Large emerging market economies will experience mixed fortunes in 2015. Russia is the standout performer, for all the wrong reasons. Much of their success is likely to boil down to their macro-economic fundamentals and reform programmes, with those with large current account deficits on the whole more vulnerable than those without. A key theme for the year will be policy reform with India and Indonesia making a strong start, Mexico is in the midst of a reform programme and even the Brazilian government is beginning to move away from unorthodox policy to a more pragmatic approach.
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Analyst Insight by Hope Lee - Senior Beverages Analyst
For years, liquid concentrates, worth around US$9 billion by retail value in 2014, seemed a neglected small category in the vast soft drinks market, and analysts once wondered if there was any glimpse of life and thought further investments might be questionable. The fact that there is no single brand in liquid concentrates reaching the billion dollar sales mark means the interest of manufacturers is exceedingly lacklustre. However, the economic slowdown or outright recession in some developed markets and new product development seemed to revive the category – the expansion of SodaStream and Kraft’s MiO and the ongoing popularity of Robinsons and Teisseire has put liquid concentrates back in the spotlight again. Some consumers who traded down to liquid concentrates when they were short of cash may well stay within the category, even when their income bounces back. Euromonitor International’s latest data show that the global off-trade volume sales increased by around 3% in 2014, and the category is expected to generate net growth of over US$900 million in 2014-2019. This figure does not seem to offer massive business opportunities compared to juices and energy drinks, but it is still worth looking at where the growth areas are and the state of play of the major companies.
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Analyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst
For the past two years at least, the beer industry’s biggest talk has been about a potential consolidation move between Anheuser-Busch InBev and SABMiller Plc. For banks, the world’s number one brewer buying out or merging with the world number two brewer is a very lucrative financing deal. The latest estimate for financing required by A-B InBev has reached US$122 billion for buying a company valued at almost US$4.8 billion, according to 2013-2014 profits.
It might seem like a shrewd decision for the two brewers to combine, as SABMiller’s biggest competitor is A-B InBev competing in beer markets totalling at over US$20 billion. This is 35% of retail value sales for the British brewer and 15% for the Belgian-Brazilian entity. According to Euromonitor International, the overlap occurs in at least 67 markets, illustrating the degree of market commonality for both companies, as reflected by the bubble size below.
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The Middle East and Africa is the world’s only remaining region with a traditional population pyramid – a wide base, tapering towards the top. The average age is low, having surpassed 20 for the first time in 2009 and in 2015 38.4% of the population will be under 15 years of age. It is a dynamic region and in 2015, six of the world’s 10 fastest-growing economies will be found here.
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Analyst Insight by Karen Van Diesen
The Muslim world represents a key consumer base, with underserved needs and rising spending power. There are approximately two billion Muslims in the world, accounting for nearly 30% of the global population. This share of the general population is set to grow even higher, as the number of Muslims is expected to increase at a pace of 1.4% per year globally. Alongside a thriving Islamic economy, there is growing demand for Islamic fashion apparel. In 2013, the 57 countries that belong to the Organisation of Islamic Cooperation accounted for 7% of total value sales of apparel and footwear. By 2018, this figure is forecasted by Euromonitor International to rise to over 9%.
Muslim fashion apparel is a key area that companies should explore. One reason for this is that there has been a change in mind set over the years. Muslims increasingly see clothing as a way of expressing their fashion sense, along with their religious and cultural values. Unfortunately, Islamic fashion apparel offerings have been limited, and there is no single Islamic brand catering to the fashion needs of the Muslim population globally. Thus, there is an opportunity for modern Islamic fashion brands to be showcased.
Source: Citra Style
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Analyst Insight by Oru Mohiuddin - Senior Beauty and Personal Care Analyst
Euromonitor International is pleased to present an interview with Eryca Freemantle, a global industry intelligence expert, a TV producer and presenter, and an award-winning international celebrity make-up artist, specialising in corrective make-up. Eryca sits on the board of Panel of Experts at the London College of Fashion and is an advocate for multicultural beauty, actively engaged in organising expos and trade fairs. She also serves as a consultant for multinational brands looking to enter the beauty market in Africa. She regularly appears on leading television channels, including Bloomberg and CNN speaking about the expanse of multicultural beauty.
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Grape production in Africa remains relatively high and grape farmers often have wineries on their respective farms. This has resulted in the local wines dominating the wines market in South Africa. In the 5 year period leading up to 2013, fine wines/champagne and spirits have seen value growth of 12%, to reach R1 billion. Fine wines posted the highest value growth during the review period because consumers’ desire to uphold reputable statuses in their respective communities often pushes them to consume luxury brands in public places, such as bars, restaurants, as well as night clubs, where people may notice them and such acts would boost their egos. The hosting of exclusive social events to enhance brand image has been on the rise in South Africa with the J&B MET horse race being one example where the J&B brand would be exclusively sold with an aim to create long-lasting brand awareness.
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Internet retailing continues to see growth in value terms across South Africa. The main growth driver has been the increasing number of internet users in the country mainly because of greater internet accessibility which in turn boosts the value sales of internet retailing.
In previous years, the disparity between incomes in South Africa has had an impact on the performance of internet retailing. The high costs of bandwidth did not allow low-income and middle to low-income consumers to have access to the internet at home. As a result, only 11% of the total population had access to the internet.
Christy Tawii, Research Analyst, says “Internet retailing has seen a 20% - 30% value growth mainly because of the convenience, expansion of digital devices such as tablets and smart phones and increased competition within the online retailing segment.”
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Alongside the tragic human cost of the Ebola outbreak in Africa, there is also a severe economic impact. It is raising the cost of foodstuffs and heightening the need for spending on healthcare infrastructure. This could trigger a rise in public debt and general government budget deficits in affected countries, as government struggle to divert enough financial resources to contain the outbreak. Nigeria’s outbreak is especially damaging as it is a key emerging market. It accounted for 33.7% of total GDP in Sub-Saharan Africa in 2013 and is one of the main catalysts for Africa’s rising economic prosperity. Tourism has also been hit in Sub Saharan Africa even in countries that are currently unaffected by the virus, which is likely to negatively impact real GDP growth in the region.
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Many emerging tourism destinations in Africa have identified surfing as a target market, reveals the WTM Global Trends Report 2014 by Euromonitor International, first released on Monday 3 November at World Travel Market.
South Africa has an established reputation with the international surfing community but other countries are gaining a foothold. Sierra Leone hosted a week-long competition and festival this September while Ghana will host the Africa Surf Series next year.
Some specialist tour operators are already active in the region. Family surfing holidays in Madagascar, Zanzibar and Mozambique are available from South African tour operator All Aboard Travel, while UK-based Errant Surf includes Morocco, Ghana, South Africa and Mozambique among its surf adventures itineraries. Other countries with potential include Liberia, Cote d'Ivoire, Cape Verde and Senegal.
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