Impact & Expertise

Press Releases

  • November 27, 2013
  • The Economic Slowdown Has Failed to Dim Consumer Optimism in Emerging Markets

  • Analysis by BCG Finds That While Consumers in Brazil, China, and India Plan to Tighten Their Belts in the Near Term, Their Long-Term Outlook Remains Far More Bullish Than That of Consumers in Richer Economies

BEIJING, November 27, 2013—Consumers in some of the world’s biggest emerging markets remain remarkably bullish despite slowing economic growth and market volatility—in stark contrast to continued gloom among consumers in many developed economies—according to a new report released today by The Boston Consulting Group (BCG).

The report, titled Keeping an Eye on the Prize: Why Emerging-Market Consumers Remain Bullish, found that recent economic challenges are prompting many consumers in Brazil, China, and India to trim their spending plans in the near term. Nevertheless, consumer spending in these rapidly developing economies (RDEs) is still growing faster than in developed economies. And more consumers in RDEs are trading up to higher-priced products, especially those with established brand names and in categories such as fresh foods and home appliances. When it comes to the longer term, consumers in RDEs feel far more financially secure and confident about the future than people in richer—but less dynamic—developed economies.

“Even though we expect some bumps in emerging markets for at least the next year, the overall picture remains buoyant for the longer term,” says Jeff Walters, a BCG partner and a coauthor of the report. “RDEs will continue to offer some of the world’s greatest growth opportunities for companies selling consumer goods and services across a broad range of categories.”

The report is based on BCG’s 2013 Global Consumer Sentiment Survey, which first identified the “trading up” trend more than ten years ago. The new report focuses on responses from nearly 7,000 consumers in Brazil, China, and India. The findings are compared with survey responses from consumers in eight African nations as well as nine developed economies. Findings on consumers in developed economies were explored in greater detail in a previous BCG report.

The contrast between the short-term caution and the longer-term confidence of consumers in RDEs is more pronounced in this report than in previous BCG surveys. While overall consumer sentiment remains stronger in RDEs than in developed economies, in 2013 a greater percentage of respondents in RDEs said that they plan to cut back on spending over the subsequent 12 months. But this sentiment varied: while 49 percent of respondents in India and 67 percent of those in Brazil reported plans to tighten their belts, only 33 percent of consumers in China said that they intend to cut back.

When asked about the future, however, an average of 72 percent of respondents in Brazil, China, and India said that they are optimistic about the future—compared with only 48 percent of consumers surveyed in developed economies. An average of 55 percent of consumers in the three RDEs, but only 35 percent of those in developed economies, reported that they feel “financially secure.” Nearly twice as many consumers in RDEs as in developed markets said that “every year, there are more I things I want to buy.”

“Consumers in emerging markets are accustomed to volatility,” explains Abheek Singhi, a BCG partner who heads the firm’s Consumer and Retail practice in Asia-Pacific. “So as rising incomes push millions more households into the middle and affluent classes, companies should expect growing demand for everything from cars and appliances to financial services.”

The report also found that the power of brands remains strong in emerging markets. Seventy percent of consumers in China and 67 percent of those in India cited “brand name and reputation” as a key reason for trading up. Brand engagement in Africa is even higher, with nearly 80 percent of consumers in Kenya, Nigeria, and South Africa agreeing with that statement. “Many Africans are in the market for certain kinds of products for the first time,” explains Johannesburg-based partner Stefano Niavas. “So they are likely to prefer known brands that they can trust.” The survey also found that consumers in RDEs are beginning to identify more personally with the brands they choose. In Brazil, for example, 40 percent of respondents—nearly twice the level of consumers surveyed in developed countries—agreed that “brands say something about who I am, my values, and where I fit in.”

Even though this year’s survey found that more consumers in RDEs are tightening their belts and plan to trade down to lower-priced products in many categories—which should not be surprising given the economic slowdowns in Brazil, China, and India—the desire to spend has not significantly diminished. Fifty-three percent of respondents in China and 62 percent of those in Brazil—around the same as in 2012—agreed that “it seems like every year, there are more things I want to buy.” In India, agreement leaped by nine percentage points, to 66 percent.

“The combination of consumers’ short-term caution and long-term confidence is something that companies must keep in mind as they calibrate their brand strategies, investments, and expectations in RDEs,” says Olavo Cunha, a partner who leads BCG’s Consumer Goods practice in Brazil. “While they should of course plan for fluctuations in demand, companies should continue to invest aggressively in their brands and organizations on the ground in order to win in the long term.”

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About BCG’s Center for Consumer and Customer Insight
The Boston Consulting Group’s Center for Consumer and Customer Insight (CCCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCCI is sponsored by BCG’s Marketing & Sales and Global Advantage practices. For more information, please visit here.


The BCG Game-Changing Program
For 50 years, The Boston Consulting Group has been helping leaders anticipate and respond to a changing world. Today, it is clear that the pace of change is accelerating. In order for organizations to own the future, they must change their game. The radical shifts in the global economy, magnified by a relentless rise in uncertainty, require bolder moves, fitter organizations, and better execution. To help leaders capitalize on the emerging opportunities, we are investing in a program of research and development, culminating in a series of publications that condense our global experience on five important requirements for success: profitable growth and value, fitness, adaptability, connectivity, and stewardship. This publication is part of that program. For more on the Game Changing Program, please go to https://www.bcgperspectives.com/changing_the_game.

About bcgperspectives.com

Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management’s agenda. It also provides unprecedented access to BCG’s extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm’s founder and one of the architects of modern management consulting. All of our content—including videos, podcasts, commentaries, and reports—can be accessed by PC, mobile, iPad, Facebook, Twitter and LinkedIn.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries.

Recent Releases

  • August 28, 2014 Consumer Packaged Goods Companies Must Plan for a Digital Future view full release
  • August 25, 2014 The Global Auto Industry’s Recovery Gains Traction view full release
  • August 21, 2014 The Construction Industry’s 2014 Challenge: To Reignite Growth view full release
  • August 19, 2014 Dramatic Shifts in Manufacturing Costs Are Driving Companies to Change Their Global Production Strategies view full release
  • July 22, 2014 Chinese Consumer Sentiment Improving, Driven by MACs in Smaller Cities view full release
  • July 16, 2014 Asset Managers Post Strong Recovery from Crisis, with Record Assets and Near-Peak Profits view full release
  • July 15, 2014 TSR Turnarounds Are Leading Value Creators Since Global Financial Crisis view full release
  • July 14, 2014 BCG Builds Its Global Capital Markets Practice with Two Senior Hires view full release
  • July 14, 2014 The European Automotive Aftermarket Returns to Growth view full release
  • July 10, 2014 BCG Local Dynamos Highlight the Successes of Homegrown Emerging-Market Companies view full release

Accelerating Out of the Great Recession

Accelerating Out of the Great RecessionThis book details what high-performing companies must do to seize advantage in a slow-growth environment. more

BCG Offices

Globe BCG has more than 80 offices around the world. Learn about our global presence.
Go

Social Impact

We are compelled to utilize our expertise to work with humanitarian organizations that impact local communities and the world at large. More