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March 2017
Research Institute
Thought leadership from Credit Suisse Research
and the world's foremost experts
Emerging Consumer
Survey 2017
Introduction
Editorial
We are delighted to present the seventh edition of In contrast, consumer confidence in Turkey and
the Credit Suisse Research Institute's Emerging Mexico has declined markedly. Whereas geopoliti-
Consumer Survey. This publication traditionally ex- cal concerns are weighing on the consumer in the
plores the growth opportunities presented by the former, the protectionist and anti-immigration
new consumer cultures developing across the rhetoric of the new US administration is at work in
emerging world, which continue to show vastly the latter.
different, often more dynamic demographic profiles Interestingly, we observe the ongoing changing
compared those of developed economies. The pattern in the spending of the emerging middle
report reflects an ongoing collaboration between class. Spending on travel and entertainment in
the Credit Suisse Research Institute and our China is booming and reached over 10% of house-
research partner, the leading market research firm hold income. A new theme we find at work is that
Nielsen, which has delivered data from 14,000
of a more "conscious" consumer, focused on a
face-to-face interviews with consumers across the
more active, healthy lifestyle and one engaged with
emerging economies of Brazil, China, India, Indone-
the sharing economy. Local rather than global com-
sia, Mexico, Russia, South Africa and Turkey as a
panies and brands are emerging to capitalize on this
basis for our research.
trend. Also importantly, digital technology is and will
In this year’s edition, our findings suggest that a
continue to be the facilitator of changing consumer
consumer culture within emerging markets may be
behavior with more than a billion consumers yet to
developing more rapidly than anticipated: a further
come online in our surveyed countries. We estimate
10% of surveyed households have succeeded in
that online retail spending can rise from a current
entering middle-income territory in the last three
USD 1 trillion to USD 2.5 trillion by 2025.
years, creating a consumer base of 1.25 billion
Finally, these themes are elements of the
people across the eight countries covered by our
broader rebalancing in growth we are witnessing in
survey alone.
the emerging world from its undue reliance on fixed
We find the immediate measures of consumer
investment and external trade to more domestic
confidence improving from a year ago, with con-
consumption. This provides a powerful internal
sumers in the major Asian economies of India,
dynamic to growth in the countries concerned
China and Indonesia reflecting the most optimistic
– a feature of considerable significance should the
outlook and topping our emerging consumer score-
global economic landscape become more multi-
card as we look into 2017. More than 40% of
polar and less globalized in nature, as is currently
Asian consumers expect to see their financial
the debate.
circumstances improve in the six months ahead.
We hope that our analysis helps our readers
We provide a special focus on several key themes
better understand the nature of these dynamic
within these countries, the consequences of the
economies and that you enjoy reading the 2017
reform to the one-child policy in China or demoneti-
Emerging Consumer Survey.
zation and tax reform in India. Generally, there is a
noticeable lifestyle "upgrade" underway in Asia.
We further observe that pressure has eased for
consumers in commodity-sensitive countries such
as Russia, South Africa and Brazil. Although con-
Urs Rohner
siderable economic fragility and inequality among
Chairman
consumers remains here, a firmer growth outlook
Credit Suisse Research Institute
supporting commodities and reduced currency risk
offer better consumer prospects for the year ahead.
2 _ Emerging Consumer Survey 2017
02 Editorial
14
05 The emerging consumer in 2016
14 Conscious living
24 E-commerce: New challenges
36 National champions: Local brand
winners
44 Asia in focus
56 Country profiles
24 56 Brazil: Outlook to gradually improve
58 China: Lifestyle upgrades
60 India: Still reigning supreme
62 Indonesia: Greater expectations for
the future
64 Mexico: Real incomes under pressure
66 Russia: The future looks brighter
68 South Africa: Challenges remain
70 Turkey: Consumer confidence weakens
73 Appendix 1: Spending heat maps
36 75 Appendix 2: Profiling the consumer
76 About the survey
77 Imprint
78 Disclaimer
72
For more information, please contact:
Cover photo: Credit Suisse
Richard Kersley, Head Global Thematic Research,
Credit Suisse Investment Banking,
richard.kersley@credit-suisse.com
Michael O’Sullivan, Chief Investment Officer,
International Wealth Management Division,
Credit Suisse,
michael.o’sullivan@credit-suisse.com
Emerging Consumer Survey 2017_3
Credit Suisse Emerging Consumer Survey 2017 Number of respondents : 13,874, across 8 countries, 69% in urban areas; 31% in rural areas Mexico (11%*) Turkey (11%*) Russia (11%*) China (18%*) No. of respondents: 1,539 No. of respondents: 1,521 No. of respondents: 1,516 No. of respondents: 2,561 Locations: 5 Locations: 14 Locations: 8 Locations: 10 Urban areas: 70% Urban areas: 69% Urban areas: 67% Urban areas: 70% Rural areas: 30% Rural areas: 31% Rural areas: 33% Rural areas: 30% Brazil (11%*) South Africa (7%*) India (19%*) Indonesia (11%*) No. of respondents: 1,550 No. of respondents: 1,000 No. of respondents: 2,653 No. of respondents: 1,534 Locations: 5 Locations: 6 Locations: 10 Locations: 10 Urban areas: 70% Urban areas: 70% Urban areas: 71% Urban areas: 66% Rural areas: 30% Rural areas: 30% Rural areas: 29% Rural areas: 34% Note: % of survey sampled from this country 4_Emerging Consumer Survey 2017
The emerging consumer in 2017
In our seventh Emerging Consumer Survey, we find confidence having improved from a year
ago, with consumers in the major Asian economies continuing to reflect the most optimistic
outlook and top our scorecard as 2017 begins. Pressure has alleviated on commodity-sensitive
countries such as Russia, South Africa and Brazil. Political risks in various guises have contrib-
uted to Turkish and Mexican confidence sinking. We reflect on themes driving the nature of
consumer spending throughout the study. It remains clear that the development of an emerging
middle class is ongoing and driving a mixed shift in spending along a discretionary path.
Richard Kersley, Maria Bhatti
A unique perspective The mood of the moment
The Credit Suisse Emerging Consumer Survey pro- To summarize the overall mood of consumers, we
vides a granular analysis of the profile, mood and highlight below the readings for the key parameters
behavior of consumers across eight major emerging we use for our Emerging Consumer Scorecard,
economies, with an aggregate population ap- which focus on five survey questions:
proaching four billion people, representing total
consumption of USD 9.4 trillion and structurally 1. "Is now a good time to make a major pur-
growing. The 14,000 face-to-face interviews con- chase?"
ducted on our behalf by leading consumer research 2. "Do you think the state of your own personal
finances over the next six months will be
firm Nielsen, provide unique bottom-up insights into
better, worse, or about the same?"
specific products and end-markets to set alongside
3. "What do you expect will happen to inflation
and at times challenge the more typical macro
(the price of goods and services) in the next
judgements.
12 months?"
A pure macro focus risks overlooking structural 4. "In what way do you expect your household
consumer themes that are at work in these econo- income to change over the next 12 months?"
mies independent of the cycle (e.g. the develop- 5. In what way did your household income
ment of the online economy, which is illustrated by change over the last 12 months?"
an average of 76% of our survey respondents now
gaining access to the internet versus only 55% in In focusing on these questions, we are seeking to
2013. Additional structural themes include new ac- capture the immediate perception of the consumer
cess to healthcare or the emergence of new con- environment (Question 1); a more medium-term and
sumer brands). In doing so, key investment oppor- broader assessment of consumers’ financial posi-
tunities and themes are missed. In this chapter, we tions (Question 2); fears of inflation, given its ability
again examine the mood of the moment from our to erode income through food prices in particular
confidence indicators, but also whether the struc- (Question 3); and income momentum, which is key
tural story that we first laid out in our initial 2010 to ultimate spending (Questions 4 and 5).
study is working. Is the emerging consumer
emerging and, if so, how?
Table 1
Survey sentiment indicators average readings
Personal finances Inflation expectations Good time to make a Income expectations Income change in last
major purchase 12 months
Indicator Net balance, better vs. Net balance higher vs. Net balance, excellent Net balance increase vs. Net balance increase vs.
worse lower time vs. bad time decrease decrease
2016 19.6% 39.3% –10.4% 19.1% -4.2%
2015 15.3% 46.4% –13.0% 24.5% 2.7%
2014 25.5% 46.1% –7.4% 31.3% 10.3%
Source: Emerging Consumer Survey 2017
Emerging Consumer Survey 2017_5
Figure 1 As we look at the average readings across the
Net percentage of respondents replying "Yes" to "Is now a good survey, the picture is one of broadly improving sen-
time to a make a major purchase?" timent when compared to our 2016 report, which
20 had been struck against a backdrop of weak cur-
10
rencies, weak stock markets and a tougher eco-
nomic environment globally, not least a growing
0
slowdown in China. Tumbling commodity prices
-10 stemming from the latter were compounding issues
-20
for the commodity exporting countries in our survey
– Brazil, South Africa and Russia.
-30
We have seen many of these pressures abate
-40 since then and negative sentiment ease accord-
-50 ingly. In Table 1, we show the aggregate readings
for these questions across the survey. The ques-
-60
India China Indonesia Mexico South Russia Turkey Brazil tions on personal finances and the judgement as
Africa to whether now is a good time to make a major
2014 2015 2016 purchase have all improved and concerns about
future inflation have moderated. Income momentum
Source: Emerging Consumer Survey 2017
is a weak point. 2016 was a poor year with the ma-
jority of survey respondents reporting falling in-
Figure 2 comes. Hopes of a recovery do exist for 2017, alt-
Net percentage of respondents expecting an improvement in hough in modest terms.
their personal finances in the next six months Figures 1 to 5 break the variables down by
60 country and show how they feed into our summary
scorecard below. We would highlight the following:
50
First, the Asian economies stand out best with
40 regard to the benchmarks of personal finances and
the judgement of whether now is a good time to
30 make a major purchase, particularly India on the
20
latter. We would note some recovery in Brazil and
also South Africa and Russia to a degree. The net
10 commodity-exporting characteristics of these
countries is a common link. Second, the improve-
0
ments we have seen in inflation expectations have
-10 been particularly pronounced in India, Russia, Brazil
India Indonesia Brazil China South Mexico Russia Turkey and Indonesia. The reversal of the currency weak-
Africa
2014 2015 2016 ness in the latter three is doubtless influential here.
Better monsoon conditions will be important for
Source: Emerging Consumer Survey 2017
Indian food prices. South Africa and Mexico reflect
the more negative perceptions on inflation both
Figure 3 versus the other countries and versus their own
Net percentage of respondents expecting inflation to increase in history.
the next 12 months Third, income momentum has been an Asian
70 phenomenon, with Latin America a marked con-
trast. Looking ahead, while income expectations in
60 the other Asian countries remain robust relative to
50
other survey countries, we do see a marked drop in
sentiment about future incomes in India after the
40 rapid rise in 2016's survey. The demonetization
event may be an influence here though our Indian
30
analysts also reflect later in the report downward
20 pressures on agricultural incomes among low-
income consumers. Expectations for income
10
prospects among Brazilian consumers have risen
0 sharply (if surprisingly so). Turkish consumers see
India Turkey Brazil Russia China Indonesia Mexico South little let-up in the pressure on them amid the geo-
Africa
2014 2015 2016 political concerns that prevail.
Source: Emerging Consumer Survey 2017
6 _ Emerging Consumer Survey 2017
Figure 4 Figure 5
Net percentage of respondents who expect household Net percentage of respondents who have seen house-
income to increase over the next 12 months hold income increase over the last 12 months
70 40
60 30
50 20
40 10
30 0
20 -10
10 -20
0 -30
-10 -40
Indonesia Brazil China South India Mexico Russia Turkey Indonesia China India South Turkey Russia Mexico Brazil
Africa Africa
2014 2015 2016
2014 2015 2016
Source: Emerging Consumer Survey 2017 Source: Emerging Consumer Survey 2017
Emerging Consumer Scorecard continues to boast the best income momentum
among the countries we surveyed. While some of
Our Scorecard draws these factors together in a China's readings have marginally softened, we
very simple manner to provide an overall assess- would flag the very sharp rise in house price expec-
ment of the mood of consumers in each country.
tations, which we do not include as a factor here,
For each question, we rank each country relative
but which is highly relevant to China and a positive
to the survey countries as a whole. Each factor is
development (we highlight this in our China focus
given an equal weight, although the two income
later in the report).
questions are treated as one factor, with the
future/past income questions given a 50:50 weight Brazil and South Africa have moved out of the
to form an overall ranking. We then take an aver- bottom three to be replaced by Turkey and Mexico.
age of the rankings across the questions to provide Of these two countries, Turkey has seen the most
a composite score. notable reverse in circumstances since last year,
Similar to last year, the Asian economies occupy falling from a ranking of fifth last time. The poor
the top three places in the scorecard, with India in income momentum referred to above is also mirrored
the lead. The weaker expectations with regard to in the readings on the perception of the consumers’
future income in India is negative in our scorecard, personal finances and whether now is a good time to
but the sharp decline in inflation expectations is a make a major purchase (indeed, the net commodity-
major positive in the overall assessment. Indonesia exporting countries were all trending up in our
Table 2
Emerging Consumer Survey Scorecard 2017
Rankings (6−12- Personal Inflation Time for a Household Income Rank
month horizon) finances expectations major income history
purchase expectations
India 1 1 1 5 3 1
Indonesia 2 6 3 1 1 2
China 4 5 2 3 2 3
Brazil 3 3 8 2 8 4
South Africa 5 8 5 4 4 5
Mexico 6 7 4 6 7 6
Russia 7 4 6 7 6 6
Turkey 8 2 7 8 5 6
Source: Emerging Consumer Survey 2017
Emerging Consumer Survey 2017_7
Figure 6 scorecard). Clearly, the prevailing political backdrop
Commodity exports and current account balance (both as a % of can only weigh on consumer confidence in Turkey.
GDP) The fallout from the US elections is a political factor
-10 of a different nature, but a damper on confidence in
Commodity exports / GDP (2015, %)
Korea
Thailand Mexico nonetheless, particularly given the unhelpful
India
Turkey
-5 China protectionist and anti-immigration rhetoric that has
Less vulnerable
Mexico to dollar strength emerged. The principal transmission mechanism of
Philippines
0 political risk to the consumer is typically the cur-
South Malaysia rency. Hence it is no accident that Turkey and
Africa
5
Brazil Mexico experienced the worst currency experience
Indonesia as well as the sharpest fall in sentiment.
10 We would not present this scorecard as an
Chile
overly scientific exercise and, by only being an an-
15 Size of bubble =
More vulnerable Russia 2017E foreign nual snapshot, much can change throughout the
to dollar strength debt (% of GDP) year in the macro and political environment.
20
-8 -4 0 4 8 12
However, we believe it provides a reflection of the
2017E current account (% GDP) factors of most relevance for the consumer and
genuine bottom-up perceptions of them. Where
Source: Credit Suisse research
there has been robust and, importantly, stable
readings in these factors, consumer stocks have
Figure 7 generally performed well in the equity market.
Purchase intentions this year versus consumption in the last China and India have been good cases in point.
year We provide an assessment of where a range of
100 key consumer macro indicators currently sit for our
Consumers that intend to buy or increase
90 countries from our emerging market (EM) strategists
80 on pages 12 and 13 to add some top-down flavor.
70 Fashion However, as we have implied and politics aside,
spending (%)
60
Holidays what can stir the relative rankings of our consumer
50
Perfume Dairy countries most top-down are currency and com-
Sports shoes
Bottled water modities. Figure 6 gives a sense of the countries
40
Cosmetics Carbonated drinks most exposed to these influences and potential
30
Jewelery Education Smartphones volatility should they emerge by analyzing their com-
20 Foreign Beer
Watches Spirits Cars
Property modity exposure and current account vulnerabilities.
10 holidays LCD TV
Tablets Notebook PC
Mobile phones (basic)
0 What's hot and what's not?
0 20 40 60 80 100
Desktop
computers
Consumers that own or have bought each item (%)
Whereas the scorecard focuses on country compari-
sons, we illustrate in Figures 7 and 8 the pattern of
Source: Emerging Consumer Survey 2017 spending by category across our countries. Figure 7
charts the intention to spend more on an item
(y-axis) relative to those who own or have bought the
Figure 8
item in the last year (x-axis). Figure 8 again charts
Spending intentions versus momentum (2016 vs. 2015) the spending intentions, but compares the same
reading with a year ago to reflect the effective
momentum of increases (not necessarily reductions
Momentum % (2016 vs. 2015)
8
in absolute terms).
6 Discretionary categories such as sports shoes,
LCD TV
Holidays holidays and fashion show among the strongest
4
Education intentions. Of these, holidays particularly stand out
Desktop computer Property
with positive readings having increased versus a
2 Foreign holidays
Jewelry
Cars
Cosmetics Perfume year ago. However, we note that holidaying re-
Notebook PC
0 Tablet mains a domestic phenomenon. Foreign holiday
Sports shoes
Mobile phone (basic) Watches Dairy intentions remain weak. China is the exception,
-2 Carbonated drinks showing genuine momentum in foreign holidays.
Beer Fashion
Spirits
Smartphones*
Bottled water In fact, the Chinese tourist is now becoming a more
-4
0 10 20
(-19.6 momentum)
30 40 50 60 70
important international traveler than the Russian
Spending intentions tourist. We believe the strength in the sports shoes
category (and weaker markets in the category of
Source: Emerging Consumer Survey 2017 alcohol) fall under the theme of healthy living, on
which we focus in our analysis of the "conscious
8 _ Emerging Consumer Survey 2017
consumer" in the next chapter. The fact that dairy is Figure 9
the strongest staple category tells the same story in Percentage of respondents owning a smartphone tracked against
our view. smartphone shipments (China)
On the weak side, a category that stands out is
smartphones. The market still continues to grow, 140000 100%
but ownership rates among consumers have risen
120000 90%
dramatically (70% of respondents either own or
have bought one in the last year) and the momen-
100000 80%
tum is weakening accordingly. Smartphones display
the weakest momentum of all our categories as 80000 70%
shown in Figure 8.
We would stress that the question we are meas- 60000 60%
uring is "do you intend to spend more on
smartphones?" so that lower momentum can 40000 50%
reflect trading down to lower price points rather
than necessarily lower volumes in every instance. 20000 40%
However, our survey has equally proved to be
0 30%
something of a barometer for market size and
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
shipments. In that respect, Figure 9 suggests a 10 10 11 11 12 12 13 13 14 14 15 15 16 16
country such as China is potentially running out of
Smartphone shipments ('000) - lhs
headroom as an end-market for shipment growth.
% of respondents who own a smartphone - rhs
Moreover, as we explore later, this maturity in the
market is coinciding with more robust challenges
Source: Emerging Consumer Survey 2017
from local smartphone makers in China, with their
brand recognition improving. There is a legitimate
reason to expect significant pricing risks to emerge
against such a backdrop for the international play-
ers.
Figure 10
(We provide a disaggregation of the spending
patterns by category and country in Appendix 1 Food and recreation spending versus GDP per capita 1929–2012
of the report together with a breakdown by age.
The role of the younger consumer in consumption 140
Volume of consumption per capita
patterns has been a theme that we have tracked
over time. Our individual country summaries begin- 120
ning on page 56 also provide added color.)
2012
100
The structural themes…are they working? Food and beverage
1970
1980 1990
80 1960
As we analyze the immediate readings from the
1950
survey, a key question is how do the survey develop-
60 1929 1943
ments fit with the structural direction of travel? In
1935 Healthcare
our 2011 report, we set out the template for how
the emerging consumer theme should evolve by 40
Recreation
displaying the consumption patterns of developed
economies as they moved from their emerging 20
consumer status. The thesis was that as Gross
Domestic Product (GDP) per capita and the income 0
profile of consumers change, so should their spend- 0 10000 20000 30000 40000 50000
ing patterns. The starting point for income levels is
GDP per capita (PPP adjusted in 2010 prices)
key. Income rising from a low GDP per capita basis
should typically first benefit more staple categories Source: Company data, Credit Suisse estimates
such as food before giving way to more discretionary
categories.
Figure 10 displays how this pattern played out in
the USA as we chart the US consumer's spending
development from the early 20th century to the 21st.
Emerging Consumer Survey 2017_9
Figure 11 We laid this out in our 2011 study (we provide a
more detailed breakdown segment by segment in
Food versus entertainment expenditure in China indexed to 2010 the next chapter). The vagaries of survey data and
the intervention of macro/political events of the like
China, expenditure in USD PPP (2010=100) mentioned previously makes it unrealistic to expect
160 that we could accurately mirror every aspect of this
macro story in our bottom-up dataset. However, we
150
do find enough effective "real world" data points
140 from our survey that seem to suggest we are fol-
130
lowing a large degree of the route map set out
above.
120
At a very simple level, the fact that the scatter
110 charts in Figures 7 and 8 show the strength in
100 more discretionary categories outweighing the more
staple areas suggests the bias one might expect to
90
be seeing in a consumer whose incomes are rising.
80 However, delving deeper into the regional mix as
70 we do in the heat maps in Appendix 1, where we
60
look at countries with differing GDP per capita
2010 2011 2012 2013 2014 2015 2016 levels, we find this discretionary bias more pro-
nounced in the higher income countries such as
Food Entertainment
China, Russia and Brazil. In contrast, three of the
top four categories in terms of spending intentions
Source: Emerging Consumer Survey 2017 in Indonesia are staples categories (e.g. dairy,
carbonated drinks, bottled water). While Brazil is
top for educational spending intentions, Indonesia is
bottom.
Taking this argument beyond this one-year
Figure 12 snapshot, we contrast the spending patterns of
Food versus entertainment expenditure in Indonesia indexed to China and Indonesia through the life of our survey,
2010 tracking the level of spending on a classic staple
and discretionary item – food and entertainment.
Indonesia, expenditure in USD PPP (2010=100) While both countries have seen improving incomes
140 this decade and been consistently among our more
optimistic countries, the pattern of consumption
130
along these lines is very different (Figures 11 and
120 12).
110 China has seen a rapid acceleration in entertain-
ment spending among our respondents relative to a
100
more stable trend in expenditure on food. As we
90 show in our China summary, food expenditure now
80 consumes 17% of the monthly income of our
70
Chinese respondents versus 19% in 2011. Travel
and entertainment now represents 11% of monthly
60
incomes.
50 In Indonesia, with its low GDP per capita, ex-
40 penditure on food has been the focus, representing
2010 2011 2012 2013 2014 2015 2016 35% of total spending. Spending on food has in-
Food Entertainment creased by 1.4 times the rate in China between
2010 and 2016. It is not that non-staples spending
of any nature in Indonesia is not at work. For exam-
Source: Emerging Consumer Survey 2017
ple, ownership of "two-wheelers" has risen from
75% to 89% since 2011. However, it is still only in
the early stages of the discretionary theme playing
out elsewhere, whereas China is beginning to follow
the US trajectory seen in Figure 10. That notwith-
standing, low GDP per capita countries such as India
and Indonesia offer plenty of investment opportuni-
ties if in other categories of spending and at differing
price points.
10 _ Emerging Consumer Survey 2017The emerging middle class is still on the move Figure 13
As well as tracking the changing nature of spend- Household income distribution (USD/month)
ing, we have been following the changing demo- 350000
graphic and income profile of the consumer influ-
encing this spending. Age has been a key theme 300000
and specifically the role of the young consumer as 250000
we have shown in previous studies. However, over-
laying that has been the change in income distribu- 200000
tion in the emerging world – the theme of "the 150000
emerging middle class."
With the benefit of knowing the prevailing 100000
household income of our respondents, the size of
50000
the family unit from which they come and factoring
in the income structure by decile in these econo- 0
0-499 500-999 1000-1499 1500-1999 2000-2499 2500-2999
mies sourced from the World Bank, we can make
an up-to-date estimate of the distribution of house- Mexico Turkey South Africa Russia Indonesia India China Brazil
hold income across each country (note that we do
make some adjustments to take into account the Source: World Bank, Emerging Consumer Survey 2017, Credit Suisse estimates
limitations in our sampling in the representation of
very low-income areas). The conclusion from this
Figure 14
analysis in recent surveys has been that the emerg-
ing consumer has been on the move. But is this still Household income distribution
the case?
100%
Having standardized incomes on a 2016 USD
purchasing power parity (PPP) basis, Figure 14 90%
builds up an aggregate income distribution curve 80%
from our survey, overlaying each country. We 70%
measure the number of households by income 60%
band as per the income data provided by our 50%
respondents. We have cut off the chart at a 40%
monthly income level of USD 3,000, but we note, 30%
however, that there is a considerable tail of house-
20%
holds that stretch well beyond this income cut-off.
10%
For simplicity of presentation, we have not included
0%
this tail in the chart 0-499 500-999 1000-1499 1500-1999 2000-2499 2500-2999
While potentially stating the obvious, given the
wide divergence of GDP per capita across our Mexico Turkey South Africa Russia Indonesia India China Brazil
countries, the chart underlines how different the Source: World Bank, Emerging Consumer Survey 2017, Credit Suisse estimates
potential emerging consumer end-markets are, and
the relevance of the analysis on spending patterns
above. For example, over 400 million households in Figure 15
our surveyhave monthly incomes in PPP terms
Aggregated household income distribution
below USD 1,000.
In Figure 15, we compare distribution now with 350000
last year and the year two years before. The chart
300000
is continuing its move to the right. If we look at
households in the USD 1,000–2,000 per month 250000
bracket, they have increased by 82 million in our
200000
surveyed countries in the last three years. Around
1.25 billion people in our survey countries now sit 150000
in this territory. Of course our survey does not
replicate the emerging world as a whole, with 100000
sizable countries in Latin America and Africa 50000
notably absent. This would scale this story further.
However, on the basis of what represents con- 0
0-499 500-999 1000-1499 1500-1999 2000-2499
sumption in end markets of four billion people, we
remain confident that the building of a middle class 2013 2015 2016
with its changing consumption patterns continues.
Source: World Bank, Emerging Consumer Survey 2017, Credit Suisse estimates
Emerging Consumer Survey 2017_11Figure 1 EM consumer through a macro lens
EM8 consumer confidence (versus post 2010 range)
104
Alexander Redman, Arun Sai
102 To set alongside our feedback from the field, we provide
100 a snapshot of where the prevailing macro indicators for
the emerging consumer sit for each of the eight countries
98
(EM8) in the survey. While our survey indicators compare
96 countries against each other, here we look at how each
country stands versus its own post-2010 historical range
94
Brazil China India Indonesia Mexico Russia S Africa Turkey on six consumer focused metrics. We establish a score-
Max Min -12m current card of relative strength. We also compare these country
Source: OECD Main Economic Indicators, Credit Suisse research scores with those of a year ago. Note that we would not
Figure 2 expect the rankings to mirror our survey scorecard earlier
EM8 real retail sales growth (versus post 2010 range) given the differing methodology, although they do provide
30% a sense of domestic momentum.
On this macro scorecard, China and Indonesia offer
20%
the most robust consumer environment against their own
10%
history ranked in first and second place, respectively, up
0%
from second and fifth place last year. Turkey and Mexico
-10%
follow in third and fourth place, respectively, with the for-
-20% mer—this year's largest score decliner—down from being
-30% ranked top last year, while Mexico retains not only its
Brazil China India Indonesia Mexico Russia S Africa Turkey
ranking year-on-year, but almost exactly the same score.
Max Min -12m current
In fifth place comes India, down from third in 2016, while
Source: Thomson Reuters, Credit Suisse research
South Africa, Russia and Brazil retain their sixth, seventh
Figure 3 and eighth positions in the rankings, respectively.
EM8 real wage growth (versus post 2010 range)
20% 1. Consumer confidence
15%
While the latest local consumer confidence surveys reveal
that only China, India and Indonesia are at levels in the
10%
more positive half of their post-2010 historical ranges,
5%
there is nevertheless a significant year-on-year improve-
0%
ment in confidence across the EM8 countries with the
-5% notable exception of Mexico and Turkey (which under-
-10% went significant reversals). Measured against their re-
Brazil China India Indonesia Mexico Russia S Africa Turkey
spective 7-year histories, China, Indonesia and India ap-
Source: Oxford Economics, Credit Suisse research
pear as the more optimistic surveys closest to their post-
Figure 4
2010 highs, while consumer confidence in South Africa
EM8 real interest rates (versus post 2010 range) languishes at the weaker end of its 7-year range.
8%
6% 2. Retail sales growth
4% Year-on-year real retail sales growth remained broadly
2% stable across five of the EM8 countries, while recording a
0%
noteworthy increase of 8 p.p. in Russia (as the country
-2%
recovers from a consumer recession deeper than that
-4%
during the global financial crisis) and of 6 p.p. in Mexico
-6%
Brazil China India Indonesia Mexico Russia S Africa Turkey (the weakening of the currency has led to an appreciation
Max Min -12m current of US dollar remittances in peso terms). The single
Source: Central bank data, Credit Suisse research noticeable drop in the growth of real retail sales (by 6
Figure 5
p.p.) across the EM8 countries was in Turkey – mirroring
the correction in confidence post the July 2016 at-
EM8 private sector credit growth (versus post 2010 range)
tempted coup. Brazil, Russia and Turkey are the only
40%
three countries in the EM8 where year-on-year real retail
30% sales growth is in negative territory – although Brazil
20% posted only a modest 2 p.p. improvement from 2016.
10%
3. Wage growth
0% Wage growth (in year-on-year inflation-adjusted terms) is
-10% positive across the EM8 countries – with the exception of
Brazil China India Indonesia Mexico Russia S Africa Turkey Brazil (at –1.7%) – although for South Africa this is mar-
Max Min -12m current
ginal (just 0.4%). For China, India, Indonesia and Turkey,
Source: BIS, Credit Suisse research
12 _Emerging Consumer Survey 2017real wage growth remains at robust levels in the range of Figure 6
5.0% to 6.1%, with China leading the pack, albeit at the EM8 real house price growth (versus post 2010 range)
lower end of its own 7-year range. Growth has main- 20%
tained broadly stable levels (within 1.3 p.p.) for the EM8
10%
group save Russia, which recorded a hefty 8.2 p.p.
0%
acceleration to 0.6% from –7.6% in Q1 2016.
-10%
4. Interest rates
-20%
There has been a considerable fluctuation in real interest
rates across the EM8 group of countries over the past -30%
Brazil China India Indonesia Mexico Russia S Africa Turkey
year. Brazil (at 6.9%) and Russia (at 5.2%) have
Max Min -12m current
recorded real rate tightening of around 300 bp and 180
Source: BIS, Credit Suisse research
bp, respectively, since last March – both on account of
Figure 7
swift disinflation outpacing central bank easing. Despite
Emerging market consumer heat map
real rates for these two countries being now at the very
top of their respective 7-year historical ranges – typically Real Real
Real Real Priv. sec.
Consumer retail house Average -
anathema for consumption – there is ample scope for Country wage interest credit Average Direction
confidence sales price 12m
growth rates growth
moderation in 2017. India and Mexico have also under- growth growth
gone a tightening in real interest rates (both by around China 55% 70% 69% 79% 51% 58% 64% 49% ↑
Indonesia 67% 76% 58% 40% 13% 37% 49% 39% ↑
100 bp) since last March – the latter case due to central
Turkey 4% 14% 59% 89% 36% 75% 46% 63% ↓
bank measures to defend the peso. The only EM8 coun- ↔
Mexico 2% 80% 24% 27% 59% 73% 44% 43%
try to have undergone a significant decline in real rates is India 75% 35% 56% 14% 20% 49% 42% 48% ↓
Indonesia (to 0.9%), although absolute levels for South South Africa 25% 35% 18% 50% 15% 19% 27% 36% ↓
Africa (0.4%), China (–1.0%) and Turkey (–2.1%) are Russia 18% 9% 22% 3% 8% 6% 11% 15% ↓
Brazil 34% 8% 6% 1% 2% 2% 9% 13% ↓
more stimulative.
Source: OECD Main Economic Indicators, Thomson Reuters, Oxford Economics, Central bank
5. Private sector credit growth data, BIS, Credit Suisse research
Only in Mexico among the EM8 has private sector credit
growth noticeably accelerated over the past 12 months
Emerging consumer macro scorecard
to 17% year-on-year at the top of the country's 7-year
We consolidate these six consumer metrics into a score-
historical range and the highest among the EM8 group of
card for the EM8 countries displayed as a heat map in
countries. Mexico's credit to GDP of 42% is low for
Figure 7. For each metric, we calculate the current per-
emerging markets and responding to a November 2013
centile position from lowest to highest across the entire
package of financial reforms targeted specifically at stim-
eight country 7-year historical range. For real interest
ulating credit growth across multiple sectors of the econ-
rates (where a high number is indicative of consumer
omy. In contrast, the pace of credit growth in Brazil,
strain), we invert the percentile ranking. To achieve an
Russia and Turkey slowed markedly since last March – all
overall country score in the heat map, we calculate a
with a deceleration of more than 10 p.p. which, in the
simple average of the percentile ranks for the six metrics
case of Brazil, has resulted in no credit expansion over
for each country for the current situation and that from 12
the year and the lowest rate in the EM8. China, India and
months ago.
Indonesia have delivered respectable growth of 15%,
At an average of 64%, China appears to have the most
9%, and 8%, respectively, but all toward the lower end of
buoyant consumer environment among the EM8 countries.
their post-2010 ranges.
Moreover, it has improved year-on-year from an average-
metric score of 49% last March. China scores particularly
6. House price growth
well for growth in real retail sales and wages, together with
At 6%, Turkey has registered the strongest year-on-year
real interest rates. In second place, Indonesia, averaging
real house price appreciation among the EM8 countries –
49%, has also recorded a year-on-year improvement from
although this places price growth only mid-range for
39%, propelled by consumer confidence and real retail
Turkey versus the past seven years, having slipped from
sales growth. In third place, Turkey, averaging 46%, has
10% year-on-year 12 months ago. In stark contrast,
dropped from last year's strongest average score of 63%,
house prices in Brazil have depreciated by an alarming
by far the largest annual decline among the EM8 group,
20% over the past 12 months in real terms, the largest
while Mexico at 44% is flat on the year. India, South Africa,
fall measured across the EM8 countries and at the ex-
Russia and Brazil have all recorded year-on-year declines in
treme lower end of Brazil's 7-year range. Russia (–12%)
their average scores across the six metrics, with Brazil and
and South Africa (–2%) have also recorded real house
Russia retaining their positions as weakest and second
price depreciation, but of a magnitude that is mid-range
weakest on the emerging market consumer heat map,
historically. Mexico (+5%) and China (+3%) have also
respectively. The Brazilian consumer appears particularly
posted robust real gains in house prices, the former right
constrained by a mixture of high real interest rates,
at the top of its post-2010 range, while house prices in
unappealing real growth in wages and credit, and declining
India and Indonesia were broadly unchanged.
real house prices.
Emerging Consumer Survey 2017_1314_Emerging Consumer
14 _ Emerging Survey
Consumer 2017
Survey 2017 Photo: istockphoto.com/lzfConscious living
The results of this year's Emerging Consumer Survey confirm that the emerging middle class
continues to expand and the pattern of consumer spending in the emerging world is chang-
ing with it. Running through this change in consumption is a lifestyle change. Consumers
across our surveyed emerging economies are starting to adopt a more conscious spending
profile. This is apparent through a greater focus on skin care, good food, sportswear and
using car-sharing services rather than owning vehicles. The brand implications cannot be
underestimated and we highlight some of the types of companies that are most geared to
these trends.
Eugene Klerk
Spending patterns change as income grows strength in growth in these categories that would
be expected at different levels of GDP per capita
As we highlighted in the previous chapter, the mix on the basis of our previous analysis.
of products and services consumed changes sub- In countries such as India and Indonesia, demand
stantially as income increases. Spending patterns
growth is likely to be strongest for basic apparel,
for consumers in emerging market (EM) countries
food and beverages, and education services. On the
with below-average income per capita tend, for
other hand, in the case of countries with higher
example, to be focused more on basic goods and
disposable income such as China, Mexico, Turkey,
services. As income levels rise, discretionary
spending then kicks in. In Table 1 below, we dig Brazil and Russia, we expect demand for relatively
deeper into specific categories of spending framed more expensive items such as tourism, credit
in the context of this story. We show the relative services or beauty products to be stronger.
Table 1
Growth potential in spending categories based on GDP per capita
GDP per capita 2016E Growth potential
Country High Medium Low
Cereals Apparel Beverages Education
India Two wheelers Meat Healthcare Consumer credit
Below USD 2,000
Cars Beauty products
PCs/laptops Tourism
Apparel Beverages Healthcare
Meat Cars/two-wheelers Consumer credit
USD 2,000 – 5,000 Indonesia Cereals Tourism
PCs
Education
South Africa Beverages Meat Cereals
Mexico Cars Apparel Two wheelers
USD 5,000 –10,000 Brazil PCs Healthcare
China Beauty products Consumer credit
Russia Tourism
Education Cars Cereals
Healthcare PCs Two wheelers
USD 10,000 – 25,000 Turkey Tourism Beverages Meat
Consumer credit Apparel
Beauty products
Source: Credit Suisse estimates, IMF
Emerging Consumer Survey 2017_15Health deteriorates as income grows a change in diet, together with a frequently ob-
served less-active lifestyle (brought about to some
Rising levels of disposable income may result in degree as economies shift from manufacturing to
changes to spending behavior as described above. become more service focused) explains a large part
However these have also contributed to undesirable of this phenomenon, in our view.
secondary effects. More specifically, we observe With the exception of Mexico, where average
that general health conditions appear to be worsen- BMI is already relatively high, we find that average
ing as income levels increase. In our view, this topic BMI readings are likely to rise in all the countries
is particularly relevant for key emerging economies, we surveyed if spending power increases further
considering the potential strong increase in associ-
and there are no significant lifestyle changes in
ated healthcare costs.
terms of health and physical fitness. The need to
ensure that such changes are enacted becomes
Consumers become bigger as income
obvious when considering potential healthcare-
increases
related costs (both public and private). For example,
For example, data from the World Bank and the the International Diabetes Federation estimates that
World Health Organisation show that average Body the number of people suffering from Type-2 diabe-
Mass Index (BMI) readings tend to increase as tes (often related to being overweight or obese)
GDP per capita rises (Figure 1). A BMI reading might increase by around 50% from levels seen in
above 25 suggests that a person is overweight, 2015 to reach 600 million by 2040. The main part
while a reading above 30 indicates obesity. The of this increase is expected to occur in Asia, the
combination of increased calorie intake through Middle East and Northern Africa (Figure 2).
Figure 1
Average body mass index (BMI) increases as GBP per capita rises
Average BMI
30
Kuwait
29
United States
Egypt, Arab Rep. Mexico
New Zealand
28 United Arab Emirates
Chile Greece
Australia
Jordan Bahrain
Peru Uruguay
Fiji Saudi Arabia Germany
27 Cuba United Kingdom
Malta
Canada
Colombia Israel
South Africa Slovak Republic Austria
Turkey
Iran Cyprus Finland
Tunisia Lebanon Brazil
26
Croatia Czech Republic
Lesotho
Serbia Bulgaria Hungary Portugal Spain
Lithuania Sweden
Russia Belgium
Macedonia, FYR Mauritius Poland
Italy Netherlands
25
Latvia Denmark
Ireland
Morocco
Estonia France
Kyrgyz Republic China Romania
24
Zimbabwe
Thailand
Ghana Malaysia
23
Philippines
Pakistan Singapore
Japan
22
Gambia Madagascar Indonesia
India
21
Vietnam
Eritrea
20
100 1000 10000 100000
GDP/Capita (USD)
Source: WHO, World Bank, Credit Suisse Research
16 _ Emerging Consumer Survey 2017Aging is set to add pressure on healthcare Figure 2
spending The number of people suffering from Type 2 diabetes might reach
600 million by 2040
Another factor that is likely to increase the pressure
250
on healthcare costs and thereby raise the potential
for a (forced) change in consumer behavior is
200 +62m
aging. Emerging markets are projected to age at
approximately twiceas fas t as citizens in developed 150
markets. As a result, by 2035, the share of the +62m
population aged 65 or older in countries such as 100
China and Russia should be similar to that in coun- +37m
tries such as the UK and the USA (Figure 3), which 50
increases demand for healthcare services (although
a much lower total spending power increases 0
pressure on governments to fund this). NA & South & MENA Europe South East Western
Caribbean Central Asia Pacific
In order to provide an estimate of the potential America
healthcare costs that countries in our survey might
2013 2015 2035E 2040E
face, we have run a simple scenario. Assuming that
total healthcare costs increase to developed market Source: International Diabetes Federation, Credit Suisse Research
levels (approximately 10% of GDP) and assuming
average GDP growth rates of approximately
4%–5% for the next 15 years, we forecast that Figure 3
China, for example, could be facing healthcare Longevity in EMs is increasing, causing healthcare costs to rise
costs of USD 2.3 trillion by 2030, up from USD
611 billion in 2015 (Figure 4). It is our belief that 35%
Percentage of population aged 65+ (2035E)
Bubble size proportional to size
these costs are unlikely to be covered either of 2035E 65+ population Japan Germany
30%
privately or publicly, which in our view increases the Korea
likelihood that consumers will have to start leading 25%
UK
healthier lifestyles. China USA
20%
Our healthcare team notes that these potential Russia
challenges to healthcare provisions might already 15% Brazil
Turkey
be occurring. While they believe that a significant Malaysia
10% India
opportunity remains within the emerging markets,
Saudi Arabia
they do highlight a projected slowing of the level of 5%
pharma sales growth in emerging markets too.
0%
This year, our survey reports year-on-year declines
0 10 20 30 40 50 60
in reported access to state healthcare in the key GDP per capita (2015, '000 USD PPP)
markets of China, Brazil and Mexico. This highlights Middle East Europe Asia Americas Africa
the continuing economic pressures in the Latin
Source: Credit Suisse
American countries and could underline increased
healthcare cost sensitivity from the Chinese govern-
ment over the last year. Findings from the survey Figure 4
align with slowing growth in EM sales reported by Total healthcare spending (USD bn) to grow quickly in a no-
international EU Pharma for 2016. They are also change scenario
further supported by IMS forecasts which project a 2500 18%
2288
slowing in growth of medicines sales in the EMs
16%
particularly in China and Brazil.
2000 14%
12%
1500
10%
8%
1000
6%
611
502
500 4%
276 238 207
98 148 178 129 2%
94 72 39 49 28
25
0 0%
China India Brazil Indonesia Russia Mexico Turkey Sth.Africa
2030E 2015 CAGR (r.h.s.)
Source: World Bank, IMF, Credit Suisse Research
Emerging Consumer Survey 2017_17Figure 5 Are EM consumers becoming more
conscious?
Year-on-year change in car ownership (p.p.)
Owing to the potential healthcare costs described
10 earlier, we believe that EM consumers might want
to/have to adopt a more conscious lifestyle. We
8 use our survey to review how consumers feel about
products and services related to environmental
6
awareness (e.g. car usage), nutrition, personal care
4 and more active lifestyles in order to judge whether
a conscious lifestyle is being adopted.
2
0
Consumers may start buying only what
they need
-2
Owning a car is typically seen as a bad investment
-4 decision considering the ticket size, strong depreci-
ation and the on-average low usage (we estimate
-6
Mexico Turkey South Russia Indonesia India China Brazil less than 5% of the time). Therefore, signs that
Africa the trend in car ownership might be changing could
2016 2015 2014 be seen as an indicator that consumers are starting
to change their appetites. This argument would
become stronger in cases where, at the same time,
Source: Emerging Consumer Survey 2017 consumers become more open to using car-sharing
services such as Uber, Lyft, Didi Chuxing (formerly
known as Didi Kuaidi) and Zipcar.
While not fully conclusive, our survey data does
show that growth in car penetration rates is starting
Figure 6 to slow across a number of our surveyed countries.
Share of consumers that expect to use car sharing schemes signifi- This is true for countries such as China, India and
cantly or slightly more Mexico. At the same time, we also observe an
increase in the share of consumers intending to use
25
car-sharing services more. In Brazil, for example,
the share of consumers intending to use services
like Uber rose from 4% in last year's survey to
20
21% this year. In China, a country with a competi-
tive sharing market (e.g. Uber and Uber and Didi
Chuxing), almost a quarter of the consumers
15
surveyed intend to use these services.
Consumers are switching from “bad” to
10
“good” food
A more conscious consumer should also imply that
5
the consumption of “bad” food products declines.
External sources such as Nielsen's Global Health
0
and Ingredient Sentiment Survey (August 2016)
Brazil China India Russia suggest that consumers across emerging countries
are much more focused on what they eat than con-
2015 2016
sumers in developed markets. For example, almost
40% of consumers in the Asia-Pacific (APAC)
Source: Emerging Consumer Survey 2017 region follow a low-fat diet (nearly twice the level
seen in Europe or North America). While not as
extreme, we also observe a higher uptake for low
sugar and low-carbohydrate diets across Latin
America, Africa and APAC than in Europe or North
America.
18 _ Emerging Consumer Survey 2017We reviewed our survey results to see if they also Figure 7
suggest that a more healthy approach is adopted by Percentage of respondents who say they follow a special diet that
our consumers, which is indeed the case. For ex- limits or restricts specified foods or ingredients
ample, consumption of beer, spirits and the use of
45%
cigarettes is down year-on-year across most of the
countries surveyed (Figure 8). At the same time, 40%
we also notice that a majority of consumers in all 35%
the countries with the exception of Russia have
30%
started to switch from “less-healthy” or sugary
products to “healthier” options (Figure 9). 25%
20%
Increased focus on personal care 15%
Another consumer product that may indicate 10%
whether emerging consumers are becoming more 5%
conscious about their lifestyles relates to demand 0%
for personal and skin-care products. We note from Low Fat Sugar Conscious Low Carbohydrate Wheat/Gluten free
the survey that a majority of consumers in all coun- Latam Asia Pacific Africa/MENA Europe Nth.America
tries already buy these products. On a positive
note, we find that this share of purchasing consum- Source: Nielsen, Global Health and Ingredient Sentiment Survey, Q1 2016
ers rose in five out of eight countries last year. In
addition, the share of consumers that intend to
spend more on personal and skin-care products Figure 8
this year rose in six out of eight countries. Year-on-year change in share of consumers who had bought
these products in the past 3 months (%)
4
2
0
-2
-4
-6
-8
-10
-12
-14
Brazil China India Russia South Africa Turkey Mexico
Beer Spirits Cigarettes
Source: Emerging Consumer Survey 2017
Figure 9
Percentage of consumers eating less sugary or “non-healthy”
products and eating “healthier” options
90
80
70
60
50
40
30
20
10
0
Brazil China India Indonesia Russia Turkey Mexico
Source: Emerging Consumer Survey 2017
Emerging Consumer Survey 2017_19Figure 10 Figure 11
Young consumers in China, Turkey and Mexico have …we observe the same change for the middle-aged con-
reduced consumption of unhealthy products most over sumers in these countries. Russian consumers appear to
the past 12 months… have a different lifestyle
18–29 year olds 56–65 year olds
6 10
Momentum 2016 vs 2015
Momentum 2016 vs 2015
India
4 Russia
India Russia Brazil
2 5
0
0
-2
Mexico
-4 Turkey
China Turkey -5
-6
Turkey China China
-8 Mexico
Turkey -10
Turkey China
-10 China
China Mexico
Mexico Turkey Mexico
-12 -15
-14 Mexico
-16 -20
0 10 20 30 40 50 60 70 0 10 20 30 40 50 60
Purchases in the last 3 months Purchases in the last 3 months
Beer Cigarettes Spirits Beer Cigarettes Spirits
Source: Emerging Consumer Survey 2017 Source: Emerging Consumer Survey 2017
When reviewing consumption patterns by age Our survey shows that the intention to spend more
group, we find that the trend away from unhealthy on personal and skin-care products is broad-based,
products appears to be most broad-based in China, which enhances our call on the conscious con-
Mexico and Turkey. In addition, we also note that sumer. For example, the share of low-income con-
this trend does not appear to be ”youth-led” as mo- sumers who have indicated a desire to spend more
mentum among middle-aged consumers appears to has risen strongly over the past few years and is
be as negative as that of the ”millennials” (Figures now similar to the share of high-income consumers.
10 and 11).
Figure 12 Figure 13
Percentage of respondents who bought personal and skin- Percentage of respondents that intend to spend more on
care products in the past 3 months personal and skin-care products
100 100
90 90
80 80
70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0
India South Brazil Turkey Russia China Mexico Indonesia India South China Turkey Indonesia Brazil Mexico Russia
Africa Africa
2015 2016 2015 2016
Source: Emerging Consumer Survey 2017 Source: Emerging Consumer Survey 2017
20 _ Emerging Consumer Survey 2017Figure 14 Figure 15
Percentage of respondents that intend to spend more Skin-care penetration and momentum in the last 3
on personal and skin-care products months: low income vs. high income consumers
50 20%
45 15%
Mexico Turkey
40 Mexico
10% China
35 Russia Russia India
5%
China South Africa
30 South Africa
0%
25
-5%
20 Indonesia Brazil
-10%
15
-15%
10
-20%
5 Indonesia
0 -25%
Low income Medium income High income 0% 20% 40% 60% 80% 100%
2013 2016 Low income High income
Source: Emerging Consumer Survey 2017 Source: Emerging Consumer Survey 2017
Healthier through a more active lifestyle lifestyles might also be found through purchase
behavior in terms of sportswear and indications of
Finally, we also review whether consumers are whether consumers have started to exercise more.
likely to start leading more active lifestyles. External The market for sportswear has indeed expanded
indicators from sources such as market research aggressively over the past five years. While we
company Euromonitor suggest that this is the case. would not necessarily attribute all of this growth to
For example, consumption of sports drinks during consumers using sportswear to start exercising, we
the past five years has been growing strongest do see this as additional “evidence” of a broader
across most of the economies we surveyed (Figure trend toward a more conscious lifestyle. In this
16). Sport-nutrition consumption (e.g. protein prod- regard, data from Euromonitor (see charts below)
ucts) has also grown very strongly for most of our not only shows that the market for sportswear is
surveyed markets (Figure 17). The exceptions here growing most strongly across key emerging
include Russia and South Africa, where total con- markets, but that the increase in sportswear spend-
sumption has declined between 2011 and 2016. ing remains far stronger across global emerging
Indications that consumers may be starting to lead markets than developed markets (Figure 18).
more active and therefore healthier or conscious
Figure 16 Figure 17
Change in consumption of sports drinks, 2016 vs. 2011: Change in total sales of sport nutrition, 2016 vs. 2011:
India, Indonesia and China leading China and India lead, Russia weakest
India China
Indonesia United Kingdom
China India
South Africa USA
Australia World
USA Turkey
World Germany
Mexico Australia
Switzerland Netherlands
Sweden Indonesia
Russia Finland
Switzerland
Turkey
Sweden
Denmark
Italy
Germany France
France Spain
Spain Denmark
Brazil Mexico
Finland Brazil
Japan Japan
Italy South Africa
Netherlands Russia
-100% -50% 0% 50% 100% 150% 200% 250% 300% -50% 0% 50% 100% 150% 200% 250%
Source: Euromonitor, Credit Suisse research Source: Euromonitor, Credit Suisse research
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