Figure 2).
Tw-fd ratinae fr vera decine in ptimism1. O aerage, tere as bee a moderatio i futurewage exectatios comared wit last ear. As weillustrate i Figure 3, i te most recet sure com-ared wit last ears sure, wage exectatios for teext 12 mots ae declied cosiderabl i Brazilad ae edged dow i Cia. Wage exectatiosae iced u i Egt, but, as wit most idicatorsfor Egt, tis comes from a er low base. howeer,te oe maret were tere as bee a clear rise iwage exectatios is Saudi Arabia. Arguabl tisreflects te icrease i social sedig rograms ad
te rise i te miimum wage tat te autorities aeursued i te wae of te olitical ueaal i oternort Africa ad Middle Easter marets. Tisicrease i otimism i Saudi Arabia is te obiousbrigt sot i wat is oterwise a somewat more sub-dued cosumer stor o aerage.2. Food iflatio as also ad a sigificat imact ocosumer setimet. We we comare te roor-tio of exediture tat is directed towards foodagaist te otimism embodied i exectatios o testate of ersoal fiaces, a clear atter emerges.Te least otimistic (cosumers i Egyt) allocate over40% of teir total icome toward food exediture,
te most otimistic (i Brazil) ave te lowest relativeexediture o food.
Figure 1
D yu tink te state f yur wn persnanances ver te next six mnts wi be better,wrse r abut te same?
Source: Credit Suisse Emergig Cosumer Survey
10
20
40
30
90
80
70
60
50
100
Brazi l I ndia China SaudiArabia
Indonesia Egypt Russia Turkey
Better About the same Worse
37
58
5
5051 60 63
51
67
72
43
7
36
4
34
3
25
24
24
8
16
12
40
9
0
Figure 2
D yu tink te state f yur wn persnanances ver te next six mnts wi be better,wrse r abut te same? 2011 versus 2010 resuts
Source: Credit Suisse Emergig Cosumer Sure
10
-10
20
-20
40
30
-30
60
50
70
Brazil India ChinaSaudiArabia
Indonesia EgyptRussia Turkey
Better less worse 2011 Better less worse 2010
53
59
3640
32 32 31
39
31
28
16 17
4
NA1
-26
0
Figure 3
Percentage expecting better ess wrse usedincme in 2011 versus expectatins in 2010
Source: Credit Suisse Emergig Cosumer Sure
10
20
40
30
60
50
70
Brazil India ChinaSaudiArabia
Indonesia Egypt Russia
2 011 2 010
55
40
47
58
39 38
35 36
24
18
22 22
58
66
0
phOTO:ISTOCkphOTO.COM
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Clearl, food rice iflatio as egatiel imactedcosumer setimet. Te extet of te recet foodrice iflatio felt across te emergig ecoomies isillustrated i Figure 4. B our calculatio, te aualrate of food rice icreases for te emergig maretsi aggregate was ruig at 6.6% (i te 12 motsedig Setember 2011) ad tis comes o to of8.0% i te ear before tat. Tis uts food iflatiofor te last two ears well aboe te 10-ear aerageof just 4.5%.
Wat next?
Ecoomic mometum, o average, looks likely tocotiue to slow. Give tat te exort to grossdomestic roduct (GDp) ratio for te emergig eco-omies is a relatively ig 35%, tey are ievitablygoig to feel te eadwids of te slowdow adcotractio i key develoed markets. As we illustratei Figure 5, emergig markets ave cosistetly aver-aged iger growt rates i idustrial roductio overte ast decade but are clearly ot ideedet ofdeveloed market treds. Te most recet pMI read-igs are cosistet wit some cotractio i idustrial
or maufacturig roductio for bot te G4 ad teBRIC ecoomies i te mots aead (Figure 6). Tissuggests tere is a risk of furter sliage i omialwage exectat ios over te ext year across our sur-vey markets ad tus ressure remaiig o cofi-dece.
Figure 4
Weigt f fd expenditure versus ptimism npersna nances utk
Source: Credit Suisse Emergig Cosumer Sure
10
-10
20
-20
40
30
-30
60
50
70
10% 15% 20% 25% 30% 35% 40% 45% 50%
% respondents with expectations of better less worse personal finances
Food expenditure as % total income
0
China 2010
Brazil 2010
Brazil 2011
China 2011
India 2010
India 2011
Saudi Arabia 2010
Saudi Arabia 2011 Indonesia 2010Indonesia 2011
Russia 2010 Russia 2011
Turkey 2011 Egypt 2011
Egypt 20102011 Survey2010 Su rvey
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phOTO:ISTOCkphOTO.COM/
ILBUSCA
Figure 5
Emerging versus deveped market industriaprductin (% YY)
Source: Credit Suisse researc
5
10
-10
-5
-15
-20
20
15
25
Jan 90 Jan 93 Jan 96 Jan 99 Jan 02 Jan 05 Jan 08 Jan 11
Developed markets
0
Emerging markets
45
50
35
40
30
55
60
97 99 01 03 05 07 09 11
G4 BRIC
Figure 6
G4 versus BRIC aggregate PMI eves
Source: Credit Suisse researc
Figure 7
Emerging market fd inatin versus te CRBFdstuffs index (% YY)
Source: Tomso Reuters, IMF, CRB, Credit Suisse researc
6%
8%
2%
4%
-2%
0%
10%
12%
-30%
-20%
-10%
0%
60%
50%
40%
30%
20%
10%
Dec 95 Dec 98 Dec 01 Dec 04 Dec 07 Dec 10
GEM food inflation (Ihs) CRB Foodstuffs Sub-index (rhs)
Te good ews is tat te iflatio sceario is set tobecome sigificatl more suortie oer te motsaead. We fid tat te atter of emergig maretfood iflatio fits well wit cages i soft commoditrices (as roxied b te CRB Foodstuffs idex). TeCRB idex is alread dow 5% sice te start of 2011ad, assumig rices remai flat from ere, te imli-catio is for egatie readigs i aual rates ofcage oer te ext six mots, gie te er igbases establised i h1 2011. Te imlicatio is tat
aerage emergig maret food iflatio is liel to fallto low leels, i te regio of 0%1% for h1 2012.
Cycica eadwinds sw discretinary spending
Te e structural teme tat uderis te outloo foremergig marets is ow icome ad demograicdriers could cage te mae-u of cosumer sed-ig i tese ecoomies i ears to come. Cosumersedig, wic as bee eail focused aroudmore essetial areas of sedig, is liel to cotiueto sift to te more discretioar bias tat tifies tedeeloed world. Tis is te atter tat as ticall
laed out across te deeloed marets troug telast cetur.
Aggregate emergig maret GDp er caita owstads at USD 7,600 i urcasig ower arity (ppp)terms. Over te ext five years, te IMF forecasts tattis will icrease to USD 10,100. Te USA, Frace ad
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Jaa saw similar cages i te level of teir GDp ercaita i te 1930s, te 1950s ad te 1960s, resec-tively. If we loo bac at te sifts i teir sedig at-ters durig tis trasitio, it is clear tat growt isedig o te more discretioary items was far stro-ger ta te growt i exediture o basic essetials.
Figure 8 serves to illustrate tese treds.We ca see tat growt i olume demad for
essentia items (suc as food ad beerages adutilities) was, o aerage, still ositie, but ot asstrog as te growt i discretioar sedig. Co-sumtio of wat we migt describe as usefu items(suc as trasortatio, educatio, fiacial serices orealtcare) roed to be muc more sesitie to terisig icome leels. We ote tat strog growt iouseold demad for commuicatio serices largelreflected te sift i tecolog tat was taig laceat te time, as well as te substatial declie i ricestat too lace as te tecolog gaied scale. Ideed,te fall i commuicatio costs to date ow meas tatte atter of demad for basic mobile serices is ermuc i lie wit tat of oter essetial utilities. Weoted tat te data from te sure last ear cofirmedtat similar atters of cosumer exediture were is-ible across te emergig ecoomies. Tese treds arestill clearl isible i te data from te recet sure.
Demad for small-ticet, basic essetials (suc asrotei cosumtio or mobile oes) icreases ra-idl from er low icome leels, but beod a aer-age motl ouseold icome of aroud USD 1,000(ppp-adjusted), cosumtio of essetial goods ad
serices teds to stagate i faor of more discretio-ar items. howeer, tis log-term structural siftacross te emergig ecoomies towards greater dis-cretioar sedig as stalled, o aerage, oer teast ear as te slowdow i ecoomic mometumad ig food iflatio as imacted cofidece.
Cosequetl, we we comare te growt isedig rates betwee 2010 ad 2011 for a rage ofgoods ad serices, we ca see tat ouseold co-sumtio cotracted for ma of te more discretio-ar areas of exediture oer te course of te ear.Figures 11 ad 12 illustrate tese cages. I tese
carts, we aggregate te sure results from all temarets to sow ow cosumtio or owersi of dif-feret tes of goods ad serices caged tis earcomared wit last ear.
We nte te reductin ver te curse f te
ast year in average cnsumer expsure t:
Sort soes ad fasio aarel tese sectorsae bore te brut of te declie i cosumer seti-met ad iger aerage food rices. Bot categorieswere dow strogl across earl all of our sure mar-ets, icludig Saudi Arabia were cosumer seti-met still aears to be relatiel strog.
priate ealtcare four out of te see marets(were we ca comare te recet data agaist lastears sure) recorded a declie i te umber ofouseolds wo allocated sedig to riate ealt-care. Teoreticall, tis could siml reflect a imroe-met i state roisio of ealtcare serices. how-
Figure 8
Average* annua rea grwt in te vume fcnsumer expenditure as GDP per capita risesfrm USD 7,500 t USD 10,000
Source: BEA, InSEE, Miistry of Iteral Affairs ad Commuicatios, Credit Suisse researc
* Taig te aerage of growt i te c omoets of real cosumer exediture i te USA
(19361940), Jaa (19611966) ad Frace (19501959). Tese umbers are
aroximate to some extet: differeces i categorizatio i exediture b sector betwee
tese marets limits a more recise calc ulatio.
Figure 9
Mbie pne wnersip
Source: Credit Suisse Emergig Cosumer Sure
2%
4%
8%
6%
10%
12%
PCE
Com
munication
Transportation
Education
Recreation
Housing
Financial
services
Healthcare
Utilities
Food&
beverages
H
ousehold&
pers.goods
Average annual growth in real terms
4.6
10.4
9.7
7.26.8
6.2 6.2
5.4
4.64.3
3.0
0%
80
90
60
70
50
100
110
0 500 1000 1500 2000 2500 3000
Mobile phone % ownership
Avg monthly household income (PPP, USD)
Brazil China Russia Egypt Indonesia
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Figure 10
Expenditure n entertainment
Source: Credit Suisse Emergig Cosumer Sure
Figure 11
Percentage f respndents tat ave bugtvarius gds and services in 2011 and te cangeversus 2010
Source: Credit Suisse Emergig Cosumer Sure
Figure 12
Percentage f respndents tat wn variusgds/assets in 2011 and te cange versus 2010
Source: Credit Suisse Emergig Cosumer Sure
-2
-1
6
5
4
3
2
1
-3
-4
7
100 20 30 40 50 60 70 80 90 100 120110
Change vs 2010
0
2011% respondents that own/have access to each itemEx Ch = total excluding China; Ch = China
Ex Ch Mobile phones
Ex Ch Internet accessEx Ch SmartphoneCh Smartphone
Ex Ch Computers
Ex Ch Cars Ch Computers
Ch Mobile phones
Ex Ch Property
Ex Ch Property
Ch Internet accessCh Cars
eer, i ractice, sice te detailed data sow tedeclie was most obious across te lowest icomegrous, it suggests tat ealtcare sedig was for-feited to offset ig food rices. proert owersi also declied o aggregate itis sure ersus te last sure. At te coutr leel,
te data sow tat owersi remaied flat i Ciaad Russia, but declied sligtl i Idia ad Brazil. Asa clear sig of te reailig ecoomic turmoil, roertowersi leels i Egt were dow sigificatl com-ared wit last ear.
Meanwie, cnsumer penetratin rates picked
up n average fr:
Mobile oes tis is redomiatl drie b terise i owersi across te lower icome marets(Idia, Egt, Idoesia ad Brazil). Growt rates co-tiue to old te greatest otetial i Idoesia (29%of our samle still do ot ae a mobile oe) fol-lowed b Egt (15%) ad Ture (11%). Smart oes at te oosite extreme to te basicmobile oe, te iger icome marets ae beete e driers of te rise i owersi of smartoes. Saudi Arabia tos te list wit a eetratiorate of 68% (a 22% icrease o last ear). Te suresows tat smart oes ae also roed oular iBrazil ad Cia. Comuters ad iteret access ae also ejoedstrog growt i eetratio rates oer te ear. Iter-estigl, tis as ot bee drie b Cia (were com-uter owersi ad iteret access is alread rela-
tiel ig). Istead, te e driers oer te last earae bee Brazil ad Saudi Arabia. Cosmetics demad aears to ae iced umargiall oer te last ear. Closer isectio of tedata sows tat te low icome grous i Brazil wereimortat driers of tis tred. Tis follows te well-establised sedig atters of te iger icomegrous i Brazil. Te coutr as a wole as oe of teigest recorded sedig rates o cosmetics adsicare (86% of our samle said te ad set otis item i te ast tree mots) i cotrast to Cia,wit oe of te lowest rates (ol 43% of our Ciese
samle said te ad set moe o cosmetics oerte same eriod). Educatio a more sigificat roortio of reso-dets i six out of seve markets said tey adallocated moey to rivate educatio courses tisyear comared wit last year. Te excetio wasEgyt were te ecoomic disrutio as clearlyudermied routies. But, Egyt aside, it is remark-able tat te growt i educatio is so cosistetacross markets tat differ so muc i terms of co-sumer referece i so may oter areas. Ad more-over, tat educatio icreased i rioritizatio i ayear tat was far from suortive from a cyclical er-
sective. Tere is a substatial weigt of istoricalevidece tat suggests tis strategy is igly likely toay ecoomic divideds ad deliver sustaiably igerGDp er caita i te log ru. Tus, tis stroglyuderis te cotiued outerformace of emergigmarket ecoomic growt.
200
300
100
0
400
500
0 300020001000 4000 5000 6000 7000 8000
Monthly spending on entertainment (PPP, USD)
Avg monthly household income (PPP, USD)
Brazil China Russia
-2
2
-4
-6
-8
4
100 20 30 40 50 60 70 80 90 100
Change vs 2010
0
2011% respondents that own or have bought each item
Extra education
Watches
Spirits
Beer
CosmeticsBottled water
Carbonateddrinks
Femininehygiene
Perfume Holidays
Tissues Dairy
Fashion apparelPrivatehealthcare
Jewellery
Sports shoes
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Te appetite fr tecngy
As oted aboe, te aetite for tecolog across ourcosumer uierse aears to be er strog. how-eer, we ote tat te stregt of tis demad ariesaccordig to icome grou as well as maret. As a
examle, te data sow tat te eetratio of smartoes is greater i te low-icome grous i SaudiArabia ta it is for te ig-icome grous i Brazilad Russia. Te owersi of comuters is iger forte mid-icome bracets i Cia ta it is for teig-icome bracets i Saudi Arabia, Russia or Idia.Figures 13 ad 14 illustrate te oit.
Te pssibe expanatins fr tis are treefd:
1. Stregt ad soisticatio of te distributio et-wor te greater tis is, te iger te eetratiorate. Cur rates are oe otetial idicator of tescoe ad reac of te distributio etwor. Our sur-e data sow tat were mobile ad smart oeeetratio rates are igest, a mobile adset as arelatiel sort life (ol 14 mots o aerage i SaudiArabia). I marets were oe eetratio rates arelowest, te aerage legt of time tat a adset isowed is muc loger (22 mots o aerage i Rus-sia ad 24 mots i Idia).2. Relatie rices are a obious factor to exlai rela-tie eetratio rates. Te realece of low-costsmart oes i Cia ad te cometitie ature oftat maret as arguabl boosted cosumer access tote roduct.
3. Relatie deelomet of broadbad ifrastructureels exlai comuter owersi. We fid tere is aclear correlatio betwee broadbad access adouseold comuter eetratio: were broadbadaccess is low (otabl Egt, Idia ad Idoesia) teaerage comuter owersi is also low.
howeer, te structural ositio is ol art of testor. Our sure data also igligt cages i tec-olog cosumtio oer te ast ear. Figures 15 ad16 illustrate some of te mai treds. not surrisigl,we fid tat te fastest rates of growt i stadard
mobile eetratio are i te low icome marets (Idiaad Egt) were eetratio rates are still relatiellow. Growt i smart oe owersi as bee fast-est across te iger icome grous i te igericome marets (otabl Saudi Arabia ad te ricered of te Brazilia cosumer).
Cia as witessed excetioal growt i comut-ers ad iteret access oer te ast te ears. partlbecause tese eetratio rates are ow alread ig,we fid tat growt rates i tis area oer te last earae bee better for te oter marets. Secificall,te sure data sow tat Brazil ad Saudi Arabia aeejoed te strogest tae-u of comuters ad iter-
et access oer te last ear.
Wat next?
Growt i mobile oe eetratio loos set to berelatiel strog i Idoesia (still 29% of our suresamle said te did ot ow a mobile), Idia (6% iph
OTO:ISTOCkphOTO.COM/
kALI9
Figure 13
Percentage f useds (accrding t incmebracket) wning at east ne cmputer
Source: Credit Suisse Emergig Cosumer Sure
60
80
20
40
0
100
120
0 2000 4000 6000 8000 10000
% households with computers
Avg monthly household income (PPP, USD)
Brazil China RussiaIndia Saudi Arabia
Figure 14
Percentage f useds (accrding t incmebracket) wning smart pnes
Source: Credit Suisse Emergig Cosumer Sure
60
70
20
10
50
30
40
0
80
90
0 2000 4000 6000 8000 10000
% households with a smartphone
Avg monthly household income (PPP, USD)
Brazil China RussiaIndia Saudi Arabia
total ad o mobile risig to 12% at te lower icomebracets) ad Brazil (were 11% of te lower icomegrous ad o mobile).
Mometum i smart oe eetratio is liel tocotiue to be strog i Brazil ad Cia. Saudi ee-tratio rates also loo liel to cotiue uward, albeit
te otetial growt is somewat dimiised b teexcetioall strog tae-u oer te ast ear. Su-ortig factors are (1) growt i real wages ad rela-tiel more otimistic outloo of tese cosumers, (2)size ad affluece of te mid-to-ig icome grous ieac of tese marets, (3) existig mometum (smartoe eetratio icreased b 22%, 11% ad 5% forSaudi, Brazil ad Cia resectiel oer te last ear).
For similar reasos, comuter sales loo liel to bestrogest i Brazil ad Saudi Arabia. Mometum asbee strog i te ast ear but eetratio rates arestill ol 67% ad 63% for tese two marets resec-tiel comared wit 83% i Cia.
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Figure 15
Cange in mbie pne and smart pnewnersip 2011 versus 2010
Source: Credit Suisse Emergig Cosumer Sure
10
5
-5
15
20
25
BrazilIndia China SaudiArabia
IndonesiaEgypt Russia
Smartphones Mobile phones
-2
4
109
11
8
34
5
1 1 1
22
0
% change in ownership vs 2010
0
Figure 17
Purchases of local brands/dairy as apercentage of total purchases
Source: Credit Suisse Emergig Cosumer Sure
60
70
20
10
50
30
40
0
80
100
90
0 20001000 3000 4000 5000 6000 7000
Avg monthly household income (PPP, USD)
BrazilChina RussiaIndia
% of respondents buying local dairy brands
Figure 16
Cange in cmputer wnersip and internetaccess 2011 versus 2010
Source: Credit Suisse Emergig Cosumer Sure
7
5
4
3
2
1
6
8
9
10
Brazil India ChinaSaudiArabia
IndonesiaEgypt Russia
Computers Internet access
7
6
9
8 8
7
1
6
1
2 2
1
2
0
% change in ownership vs 2010
0
Te re f brands
Ruig alogside te structural stor of te trasitioof emergig maret cosumtio from essetial itemstoward discretioar sedig, tere are imortatimlicatios for cosumer brads. I last ears sure,
we flagged tree secific temes wic were ermuc aaret i te data. First, at relatiel low leelsof ouseold icome, ubraded goods are a sigifi-cat feature of total cosumtio. Secod, as icomeleels imroe, refereces for braded goods ic u;ad tird, as icome moes to relatiel affluet leels,remium brads attract a greater maret sare. Tradi-tioall, iteratioal brads ae ad te uer adi te remium ratigs wile local brads ae tededto aeal to te lower icome mass maret. Our datasuort tis tesis for most of te goods we sureedat te discretioar ed of te sectrum.
howeer, our sure also sows tat for goods tatcould be classified broadl as essetial items, te ref-erece at iger icome leels for iteratioal bradsoer local brads is ot articularl strog. To illustratetis simle oit, Figures 17 ad 18 lot te relatiedemad for local ersus iteratioal brads b icomebracet for dair ad cars. Te stabilit i te aetitefor a ubraded/domestic essetial item suc asdair across te icome scale cotrasts wit te raiddeterioratio i te brad alue of a domestic car asicome leels become rogressiel iger. Te sameatter ca be see across a large umber of oterroduct categories tat fall ito te essetial ersus
discretioar bracets (for istace, bottled water orerfumes).
We see tree ikey expanatins:
1. Local maufacturers for essetial goods ad sericesalso offer attractie remium brads ad ca cometesuccessfull wit te iteratioals. Tere are umerousexamles of tis, articularl i te dair maret.2. Emergig cosumers are a to stic wit teirlocal brads for essetial items, artl out of iertia,but eras also as te offer o status beefit icosumtio terms.
3. Brad ower for essetial items is ot as strog asit is for discretioar items. Ee iteratioal bradsare ofte mareted o rice ad alue.
Te broad coclusio is tat as icomes cotiue toimrove iteratioal brads offer greater growt ote-tial ta teir local eers i te discretioary sace.however, te growt outloo for local brads sould beat least as good as iteratioal brads for essetialgoods ad services. Tis suggests cotiued strogM&A otetial i te essetials sectors as iteratioalcomaies may be moved ideed i some cases avealready bee moved to acquire tese local brads.
W are te winners?
If tis is te broad icture, wat are te secific illus-tratios of brad otetial or ulerabilit? Te sureallows us to isolate secific brads at a er graular
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ELDADCARIn
Figure 18
Panned purcases f ca car brands as apercentage f tta purcases
Source: Credit Suisse Emergig Cosumer Sure
60
70
20
10
50
30
40
0
80
100
90
0 20001000 3000 4000 5000 6000 7000
China RussiaIndia
% of respondents buying local car brands
Avg monthly household income (PPP, USD)
leel b categor of sedig, b coutr ad b teature of te cosumer cocered, weter b icomeor a wide rage of demograics. Te Credit SuisseResearc Istitute reort Te ower of brad iest-ig ublised i Februar 2010 uderlied te sigifi-cace for iestors i uderstadig te driers ofbrad deelomet ad ositioig.
Wen taken t te micr eve, we see treespecific temes aready at wrk and tat migt
devep furter:
1. Te scoe for idustr cosolidatio ad mergersad acquisitios (M&A) actiit.2. Tradig u oortuities as cosumers sift fromubraded to braded roducts we teir icomesimroe.3. Te otetial structural global ad local wiigbrads alogside tose tat ma see teir brad statuscalleged.
To exlore tese temes, Figures 20 ad 21 disla a
umber of e coutr brads tat cosumers ig-ligted i te sure. Tis is a small, but sigificat,subset of te data from te udreds of brads i tesure as a wole. Te two tables slit te brads itofood ad beerages to iclude some lower ticet adessetial items, ad te discretioar sedig.
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Eac table sows te categor of sedig, a ecoutr brad ad its eetratio i te lowest adigest icome grous witi te maret. Our tiigere was to illustrate ow strog te maret ositio-ig of certai brads was sould icome rise amogstemergig cosumers. We ae also sow wic com-
a ows te brad, wic els idetif weter tebrad is local or global i ature.
Te brads selected fall ito oe of tree categoriesad are color coded accordigly brads i te surveytat see teir maret eetratio amog cosumersicrease as we move from low to ig icome (blue);tose tat decrease as icome rises (orage); ad tosetat old teir ow across te icome scale (yellow).
Mergers and acquisitins
M&A activity is rovig to be a major ogoig teme iemergig marets. Global cosumer comaies avetae advatage of te growt oortuities i emergigversus develoed marets ad also te relaxatio of regu-latory costraits tat ermit it. Te sectors tat are morefragmeted ad were local brads roliferate loo mostliely to beefit from greater M&A activity i te future.
Taig te two tables togeter, te dair ad cos-metics sace roide good illustratios of M&A ote-tial, albeit for differet reasos. As our earlier worsuggested, global brads suc as nestle, Daoe adkraft gai limited tractio i essetial items. Tedomiace, ad ideed resiliece across te icomescale, of comaies lie Megui ad yili i Cia illus-
trate ow te stregt lies domesticall. Ulisted com-aies ad co-oeraties (e.g. Moter Dair ad Amuli Idia ad Botao i Brazil) also la a major role.Beod te lies of te co-oeraties, te owersiof local brads b major global comaies is still low (icotrast to muc of te beerages segmet). howeer,pesis Wimm-Bill-Da acquisitio i Russia ad itsowersi of two dair brads sows tat tis eed otbe te case. Tere is eer reaso for more. Te globalcomaies ow brads meet wit limited aetite;te ma be better off buig te local brads ad er-as leeragig teir suerior caabilities i brad
awareess ad distributio to create alue.
Cosmetics are a differet stor. Global laers arereset ad icome sesitiit does imact teir attrac-tio. howeer, as i dair, te data from our surewould suggest tat tere are well-osi tioed localbrads tat offer strog maret ositio, growt ote-tial ad tat are ot alread i te ads of te global
laers, for examle, natura i Brazil, paracute iIdia ad Cistaa Liia i Russia.
Trading up: Unbranded t branded and beynd
Wile te rocess of ow cosumers sift from low-edbrads to remium brads catures lety of cosider-atio; te reality is tat may cosumers across teemergig world still buy ubraded roducts i may cat-egories. I te discretioary areas, tis is at its extremeamog low-icome earers but, as we ave igligted,ca also be widesread i essetial items. Beig wellositioed to exloit te sift from ubraded to bradedroducts offers sizeable otetial gais for comaies.
Figure 19 breas dow by coutry ad by categoryte roortio of resodets suggestig tey bougtubraded roducts. Te relevace of ubraded ur-cases seems greatest amog te discretioary areasad i essetials lie dairy.
If we cosider a sceario were icomes imrove atte low ed ad te aetite for braded roducts grows,tere sould be immediate beefits for tose well osi-tioed amog te lowest icome earers. Liig tisito secific brads icluded i our survey, Figures 20ad 21 would igligt te strog ositio witi te
lower icome grous i fasio/retailig for brads sucas Bata i Idia, herig ad Marisa i Brazil; i cosmet-ics, agai, for natura ad paracute; i sortswear
Actio I Idia ad Liig i Cia. Te data suggeststat pesis dairy acquisitio i Russia also loos strate-gically well laced.
We are somewat scetical about te quality of telow resoses to te questios o ubraded alcool.Buyig ubraded alcool may be deemed illegal isome areas (also ote tat te questio was ot ased iIdoesia, Saudi Arabia ad Egyt for cultural reasos.)however, eve taig te data at face value, we ca see
a read troug to relative ositio of beer brads suc as
Figure 19
Percentage f purcases by sectr tat are unbranded
Source: Credit Suisse Emergig Cosumer Sure
Brai Cina Egypt India Indnesia Russia Saudi Arabia Turkey
Dair 9 7 68 15 14 32 0 23
Soft dris 6 1 1 2 2 16 0 4
Beer 1 4 - 5 - 20 - 7
Sirits 13 19 - 6 - 16 - 34
Cosmetics 6 13 38 8 68 14 7 15
perfumes 9 23 72 45 81 32 31 66
Fasio 46 43 78 53 72 67 38 80
Leater goods 67 43 79 31 46 76 35 68
Sorts soes ad wear 24 13 54 19 37 29 10 37
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Figure 20
Fd and beverages: Brand market penetratin accrding t incme grup
Source: Credit Suisse Emergig Cosumer Sure
Sector Coutr / Brad % eetratioat LOWER
icome
% eetratioat hIGhER
icome
Differece paret coma (if alicable) Listed /
priate
Dairy
Juaa (EGypT) 35% 73% 38% Juaa Food Idustries JUFO Ey
Domi Deree (RUSSIA) 27% 50% 23% pesiCo Ic. pEp US
Cudo (RUSSIA) 13% 29% 16% pesiCo Ic. pEp US
Batao (BRAZIL) 30% 44% 13% Batao Cooeratia Agroidustrial priate
parmalat (BRAZIL) 39% 48% 9% AEp Iestmets, Ltd. priate
nestle (InDIA) 2% 11% 9% nestl S.A. nESn vX
Daoe (SAUDI) 7% 15% 8% Daoe Bn Fp
yili (ChInA) 55% 63% 8% Ier Mogolia yili Idustrial Grou Co., Ltd. 600887 Ch
Megiu (ChInA) 63% 68% 4% Cia Megiu Dair Coma Limited 2319 hk
piar (TURkEy) 41% 44% 3% yasar holdig priate
Acor (SAUDI) 20% 21% 1% Foterra Co-oeratie Grou Limited priate
Moter Dair (InDIA) 26% 25% -1% natioal Dair Deelomet Board priate
kraft (SAUDI) 30% 28% -2% kraft Foods Ic. kFT US
Tirumala (InDIA) 16% 7% -9% Tirumala Mil products (p) L priate
Softdris
Guara Atarctica (BRAZIL) 46% 64% 18% Aeuser-Busc IBe nv ABI BB
Mirida pesi-Cola (SAUDI) 41% 53% 12% pesiCo Ic. pEp US
Coca-Cola (InDIA) 25% 33% 8% Te Coca-Cola Coma kO US
Limca (InDIA) 29% 33% 4% Te Coca-Cola Coma kO US
Guoziguole (ChInA) 10% 9% -1% Cia huiua Juice Grou Limited 1886 hk
Cerogoloa (RUSSIA) 10% 9% -1% OST Grou priate
Doll (BRAZIL) 19% 13% -6% Doll priate
Beer
Budweiser (TURkEy) 6% 23% 17% Aeuser-Busc IBe nv ABI BB
Carlsberg (InDIA) 0% 12% 12% Carlsberg Grou CARLB DC
heiee (BRAZIL 0% 11% 11% heiee hEIA nA
Brama (BRAZIL) 12% 19% 7% Aeuser-Busc IBe nv ABI BB
Tsigtao (ChInA) 23% 26% 3% Tsigtao Brewer Coma Limited 600600 Ch
yajig (ChInA) 11% 13% 2% yajig Beer (Guili Liqua) Co., Ltd. priate
hawards (InDIA) 11% 12% 1% SAB Miller SAB Ln
kigfiser (InDIA) 42% 37% -5% UB Grou priate
Baltia (RUSSIA) 23% 18% -5% Carlsberg Grou CARLB DC
klisoe (RUSSIA) 16% 10% -6% Aeuser-Busc IBe nv ABI BBSow (ChInA) 30% 16% -14% SABMiller SAB Ln
Sol (BRAZIL) 45% 30% -15% Aeuser-Busc IBe nv ABI BB
Efes pilse (TURkEy) 85% 58% -26% Aadolu Efes AEFES.IS
Sirits
Joie Waler (BRAZIL) 5% 24% 19% Diageo lc DGE Ln
Bacardi (BRAZIL) 9% 18% 9% Bacardi Limited priate
niulasa (ChInA) 17% 24% 7% Beijig Suxi Agriculture Co., Ltd 000860 Ch
Smiroff (BRAZIL) 31% 38% 7% Diageo lc DGE Ln
Roal Stag (InDIA) 11% 13% 2% perod Ricard RI Fp
5 Ozer (RUSSIA) 11% 11% 0% Alcool Siberia Grou, Ic priate
Bagiers (InDIA) 14% 13% -1% UB Grou priate
Jac Daiels (TURkEy) 22% 18% -4% Brow-Forma Cororatio BF/B US
Xifeg (ChInA) 10% 3% -7% Saaxi Xifeg Liquor Co., Ltd priate
McDowells no.1 (InDIA) 42% 27% -15% UB Grou priate
Absolut (TURkEy) 35% 14% -21% perod Ricard RI Fp
Brads icreasig sare from low to ig icome Brads maitaiig sare Brads seeig decreases i maret sare
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Sector Coutr / Brad % eetratio
at LOWER
icome
% eetratioat hIGhER
icome
Differece paret coma (if alicable) Listed/priate
Autos
GM (ChInA) 8% 12% 4% Geeral Motors Co GM US
Maruti Suzui (InDIA) 38% 41% 4% Maruti Suzui Idia Limited MSIL In
TATA (InDIA) 40% 41% 1% Tata Motors TTM US
Toota (SAUDI) 23% 23% 0% Toota Grou 7203 Jp
Lada/vAZ/Ziguli (RUSSIA) 17% 11% -5% Reault SA RnO Fp
volswage (ChInA) 22% 16% -6% volswage AG vOW3 Gy
Fiat (BRAZIL) 38% 22% -16% Fiat S..A. F IM
Cosmetics
Boticrio (BRAZIL) 15% 50% 35% O Boticrio priate
niea (RUSSIA) 14% 31% 17% Beiersdorf AG BEI GR
pods (InDOnESIA) 27% 43% 16% Uileer Idoesia UnvR Jk
natura (BRAZIL) 51% 62% 11% natura Cosmeticos SA nATU3 BZ
paracute (InDIA) 33% 42% 8% Marico Limited MRCO In
Satoor (InDIA) 14% 15% 1% Wiro Limited WpRO In
LOreal (SAUDI) 10% 10% 0% LOreal SA OR Fp
Cistaa Liia (RUSSIA) 19% 17% -3% kalia kLnA RU
Fair & Loel (InDIA) 46% 32% -14% Uileer UnA nA
via (InDOnESIA) 26% 7% -19% SiFood priate
Oriflame (RUSSIA) 61% 20% -42% Oriflame Cosmetics S.A. ORI SS
Fasio
Cow Taifoo (ChInA) 5% 28% 23% Cow Taifoo Co. priate
herig (BRAZIL) 4% 20% 16% Cia. herig hGTX3 BZ
Burberr (SAUDI) 4% 16% 12% Burberr Grou pLC BRBy Ln
Zara (RUSSIA) 2% 13% 11% Idustria de Diseo Textil, S.A. (Iditex) ITX SM
Fast Trac (InDIA) 12% 22% 10% Tita Idustries Ltd TTAn In
Alle Soll (InDIA) 1% 11% 10% Adita Birla Grasim GRASIM BO
Reer (BRAZIL) 21% 28% 8% Lojas Reer S.A. LREn3 BZ
Omega (ChInA) 4% 11% 7% Swatc Grou UhR vX
LvMh (ChInA) 1% 6% 5% LvMh S.A. MC Fp
Zara (SAUDI) 16% 17% 1% Idustria de Diseo Textil, S.A. (Iditex) ITX SM
Marisa (BRAZIL) 41% 33% -8% Maris Lojas SA AMAR3 SA
Sortswear
Adidas (RUSSIA) 27% 42% 15% Adidas AG ADS Gy
nie (SAUDI) 12% 14% 2% nie, Ic. nkE US
Liig (ChInA) 20% 20% 0% Li nig Coma Limited 2331 hk
Ata (ChInA) 12% 12% 0% Ata Sorts products Limited 2020 hk
X ste (ChInA) 10% 4% -6% Xte Iteratioal holdigs Limited 1368 hk
hadsets
Ale (ChInA) 13% 28% 15% Ale Ic. AApL US
Ale (BRAZIL) 5% 17% 12% Ale Ic. AApL US
Samsug (BRAZIL) 26% 33% 7% Samsug Grou 005930 kS
huawei (InDOnESIA) 10% 9% -1% huawei Tecologies Co. Ltd priate
LG (BRAZIL) 15% 12% -3% LG Cor. 066570 kS
noia (BRAZIL) 37% 28% -9% noia Cororatio nOk1v Fh
Tv/Comuters/Iteret/
Tele
coms
So (RUSSIA) 8% 30% 22% So Cor. 6758 Jp
Ale (SAUDI) 11% 21% 10% Ale Ic. AApL US
Tata poto (InDIA) 13% 23% 10% Tata Teleserices Limited TTLS In
hCL Tecologies (InDIA) 3% 12% 9% hCL hCLT In
Airtel (InDIA) 11% 11% 0% Barti Ai rtel Limited BhARTI In
Leoo (ChInA) 29% 24% -5% Leoo Grou Limited 992 hk
hewlett pacard (InDIA) 11% 6% -5% hewlett-pacard Coma hpQ US
Dell (InDIA) 19% 13% -6% Dell, Ic. DELL US
Acer (InDIA) 17% 4% -13% Acer Icororated 2353 TT
Figure 21
Discretinary spending: Brand market penetratin accrding t incme grup
Source: Credit Suisse Emergig Cosumer Sure
Brads icreasig sare from low to ig icome Brads maitaiig sare Brads seeig decreases i maret sare
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Baltia ad klisoe i Russia. If you believe tat tebeer/sirits resoses below uderestimate te localo-braded cosumtio, it is wort otig te localbrads tat domiate te low icome bracets suc aste lies of Sow i Cia ad Sol i Brazil.
Ma of tese brads tat target te low icome
cosumer, articularl beerages, ae bee acquiredb te global cosumer comaies suc as ABI adSAB Miller. Tsigtao i Cia is oe otable tat stillrests outside of global owersi. Uileer ows stroglow icome local brads i Idia ad Idoesia. how-eer, oe of te cosmetics ad fasio brads is aset owed b global comaies.
Structura winners and structuray caenged
Wile tis otetial ositioig for a low-ed oortuityas a immediate relevace i some areas, te log-term
teme i tis reort is to cosider a multi-year sift todiscretioary sedig tat exteds well beyod te low-est of icome earers. Cosumers wo ave moved fromubraded to effective low-ed or value-braded rod-ucts are ot goig to sto tere if teir icomes imrovefurter. Brads tat ave critical mass at te low ed, butsustai it or grow it u te icome scale could rove to bemajor structural wiers.
For examle, as strog as te aetite may be forSow ad Sol at te low ed, it tails off raidly beyodte low icome earers. Sows effective eetratioalves betwee low ad ig icome earers. I te cos-metics segmet i Russia, Oriflame sees its eetratio
fall from 61% to 20% betwee low- ad ig-icomegrous. As muc as tey are missig out o te otetialstructural sift u te icome scale, tey are very dee-det o oe icome segmet today. Oriflame as foudtis a aiful exeriece i te last year, give te ressureo te real icomes of low-icome Russia cosumers.
Ma of te brads tat disla te ideal mix of beigstrog across te board are i te ortfolios of teglobal comaies aboe, e.g. ABIs soft dri bradGuaraa Atarctica or beer brad Brama. Te globallaers owig brads suc as tese will geerallcotiue to beefit. howeer, a umber of te local
brads we ae metioed aboe tat stood out forteir low-icome attractios ad sittig i ucosoli-dated sectors emerge ere as well.
For examle, our sure sows tat just as aroud aquarter of cosumers urcase Tsigtao i te low-icome bad, a quarter at te ig ed do liewise.natura ejos sares of 51% ad 62%, resectiel,betwee low- ad ig-icome bads ad Liig as astable 20% from to to bottom. Brads tat do otejo te same icome resiliece would ultimatel aeto deise a rebradig or reietio or ru te risof beig left beid as icomes steadil imroe
beod te most basic leels.A fial tougt is to wat extet ca tese localbrads sulat te global layers i te bigger ticketareas? hig-ed luxury seems ulikely. Brads sucas Burberry cotiue to grow aace. Tecologyseems to be a area to watc. We ave igligtedte structural growt tat te sector cotiues toexeriece eve i te curretly weak cyclical evi-romet. Te Wester brads are i may areas tir-ig. Brads suc as Dell ad hp ave a decliigaeal i Idia amog iger earers, wile Leovodomiates across te board i Cia. nokias sare isdecliig i most markets as huawei establises itself
i a umber of tem. Of te major global tecologybrads, our survey sows tat oly Ale dislaysstrog market ositioig ad growt. Tere seemsevery reaso to believe tat domestic brads caerode te brad value develoed comaies aveejoyed i tis area.ph
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Credit Suisse EmergingCnsumer Survey 2012
BRAzIl (11%*)
GDp USD 2,447.8 bn
Cosumtio USD 1,520.1 bn (62%)
GDp growt (2011E) 3.77%
TURKEY (11%*)
GDp USD 846.5 bn
Cosumtio USD 601 bn (71%)
GDp growt (2011E) 6.59%
number of resodets: 14,232
Across 8 coutries
70% i urba areas; 30% i rural areas
Nte:
1. Total GDP for the country shown in nominal USD (2011E)
2. * % of survey sampled from this country
3. Country GDP from IMF
4. Consumption from UN data
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RUSSIA (11%*)
GDp USD 1,894.3 bn
Cosumtio USD 945.3 bn (50%)
GDp growt (2011E) 4.29%
SAUDI ARABIA (11%*)
GDp USD 580.7 bn
Cosumtio USD 153.3 bn (26%)
GDp growt (2011E) 6.47%
EGYPT (11%*)
GDp USD 248.6 bn
CosumtioUSD 174 bn (70%)
GDp growt (2011E) 1.22%
ChINA (18%*)GDp USD 6,476.2 bn
Cosumtio USD 2,085.3 bn (32%)
GDp growt (2011E) 9.47%
INDIA (18%*)
GDp USD 1,700 bn
Cosumtio USD 827.9 bn (49%)
GDp growt (2011E) 7.84%
INDoNESIA (11%*)
GDp USD 813.9 bn
Cosumtio USD 454.2 bn (56%)
GDp growt (2011E) 6.4%
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Emerging Consumer Survey 2012
number of resodets: 1,500
Across 5 geograic locatios
70 % i urba areas; 30 % i rural areas
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CELSOpUpO
Te Brazilia cosumer cotiues tostad out as te most otimistic acrossour sure. Te mometum of icomegrowt roides a uderiig to dis-cretioar sedig as it as oer telast ear. Te Brazilia ticall sedsot saes. Tere is a aetite for realassets suc as roert if ot fiacialassets.
At 58%, te weigted aerage bal-ace of resodets is more ositie iBrazil ta i a oter coutr. I addi-tio, tis measure of otimism as seeol a mior ste dow at te lower-icome ed relatie to last ears sure.Te geeral breadt of te otimismacross te oerall oulatio looigaead teds to set Brazil aart, otwit-stadig te istorical uequal icomedistributio.
Icome exectatios are uderiigtis sese of otimism. O average, Bra-zilia cosumers exect oe of te ig-est rates of ouseold icome growtamog te coutries surveyed, wit te
majority exectig icreases i excess of10%, or aroud 5% i real terms. Strogomial icome growt i te last yearalso sielded te cosumer i Brazil fromiflatio more ta i oter coutries.
Te sure reeals tat sedigbeaior roed more robust i te lastear ta elsewere, icludig sedigi te more discretioar areas. Sub-zero readigs o te ertical axis i Fig-ure 23 reflect te umber of categoriesseeig lower readigs i sedigbeaior i tis sure comared wit2010. It cotais te fewest categoriescomared wit oter coutries. Tiscart also igligts tat tecologeetratio i Brazil is seeig strogositie readigs. We also fid temometum beid te readigs o oli-das bacward ad forward looig
is er strog.Fiall, amog te wealtier cosum-
ers i te sure (GDp er caita ofUSD 12,400), te saigs beaior isstriig i tat so little of icome is
saed. Barel 7% of ouseold icomeis registered as saed ad oer a alf ofresodets suggest te ae o extracas for saigs. Gie te stregt ofrojected real icome growt, tis isextraordiar. It is more tical of tecoutries were te cosumer is beigseriousl squeezed ta oe werefiaces seem robust.
peras a aswer lies i ercetioof roert as a asset. proert ur-case itetios are iger ere ta foroter coutries ad ae icreased oerte ear. Moreoer, 73% of resodets
exect ouse rices to rise igerta a of te BRIC coutries. Couledwit a istor of ig iflatio, realassets eras commad more of astructural attractio.
BraiLiig for toda
Figure 22
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 2,447.8 billio
GDp er caita (2011) USD 12,423
poulatio (2011) 197.04 millio
Geograical area 8.51 millio m2
number of cities 6(i excess of 2 millio eole)
Gii coefficiet (2009) 55.0
Aerage iflatio (2011E) 6.6 %
Aerage iflatio (2012E) 5.2 %
Real GDp growt (2011E) 3.8 %
Real GDp growt (2012E) 3.6 %
Curret accout % of GDp -2.3 %(2011E)
Curret accout % of GDp -2.5 %(2012E)
Cosumtio as a % of GDp 62.1 %(2011)
EMERGInG COnSUMER SURvEy 2012_20
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10%
20%
30%
40%
50%
60%
70%
80%
Total 800 1400500 2400 4100 5600 7300 More than
8200
Income (BRL)
Balance better vs worse
30%
40%
50%
60%
80%
70%
90%
800500 1400 2400 56004100 7300 More than
8200
Balance better vs worse
Income (BRL)2011 2010 2011 average 2010 average
-2
2
4
6
0
8
10
12
0 2000 4000 6000 8000
Nominal growth in household income (%)
Income (BRL)Last 12 monthsNext 12 months
0
10
5
-20
-15
-10
-5
15
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
10
20
40
30
50
60 % of respondents saving by each method
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
Housing+
PublicUtilities
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
45%
30%
35%
40%
0%
2011% respondents that own or have bought each item
0%
Smartphone
Watches Spirits
Cars
Internet access
Computers
Beer
Cosmetics
Dairy
Carbonateddrinks
Sports shoes
PerfumeProperty
Mobilephones
Fashion apparel
Holidays
Privatehealthcare
Extra education
Figure 26
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 27
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 28
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 25
Nmina grwt in used incme (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 24
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 23
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
EMERGInG COnSUMER SURvEy 2012_21
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phOTO:ISTOCkphOTO.COM
Te outloo for te Ciese cosumeris robust toug exectatios ae soft-eed i te last 12 mots. Te exec-tatios of te ric ad oor remai amared cotrast, desite goermetolic iitiaties aimed at addressig teimbalaces. For ow, te iger-icomecosumers loo liel to remai te re-sere for discretioar sedig ad teacquisitio of iger-ticet items.
At 38%, te weigted balace ofresodets exectig to see teirfiacial ositios imrove is still robust toug we would ote softeigsomewat from last year ad belowtat of Brazil ad Idia. As Figure 31sows, te ste dow as bee rettyuiform from ric to oor. I tatresect, we would also ote tat ot-ig as caged to close te sizeable
ga betwee te outlook of te ricad oor.
Te imlied atters of sedigover te last year reflected i Figure 34are of lower sedig o a rage of
stales suc as dairy ad beverages aswell as more discretioary items sucas fasio aarel, cosmetics ad er-fumes.
Te areas of sedig tat aesee uward mometum are still rela-tiel muted i teir degree toug testregt of tecolog sedig isclearl aaret. howeer, te two cat-egories tat stad out are ealtcaread educatio. Te ol coutr witcomarable mometum i ealtcaresedig is Saudi Arabia. Ol Saudiad Idia ad stroger readigs o extraeducatioal sedig.
Te saigs beaior of te Ciesecosumer is also a otable feature. Lastear we igligted te ig roesitto sae. Tis remais ucaged. Aressure o icomes as ot bee off-
set b a reductio i saigs. At earl30% of motl icome, it is te igesti te sure. howeer, as Figure 35illustrates tere is let of scoe todiersif ito oter saigs caels.
Fially, we ote te iterestigresoses i Cia to some additioalquestios icluded i our latest survey.We asked about te imortace ofevirometal rotectio relative toecoomic growt, a et 28% of reso-dets tougt tat te evirometsould take riority over growt, wellabove ay oter coutries surveyed.Tis suggests tat wealt accumulatiois also temered by cocers about tecommo good ad a degree of socialcosciece is emergig. At te sametime, Ciese cosumers tik teir
govermet is very effective. Secifi-cally, 62% of eole tougt tat teirgovermet was quite effective or veryeffective at solvig teir roblems, sec-od oly to Saudi Arabia.
CinaA saigs cultureEmerging Consumer Survey 2012
number of resodets: 2,595
Across 10 geograic locatios
71 % i urba areas; 29 % i rural areas
Figure 29
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 6,476.2 billio
GDp er caita (2011) USD 4,833
poulatio (2011) 1.34 billio
Geograical area 9.59 millio m2
number of cities 25(i excess of 2 millio eole)
Gii coefficiet (2009) 41.5
Aerage iflatio (2011E) 5.5 %
Aerage iflatio (2012E) 3.3 %
Real GDp growt (2011E) 9.5 %
Real GDp growt (2012E) 9.0 %
Curret accout % of GDp 5.2 %(2011E)
Curret accout % of GDp 5.6 %(2012E)
Cosumtio as a % of GDp 32.2 %(2011)
EMERGInG COnSUMER SURvEy 2012_22
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10%
20%
30%
40%
50%
Total 3500 4500Up to
2500
5500 6500 7500 9000 More than
10000
Income (RMB)
Balance better vs worse
0
10%
20%
30%
40%
50%
60%
Up to
2500
3500 4500 5500 6500 7500 9000 More than
10000
Balance better vs worse
Income (RMB)
-1
0
1
2
3
6
5
4
7
2000 4000 6000 8000 10000 12000
Nominal growth in household income (%)
Income (RMB)Last 12 monthsNext 12 months
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
35%
30%
2011 2010 2011 average 2010 average2011 2010 2011 average 2010 average
Housing+
PublicUtilities
10
20
40
30
50
90
60
70
80
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
0
8
4
2
6
-8
-6
-4
-2
10
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
Smartphone
Watches
Spirits
Cars Internetaccess
Computers
BeerCosmetics
Dairy
Carbonateddrinks
Sports shoes
Perfume
Property
Mobile
phones
Fashion apparel
Holidays
Privatehealthcare
Extra education
0%
0%
Figure 33
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 34
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 35
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 32
Nmina grwt in used incme (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 31
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 30
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
EMERGInG COnSUMER SURvEy 2012_23
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Emerging Consumer Survey 2012
number of resodets: 1,507
Across 4 geograic regios
52 % i urba areas; 48 % rural
phOTO:ISTOCkphOTO.COM/
hOLGS
Egt otabl stood out as b far temost egatiel ositioed i last earscosumer sure. Drawig a defiitiecoclusios from our sure for Egttis ear is clearl azardous, gie aolitical bacdro tat is so fluid. how-eer, we ca illustrate wat cages areisible i tis ears data. Te realit isless as caged ta oe migt aeoed. I fact, te reailig ouseoldfiacial ositio loos worse ta it dida ear ago.
Wile we would mae o claims as toerfect foresigt, we would ote tatlast ears sure for Egt geeratedb far te most egatie readigs of acoutr i te sure across eerbarometer of setimet. A extremeiequalit of icome ad a ouseoldbudget cosumed b eer more exe-
sie food rices erodig its real aluewere ard data oits. Wats caged?
Te outloo of te cosumer asimroed wit our weigted readigs ofotimism moig from 5% to +8%.
howeer, tis is still te lowest i tesure. how te readigs ae cagedacross icome grous as sow i Fig-ure 36 are otewort. Te oorest admiddle-icome earers ae see aimroemet from te er egatieercetios a ear ago, wile te ricae see a corresodig declie, a-ig arguabl bee te greater beeficia-ries of te old regime.
Curret olitical eets eras owcall ito questio te durabilit of teimroemet at te bottom ed of tescale. Tere is also te ogoig red flagraised b exosure to food wit its ear50% claim o te ouseold icome ofEgtia cosumers. Iroicall, las tocut goermet sedig o food subsi-dies to stregte state fiaces, couldi itself icrease iflatio ad udermie
cosumer setimet.Wat we ae see durig te eriod
tis sure catces as bee a ic-ui buig i te lower-ticet discretio-ar items, e.g. fasio ad cosmetics.
Tis is eras reflectie of te imroedcofidece amog low-icome earers.Tis cotrasts wit retrecmet iroert. proert owersi as falleb 13% tis ear to 57% o aerage.Also stri ig, ad eras cocerig,tere ae bee major reductios iareas of ealtcare ad educatio roi-sio b idiiduals.
Te structural bullis stor tat existsfor te cosumer i Egt is tat sed-ig leels are so low. Recorded actiiti almost eer categor is lower taoter coutries. Te e is fidig te
stabilit ad imetus to uloc it. Atreset, ad olitics aside, low omial-icome exectatios wic, if deliered,will still be sigif icat real declies areot te rigt latform.
EgyptCage but o cage
Figure 36
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 248.6 billio
GDp er caita (2011) USD 2,892
poulatio (2011) 85.95 millio
Geograical area 1.00 millio m2
number of cities 3(i excess of 2 millio eole)
Gii coefficiet (2009) 32.1
Aerage iflatio (2011E) 11.1 %
Aerage iflatio (2012E) 11.3 %
Real GDp growt (2011E) 1.2 %
Real GDp growt (2012E) 1.8 %
Curret accout % of GDp -1.9 %(2011E)
Curret accout % of GDp -2.2 %(2012E)
Cosumtio as a % of GDp 69.7 %(2011)
EMERGInG COnSUMER SURvEy 2012_24
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-15%
-10%
-5%
5%
10%
20%
15%
Total
Income (EGP)
Balance better vs worse
0
-40%
-50%
-30%
-20%
-10%
10%
20%
30%
1000 1500 2500 3500 4500 5500 60001000 1500 2500 3500 4500 5500 6000
Balance better vs worse
Income (EGP)2011 2010 2011 average 2010 average2011 2010 2011 average 2010 average
70
80
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
-20%
10%
-10%
20%
30%
50%
40%
Housing+
PublicUtilities
10
20
40
30
50
60
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
2.0
1.0
4.0
3.0
5.0
6.0
7.0
8.0
0.0
0
10
5
-30
-20
-25
-15
-10
-5
20
15
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
Smartphone
Watches
Cars
Internetaccess
Computers
Cosmetics
DairyCarbonated
drinks
Sports shoes
Perfume
Property
MobilephonesFashion apparel
Holidays
Privatehealthcare
Extra education
0%
0%
500 1500 2500 3500 4500
Nominal growth in household income (%)
Income (EGP)Last 12 monthsNext 12 months
Figure 40
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 41
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 42
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 39
Nominal growth in household income (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 38
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 37
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
EMERGInG COnSUMER SURvEy 2012_25
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phOTO:ISTOCkphOTO.COM
Otimism amog Idia cosumers isol surassed b tat of Brazil. how-eer, te sedig riorities ae beelower ticet. Distiguisig features ofte Idia cosumer are a cotiuedaetite for extra educatioal exedi-ture ad a roesit to sae. Tere is astructural oortuit i tecologsedig.
Te Idia cosumer remais tesecod most cofidet i is/er er-soal fiaces looig forward (afterBrazil). O a weigted basis, tis asstregteed oer te ear, but tedetailed breadow sows tis sift wasdrie b te igest icome earers.
Te ast majorit of categories weillustrate ae sow a icrease iactiit aboe te rates see elsewere.
Te are tedig to be lower-ticet iature cosmetics, clotig, beer-ages, mobile oes (ot smartoes), for examle. I cotrast tooter coutries, tecolog sedig
as bee more muted (if still ositie).howeer, a strog structural stor existsi tecolog, wit owersi ad receturcases of tecolog still low com-ared wit elsewere.
70% of Idias say tey ave ocomuters i te ome. Oly 19% ofresodets register avig access tote iteret. Bot measures are tesecod lowest i te survey after Ido-esia. If we begi to see a sift awayfrom sedig o essetial items(ousig ad food make u aroud35%), tis sould be oe of te areasto beefit, articularly if we seeicreased ifrastructure sedig itelecoms.
We igligted last ear te igsare of sedig te cosumer sets
aside for educatio. At close to 10% ofte ouseold budget, tis remais afeature. I fact sedig o extra edu-catio is recorded at a greater rate itis sure comared wit last, bot i
absolute terms ad relatie to otercoutries. 32% of cildre articiate ieducatio outside of tical scooligersus 23% last ear. Adult articia-tio i extra courses as rise from 3%to 12%. Tis micro stor uderis alog-term bullis macro stor for Idia.
Fially, te savigs culture we ig-ligted last year remais aaret. Tesurvey registers te igest bakaccout eetratio ad te fewestumber of eole claimig tey aveo extra moey for savig. Te life
isurace idustry (via tax icetives)ad real assets suc as gold ad ro-erty are te mai o-cas omes forte ruee. Tis mix sets Idia aartfrom te oter great saver Cia.
IndiaGoig bac to scool
Figure 43
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 1,700 billio
GDp er caita (2011) USD 1,382
poulatio (2011) 1.23 billio
Geograical area 3.28 millio m2
number of cities 13(i excess of 2 millio eole)
Gii coefficiet (2009) 36.8
Aerage iflatio (2011E) 10.6 %
Aerage iflatio (2012E) 8.6 %
Real GDp growt (2011E) 7.8 %
Real GDp growt (2012E) 7.5 %
Curret accout % of GDp -2.2 %(2011E)
Curret accout % of GDp -2.2 %(2012E)
Cosumtio as a % of GDp 48.7 %(2011)
Emerging Consumer Survey 2012
number of resodets: 2,512
Across 10 geograic locatios
70 % i urba areas; 30 % i rural areas
EMERGInG COnSUMER SURvEy 2012_26
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10%
20%
30%
40%
50%
60%
70%
Total 5000 6250 8750 12500 17500 25000 35000More than
40000
Income (INR)
Balance better vs worse
0%
20%
10%
40%
30%
60%
50%
70%
6250 8750 12500 17500 25000 35000 More than
40000
Balance better vs worse
Income (INR)
0.0
3.0
4.0
5.0
2.0
1.0
6.0
50000 10000 15000 25000 30000 400003500020000
Nominal growth in household income (%)
Income (INR)Last 12 monthsNext 12 months
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
2011 2010 2011 average 2010 average
Housing+
PublicUtilities
0%
0%
10
20
40
30
50
100
90
70
80
60
% of respondents saving by each method
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
0
10
5
-25
-20
-15
-10
-5
15
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
Smartphone
Watches
Spirits
CarsInternet access
Computers
Beer
Cosmetics
Dairy
Carbonateddrinks
Sports shoesPerfume
Property
Mobilephones
Fashion apparel
Holidays
Privatehealthcare
Extra education
Figure 47
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 48
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 49
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 46
Nmina grwt in used incme (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 45
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 44
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
EMERGInG COnSUMER SURvEy 2012_27
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phOTO:ISTOCkphOTO.COM
Te Idoesia cosumer offers a strogstructural growt story, wit arguablymore BRIC caracteristics ta te Rus-sia. GDp er caita may be te tirdlowest i te survey, but otimism is tetird igest. If food rices are removedas a urdle, uder-eetrated discre-tioary sectors offer cosiderable growtotetial as icomes cotiue to grow.
Idoesia ma ra as oe of teoorer coutries i te sure, but itras amog te most otimistic adalso sows otimism tat is risig earo ear. Otimism i te regio comestird igest i our sure (just belowIdia ad Brazil), wit a weigted et38% of resodets exectig teirositio to imroe i te comig six
mots. Tis is u four ercetageoits from last ear ad as riseacross eer icome categor.
Wile te ricer dislay te greatestcofidece close to te igest i te
wole survey te oorer ed of tescale sows robust levels of cofidecei te 20%30% rage. Te driver oficome is a suortive oe. It may be auequal oe i terms of rogressio,but agai te exectatios of te oor-est levels i te icome scale areimrovig more raidly ta elsewere,albeit from a icome level tat is low iabsolute terms.
Te ris tat alwas exists for teIdoesia cosumer is te sesitiit offood rices. As i a of te oorerecoomies, food cosumes a large ro-ortio of te ouseold budget. Oursure suggests it is close to a tird.hece, uward ressure o riceswould treate to crowd out oter dis-
cretioar sedig.We ca arguably see a elemet of
tis i comarig tis survey to lastyear a eriod we food rices avebee a issue. Recorded sedig
activity is ositive i a wide rage ofsectors, but i a more modest fasiota oter coutries were otimism isrecorded at a similarly ig level. how-ever, if food rices become less of aimedimet, tere is cosiderableotetial to ulock uder-eetratedmarkets suc as autos (cars ad motor-cycles) ad tecology.
As oe would robabl exect, tedeelomet of fiacial serices issmall. howeer, we ae see small
rises i te umber of resodets ro-fessig to ow a ba accout ad lifeisurace olicies (39% ad 3%,resectiel), toug oldig cas is stillte mai form of saigs.
IndnesiaO a fast trac
Emerging Consumer Survey 2012
number of resodets: 1,548
Across 10 geograic locatios
66 % i urba areas; 34 % i rural areas
Figure 50
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 813.9 billio
GDp er caita (2011) USD 3465
poulatio (2011) 234.9 billio
Geograical area 1.90 millio m2
number of cities 5(i excess of 2 millio eole)
Gii coefficiet (2009) 39.4
Aerage iflatio (2011E) 5.7 %
Aerage iflatio (2012E) 6.5 %
Real GDp growt (2011E) 6.4 %
Real GDp growt (2012E) 6.3 %
Curret accout % of GDp 0.2 %(2011E)
Curret accout % of GDp -0.4 %(2012E)
Cosumtio as a % of GDp 55.8 %(2011)
EMERGInG COnSUMER SURvEy 2012_28
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10%
20%
30%
40%
50%
60%
70%
80%
Total 12501000 1750 2500 6250 87504000 More than10000
Income (IDR '000)
Balance better vs worse
0%
10%
5%
15%
30%
25%
20%
35%
50%
45%
40%
55%
12501000 1750 2500 4000 6250
Balance better vs worse
Income (IDR '000)
0
8.0
7.0
6.05.0
4.0
3.0
2.0
1.0
10.0
9.0
11.0
-1.0
1000000 3000000 5000000 7000000 9000000 11000000
Nominal growth in household income (%)
Income (IDR '000)Last 12 monthsNext 12 months
10
20
40
30
50 % of responding saving by each method
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
40%
35%
30%
Housing+
PublicUtilities
0
10
5
-30
-20
-25
-15
-10
-5
15
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
SmartphoneWatches
Cars
Internet
access
Computers
Cosmetics
Dairy
Carbonateddrinks
Sports shoes
Perfume
Property
Mobilephones
Fashion apparel
Holidays
Privatehealthcare
Extra education
0%
0%
2011 2010 2011 average 2010 average
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
Figure 54
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 55
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 56
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 53
Nmina grwt in used incme (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 52
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 51
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
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MORDOLFF
Desite te structural suort tere asbee for te Russia ecoom i recetears from commodit rices, tere asot bee a otable tricle dow to teaerage cosumer. Otimism remaiste lowest of te BRICs. Te iequalitof icome suggests tat growt oor-tuities are laed mail at te ig-icome ed i Russia.
At a et weigted balace of ol20% iewig teir fiacial ositioimroig i te six mots aead, tereadig i Russia is barel a tird of teleel see i Brazil. I fact, ol Turead Egt ra lower i terms of fia-cial otimism witi te sure.
Te simle exlaatio stems fromicome growt omial ad real. Witte former er modest, te latter waser egatie to te tue of 7% as
iflatio eroded omial gais. Witiflatio forecast to remai at similar le-els, tis lid o otimism will ot beremoed easil (a tigteig i goer-met sedig ad ostoig esio
idexatios are also uelful). Agaisttis bacdro, it is iterestig ad er-as surrisig to ote tat we aesee icreased ositie readigs ofactiit i some areas of discretioarsedig, articularl ig-ticet items,icludig tecolog ad luxur goods.We would offer two exlaatios. First,a seere iequalit of icome reails iRussia ad, at te ig ed, suortremais for strog for large-ticet ur-cases. Secod, iger-ticet goodssuc as watces ad smart oesremai uder-eetrated i Russia fur-ter suortig structural growt.
Russia cosumtio of alcoolicdriks is still oe of te igest com-ared wit te oter markets. Te e-etratio of beer (66% of our Russiasurvey resodets urcased beer i
te last tree mots) is similar toCia (67%) ad Brazil (63%), butRussia cosumtio of sirits is by farte igest (49% of resodetsbougt sirits i te last tree mots
comared to Brazil i secod lace at33%). however, alcool cosumtioas ot grow over te ast year,accordig to our survey data. Te raftof measures aimed at curbig alcoolcosumtio itroduced by presidetMedvedev i 2011 is likely to lead tofurter declies i beer ad sirit salesas tey are ased i over te extcoule of years.
Te stor of low baig eetratiowe igl igted i te last sure er-sists, wit little imroemet i baaccout access. Less ta a fift of
tose sureed reorted aig a baaccout, ad oter caels of iest-met life isurace, mutual fuds,goermet bods agai registeredegligible oerall utae.
RussiaTe weaest BRIC i te wallEmerging Consumer Survey 2012
number of resodets: 1,508
Across 8 geograic locatios
70 % i urba areas; 30 % i rural areas
Figure 57
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 1,894.3 billio
GDp er caita (2011) USD 13,543
poulatio (2011) 139.87 millio
Geograical area 17.09 millio m2
number of cities 2(i excess of 2 millio eole)
Gii coefficiet (2009) 37.5
Aerage iflatio (2011E) 8.9 %
Aerage iflatio (2012E) 7.3 %
Real GDp growt (2011E) 4.3 %
Real GDp growt (2012E) 4.1 %
Curret accout % of GDp 5.5 %(2011E)
Curret accout % of GDp 3.5 %(2012E)
Cosumtio as a % of GDp 49.9 %(2011)
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-20%
-10%
10%
20%
30%
40%
Total 250001500075005000 850006000040000 More than
100000
Income (RUB)
Balance better vs worse
0%
-10%
-20%
10%
20%
30%
40%
50%
5000 7500 15 000 25 000 60 00040000 More than
100000
85000
Balance better vs worse
Income (RUB)
-2.0
0.0
-1.0
2.0
1.0
4.0
3.0
5.0
10000020000 40000 60000 800000
Nominal growth in household income (%)
Income (RUB)Last 12 monthsNext 12 months
% of respondents saving by each method
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
40%
35%
30%
2011 2010 2011 average 2010 average
Housing+
PublicUtilities
0
5
-20
-15
-10
-5
10
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
SmartphoneWatches
Spirits
Cars
Internet access
Computers
Beer
Cosmetics
DairyCarbonateddrinks
Sports shoes
Perfume
Property
Mobilephones
Fashion apparel
Holidays
Privatehealthcare
Extra education
0%
0%
10
20
40
30
50
60 % of respondents saving by each method
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
Figure 61
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 62
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 63
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 60
Nmina grwt in used incme (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 59
Persna nances 2011 versus 2010 (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 58
State f persna nances ver next six mntsSource: Credit Suisse Emergig Cosumer Sure
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Te stregt of icome exectatiosuderis te ig leel of otimism ofte Saudi cosumer i te sure. Oilrices tat are a idrace elsewereare coersel a el ere. Te outloofor discretioar sedig tus remaiser strog after wat as bee a earof cosiderable mometum. howeer,tere is also let of otetial for acage i wat is relatiel usoisti-cated saigs beaior.
Wit a weigted balace of reso-dets exectig to see teir fiacialositios imrove i te ext six motsat 37%, te Saudi cosumer is amogte most otimistic i te survey. Wileotimism is at its strogest amog teigest earers, te level is relatively igacross a broad swate of te oulatio.
Otimism goes ad i ad wit
icome growt. Saudi real ouseold-icome growt oer te ext 12 motsis uiforml ositie, ad o aerage teigest i our sure. Te uer ed ofearers exect teir icomes to grow b
9% i real terms a leel usee else-were. Te icture as bee, ad is,less ros for te lowest earers, butagai omial ad real icomes areexected to grow.
Wile iflatio as bee a egatiefactor i our emergig ecoomies sur-eed, icludig Saudi Arabia, tere is astabilizig effect from goermet ol-ic. Robust oil reeues (a drier of ifla-tio for oters) ae roided goer-met sedig wit te fireower tosuort ublic sector icomes ad boostsedig more geerall. We ae seea goermet ledge to sed USD130 billio o ousig ad job creatiotis ear.
Te sedig mometum i te lastear ad te outloo is discretioarfocused. Smart oes, comuters,
roert, cars ad olidas ae all seemore robust treds i actiit ta else-were. Looig forward, 25% ofresodets see ow as a excellettime to mae a big-ticet urcase, wit
itetios to bu cars ad roert risigacross te icome scale. Awa fromsorter-term cosumtio decisios,ealtcare ad extra educatioal sed-ig as also bee stroger ta else-were, wit goermet sedig tosulemet tis.
A structural oortuit remais ite fiacials serices idustr. Te oolof saigs is excetioall large. higleels of icome coicide wit a igsaigs rate (15%). Te Credit SuisseGlobal Wealt Reort 2011 estimatedtat total wealt i Saudi Arabiaicreased from USD 0.4 trillio to USD
0.6 trillio i te last ear. Fiacialwealt er caita icreased 27.5%. Stillte saigs culture is far from soisti-cated. Gold/jeweller commads moreof a focus ta fiacial marets.
Saudi ArabiaTe oil rice edgeEmerging Consumer Survey 2012
number of resodets: 1,500
89 % i urba areas; 11 % i rural areas
Figure 64
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 580.7 billio
GDp er caita (2011) USD 21,685
poulatio (2011) 26.78 millio
Geograical area 2.15 millio m2
number of cities 2(i excess of 2 millio eole)
Gii coefficiet (2009) n.A.
Aerage iflatio (2011E) 5.4 %
Aerage iflatio (2012E) 5.3 %
Real GDp growt (2011E) 6.5 %
Real GDp growt (2012E) 3.6 %
Curret accout % of GDp 20.6 %(2011E)
Curret accout % of GDp 14.2 %(2012E)
Cosumtio as a % of GDp 26.4 %(2011)
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0%
40%
35%
30%
25%
20%
15%
10%
5%
45%
50%
5000 87506250 1375011250 16250 18750
Balance better vs worse
Income (SAR)
4.0
16.0
14.0
12.0
10.0
8.0
6.0
14500 2250018500105002500 6000
Real growth in household income (%)
Income (SAR)Last 12 monthsNext 12 months
Food
Entertainment
Autos
Healthcare
Education
HPC
Savings
Mobilephone
Other
5%
10%
15%
20%
25%
2011 2010 2011 average 2010 average
10
20
40
30
50
60 % of respondents saving by each method
Life
insurance
Bankaccount
Collectables
Cash
Gold/
Jewellery
MutualFund
Noextra
savings
Property
Stockmarket
Treasurybond
0
Housing+
PublicUtilities
0
15
10
5
-20
-15
-10
-5
25
20
0 20 40 60 80 100
Recorded spending in 2011 vs 2010
2011% respondents that own or have bought each item
Smartphone
WatchesCars
Internet accessComputers
Cosmetics
DairyCarbonateddrinks
Sports shoes
Perfume
Property
MobilephonesFashion apparel
Holidays
PrivatehealthcareExtra education
0%
10%
20%
30%
40%
50%
60%
Total 6250 87505000 11250 13750 16250 18750More than20000
Income (SAR)
Balance better vs worse
0%
Figure 68
Spending mmentum and market penetratin
Source: Credit Suisse Emergig Cosumer Sure
Figure 69
Mnty spending by categry (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 70
Savings by distributin canne (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 67
Nominal growth in household income (%)
Source: Credit Suisse Emergig Cosumer Sure
Figure 66
Persna nances 2011 versus 2010 (%)Source: Credit Suisse Emergig Cosumer Sure
Figure 65
State f persna nances ver next six mnts
Source: Credit Suisse Emergig Cosumer Sure
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MASTERLU
Ture is a ew editio to te CreditSuisse Emergig Cosumer Sure for2012. Ufortuatel, it jois at a timewe emergig maret cosumers aelittle cofidece i teir immediate out-loo. Desite GDp er caita i eeigwit te middle-icome bracet, itssedig atters are more tical of telow-icome coutries, wit food adousig costs osig a seere costrait.
After Egt, Ture registers a lowleel of cofidece i te sure witol 7% of resodets registerig etositie rosects for te six motsaead. Te essimism is most acute ite low-icome areas, toug ee atte ig ed otimism is well below tatexressed b te ig ed of te icomedistributio elsewere.
Wile Ture is a ew editio ad we
lac a 2010 sure, we would cofidetlsuggest tat 2011 as bee a ear ofrelatie difficult for te cosumer. nom-ial-icome growt as bee meager less ta 3% ee at te ig ed. Ifla-
tio will ae more ta wied tis out ateer icome leel. Wit cosumers sug-gestig tat omial icomes will grow ata similar rate ext ear, real icomes looset to erode furter.
Two categories domiate te sed-ig atters of te Turis cosumer food ad ousig/utilities. Collectivesedig o tese items reresetsearly alf of total icome. As we avesow elsewere, te coutries werefood as osed a large claim o co-sumers icome ave bee amog temost deressed. Turey is o differet.
housig is a more distictive feature.Exediture i tis area (at a esti-mated 24%) is te igest of ay cou-try i te survey. Tis looks to be moreout of ecessity ta desire. Te ro-ortio of eole registered as retig
teir roerty is amog te igest ite survey. Turkis ecoomic growtover te ast decade, ad te esuigurbaizatio, as led to ig iflatio ite ousig sector.
Take togeter wit te food como-et, te most basic eeds arearguably crowdig out may oterareas of sedig. Te survey datasow tat te owersi ad imliciteetratio of discretioary roductsi Turkey is muc lower across teboard we set agaist te surveyaverage, desite GDp er caita i temid-rage comared wit te otersurvey markets.
Cosumers ave a limited egage-met wit te fiacial sector. Bakaccout eetratio is amog te low-est i te survey, wit oly 14% avig
access to oe. Wile tis resets astructural oortuity, we would equallyote tat, worryigly, 73% of reso-dets claim tey ave o additioalicome to save.
TurkeyFeelig te squeezeEmerging Consumer Survey 2012
number of resodets: 1,562
Across 14 geograic locatios
Figure 71
Key ecnmic and demgrapicindicatrs
Source: IMF, EIU, Un
GDp (2011) USD 846.5 billio
GDp er caita (2011) USD 11,054
poulatio (2011) 76.58 millio
Geograical area 783,562 m2
number of cities 3(i excess of 2 millio eole)
Gii coefficiet (2009) 43.2
Aerage iflatio (2011E) 6.0 %
Aerage iflatio (2012E) 6.9 %
Real GDp growt (2011E) 6.6 %
Real GDp growt (2012E) 2.2 %
Curret accout % of GDp -10.3 %(2011E)
Curret accout % of GDp -7.4 %(2012E)
Cosumtio as a % of GDp 71 %(2011)
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-5%
5%
10%
15%
20%
25%
Total 1000 1500 2500 4000 6000 8500
Income (TRY)
Balance better vs worse
0%
30%
40%
20%
10%
50%
60%
80%
70%
100%
90%
1000 25001500 60004000 8500
Electronic Ownership (%of households)
Income (TRY)Pho ne s Sma rt ph on es Compu te rs