Cuba: Key Market of the Future

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Cuba is identified as one of the 20 Markets of the Future that will offer the most opportunities for consumer goods companies. Accelerating market liberalization and improvement of business environment is anticipated to boost employment and income growth, resulting in a sizeable increase in consumer expenditure by 2020. Alcoholic drinks is projected to become the largest consumer market over the forecast period, with spirits and beer being the most promising categories.

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December 21, 2014

Euromonitor to Speak at International Production & Processing Expo 2015

IPPE

Event Name: International Production & Processing Expo

Date: January 27, 2015

Location: Atlanta, Georgia

Event Description: International Poultry Expo, International Feed Expo, and International Meat Expo integrated their trade shows in 2013, under the International Production and Processing Expo. The 2015 IPPE will bring together more than 1,000 exhibitors and 25,000 attendees in Atlanta from January 27, 2015. We look forward to seeing you there! Registration for IPPE includes entrance to the trade show exhibits and select education programs.

SvetlanaUduslivaiaSpeaker: Svetlana Uduslivaia - Research Analyst

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Session: Pet food retail: update on current state and opportunities for future growth

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Euromonitor to Partner and Speak at the Spielwarenmesse eG Press Conference and Toy Business Forum 2015

Spielwarenmasse-logo

Press Conference:

Date/Time: Thursday January 22, 2015 from 11a.m to 12:15 p.m.

Location: Exhibition Center, Nuremberg, Germany

Speaker: Clarissa Nicklaus, Senior Research Analyst at Euromonitor International

The Presentation: Clarissa will highlight some key facts and trends about the Toys and Games market worldwide and in Germany. Presentation delivered in German.

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December 20, 2014

Both Developed and Emerging Markets Offer Good Opportunities in Toys Licensing

Utku_TanselAnalyst Insight by Utku Tansel - Head of Toys and Games Research

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As we explore in our new global briefing, licensing is continuing to have an increasing impact on traditional toys and games with more toy manufactures looking to create fresh intellectual property using TV and films and then leveraging these characters’ popularity to increase toy sales.  However, as this trend becomes increasingly more prevalent, competition increases, making opportunities more challenging to find globally.

Licensing1.1

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Opportunities and Relationships Between Personal Accessories and Beauty and Personal Care

Put together, personal accessories and beauty and personal care sales will exceed US$1 trillion in 2015. The two industries are related in more ways than one, not least because of both targeting similar consumer profiles. Although leading brands such as L'Oréal, Gillette or Louis Vuitton are unlikely to venture outside their core industries, brands such as Avon and Tiffany & Co might be ideal candidates to expand their relatively small presence in personal accessories and beauty and personal care respectively.

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December 19, 2014

Olam to Become One of Top Three Global Cocoa Processors

John MaddenAnalyst Insight by John Madden - Head of Ingredients Research

As the year ends on a major acquisition in ingredients, we ask what is driving this and does it make good business sense? Archer Daniel Midlands (ADM) announced plans to dispose of its cocoa business in July 2013 – a decision driven by volatility in the cocoa market. Cargill purchased the chocolate business in September 2014 but steered clear of cocoa processing due to potential competition issues. This week Olam broke the news of a US$1.3 billion purchase of ADM’s cocoa business – a deal that will catapult Olam to become one of the top three global cocoa processors.

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Holidays Without Hunger

Cat Dixby Cat Dix - Corporate Social Responsibility Manager

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In lieu of mailing traditional greetings cards for the holidays, Euromonitor has made a number of donations, totalling £16,000 to organisations addressing food poverty.  Today people in many countries struggle to feed themselves and their families.  Redundancy, illness, debt, family breakdowns and rises in living costs all contribute to situations which leave people relying on food banks and community kitchens.   Organisations nominated by our regional offices to receive support include:

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Cuba Libre: Latin America’s Final Consumer Frontier?

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With the thaw in relations between Cuba and the USA, multinationals are likely to be planning their strategies in the new year to boost business in this frontier market. Even before the thaw, we identified Cuba as a Consumer Market of the Future. In 2013, consumer expenditure totalled Tweet-ThisUS$38.6 billion, and with a population of 11.3 million, albeit in slow decline, the market offers real promise for multinationals. Although the US embargo has not yet been lifted, the time might be right to re-evaluate Cuba’s potential as a consumer market.

Low-income consumers underpin the market

Outside of tourism, the most immediately obvious market is for alcohol and soft drinks. We forecast that these markets will increase by 51.6% and 34.8% in nominal terms between 2014 and 2018. This will be driven by increasing tourist arrivals and rising incomes supported by remittances. Although Cuba has a relatively old demographic profile – the median age was 40.3 in 2013, 10 years higher than Brazil, it has a large proportion of working age population – 70.5% were aged 15-64 in 2013 which contributes to this income growth. The market is currently constrained by rationing and subsidised prices however. Other fast-growing markets in the future include home care and tissue and hygiene. Durable goods such as consumer electronics and appliances are likely to see slower growth. One explanation for this, and something to remember across markets, is that despite growth, overall incomes are low – per capita GDP stood at US$6,788 in 2013, roughly Tweet-Thiscomparable to Peru and Ecuador. Although price-sensitive, Cuban consumers can be targeted with the “traditional” smaller packet sizes aimed at bottom of the pyramid consumers around the globe but also through innovation. As in the rest of Latin America, an approach based on tailoring to local tastes and aspirations, whilst striving to build brand and in some cases category awareness, is likely to have the most success.

 

Forecast Growth Rates of Selected Markets in Cuba: 2014-2018

Forecast Growth Rates of Selected Markets in Cuba: 2014-2018

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

 

History lesson from Eastern Europe

Lessons can be learned from experiences following the fall of the iron curtain in Eastern Europe and the fall of the Berlin Wall, which celebrated its 25th anniversary in November of this year. In addition a look at Myanmar and China could yield insights. However, these lessons cannot be transferred to Cuba in their entirety - rather they should be used to inform strategies in Cuba. Cuban consumers have their unique tastes and preferences so a holistic approach, taking in a thorough knowledge of the market, consumers, economic backdrop, business environment, competitors and partners is crucial for optimum success.

A Cuba strategy should also be seen as a long-term one, gains and change will not be realised overnight. Resistance to commercialism will also be seen in some segments and the mind-set of “being at war” with the USA could take a generation to change. It would also be wrong to see Cuba as an entirely virgin market. Cuba trades heavily with China and Spain and companies from these countries have first-mover advantage in some sectors. It also suffers from serious economic challenges – including crumbling infrastructure, low productivity and a lack of investment – and its economic development should be monitored closely.

 

Have a question or a thought to add? Leave us a comment below.

December 18, 2014

Rouble Trouble: Impact of Currency Volatility on Russian Apparel Market

Magdalena KondejAnalyst Insight by Magdalena Kondej - Head of Apparel and Footwear Research

Faced with sharp devaluation of the rouble, Apple has already halted its online sales in Russia while some luxury brands, including Cartier, are raising prices to counter deflation. If Russia’s financial and economic instability continues, fashion and sportswear brands are inevitably set to suffer too. 

adidas Group under increased pressure

adidas clearly leads in Russian sportswear, over Nike. But what was once adidas’s significant advantage, is now becoming a hindrance. Russia accounts for almost 7% of adidas’s global sales compared to only 1% for Nike.  Earlier this year, the company had already issued profit warnings, partly blaming the situation in Russia and its share price has slid by 25% since July.

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Diplomatic Normalisation Promises Cuban Evolution for US Cigar Market

Shane_MacGuillAnalyst Insight by Shane MacGuill - Tobacco Analyst

The almost total thawing out of diplomatic relations between the US and Cuba, announced yesterday, 17th December by President Barack Obama, could lead to the smouldering of Cuban cigars from coast to coast in the US$8 billion dollar US cigar market. The biggest winners from the relaxing of the trade embargo with Cuba are likely to be Imperial Tobacco plc, the world’s 4th largest international tobacco company and part owner, with the Cuban government of the state cigar company Corporacion Habanos and the US tobacco specialist stores which currently supply around 40% of the country’s cigars and through which high price point Cuban offerings will largely be distributed.

Imperial Tobacco inherited  a 50% holding in the Cuban state cigar company Corporacion Habanos through its purchase of the French-Spanish tobacco giant Altadis in 2007. It is thought that the company, which distributes the Cohiba and Montecristo premium cigar brands outside the US and non-Cuban brands such as Romeo y Julieta within it, has been anticipating the relaxation of the trade embargo for some time and has plans to ramp up production by 50% to meet increased demand. However, in an analyst briefing in November 2014, Imperial CEO Alison Cooper made reference to some supply issues in Cuba which may or may not impact this target:

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December 17, 2014

Life in Europe in 2015

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In 2015, Europe will represent a combined consumer market of US$12,676 billion. It is home to Tweet-This16% of the world’s households, but 29% of its single person households. The average European will spend US$15,937 in 2015 and save just 10.5% of disposable income. With an average age of 40.2 years, how do European consumers live their lives?

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Recent Posts

Euromonitor to Speak at International Production & Processing Expo 2015

Euromonitor to Partner and Speak at the Spielwarenmesse eG Press Conference and Toy Business Forum 2015

Both Developed and Emerging Markets Offer Good Opportunities in Toys Licensing

Opportunities and Relationships Between Personal Accessories and Beauty and Personal Care

Olam to Become One of Top Three Global Cocoa Processors

Holidays Without Hunger

Cuba Libre: Latin America’s Final Consumer Frontier?

Rouble Trouble: Impact of Currency Volatility on Russian Apparel Market

Cuba: Key Market of the Future

Diplomatic Normalisation Promises Cuban Evolution for US Cigar Market