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April 24, 2014

UK Tea Tastes Turn Premium

Dana LaMendolaAnalyst Insight by Dana LaMendola - Beverages Analyst

Despite the UK’s declining tea sales, which decreased by 8% in retail volume terms between 2008 and 2013, retail value growth has remained steady, increasing by 1% in real growth over the same period. The inverse volume and value growth indicates that while Britons are drinking less tea, their choices are becoming more premium. In addition to the increasing popularity of tea types like green tea and fruit and herbal teas – which carry a higher price tag than traditional black standard tea, premium tea brands are also on the rise.

Shifting Tea-Type Preferences

The premiumisation of British tea culture is evident in the increasingly popularity of different tea types. Black standard tea, the most traditional and inexpensive type of tea in the UK, decreased by 9% in retail volume between 2008 and 2013, accounting for nearly the entirety of the category’s overall volume decline. In contrast, alternative tea types such as green tea, fruit/herbal tea, and other teas which include white teas, oolong tea, and rooibos, each recorded double digit volume growth over the same period. These different variants are priced much higher than standard black teas. Fruit and herbal teas, which recorded the highest absolute volume growth between 2008 and 2013, are also the most expensive type of tea, with an average unit price of nearly six times that of black standard tea.  

Retail Volume Growth by Tea Type, 2008-2013

Source: Euromonitor International

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April 23, 2014

A New Consumer Health Powerhouse: GSK and Novartis to Form a Joint Venture

Mark StrobelAnalyst Insight by Mark Strobel - Consumer Health Analyst

In the midst of significant merger and acquisition speculation among the world leading pharmaceutical and consumer health companies, GlaxoSmithKline Plc (GSK) and Novartis AG made a deal to establish a joint venture that will create the largest consumer health operation worldwide*.

The Deal

GSK and Novartis traded over US$20 billion in assets on 22 April 2014 involving the companies’ consumer health, oncology and vaccine divisions.  In a desire to focus on their strengths, Novartis will acquire GSK’s oncology unit to further bolster its position in the fast moving field of cancer drug research while GSK will take on Novartis’s vaccine unit, converting the company into the world leader in this area. The consumer health businesses of these companies will be merging forces to create a joint venture, which will operate under the GlaxoSmithKline Consumer Healthcare name and will be run by GSK’s current consumer health head, Emma Walmsley. GSK will own 63.5% of the new venture which reflects the valuation of its contribution to the deal, and GSK will retain full control of its operations in India and Nigeria. The new partnership is expected to be completed in early 2015, subject to approvals.

In a separate transaction, Eli Lilly and Company will acquire the Novartis animal health business.


A New Leader in Consumer Health

This high profile partnership is expected to establish a new global leader in consumer health. In 2013, GSK and Novartis ranked seventh and eighth in consumer health retail value sales, respectively, reaching US$4.8 and US$4.7 billion. The combined sales of US$9.5 billion would account for a value share of 4.6%, surpassing Johnson & Johnson Inc’s 3.9% of global consumer health sales.

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Freshpet Rapidly Expanding in Mass-Market Retail in Canada

Maryna IvusAnalyst Insight by Maryna Ivus - In-Country Analyst, Canada

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As the Canadian pet food marketplace faces the prospect of slowing volume growth in the coming years, manufacturers and retailers are continuing to seek opportunities in the premium dog and cat food segment. Premium pet food products are sought after by many Canadian pet owners, especially those with higher disposable incomes, thus enabling this otherwise mature industry to achieve value growth.

Within premium pet food, sales of fresh and frozen products remain relatively low. However, consumer interest in these products, driven by the perception of high-quality fresh ingredients, has been on the rise. Consumers are treating their pets as members of the family, and this trend is driving a preference for more natural products and better ingredients. Many pet owners feel more comfortable with familiar ingredients, ie ingredients which are similar to those they eat themselves.

Traditionally, fresh/frozen products have been sold mainly in specialist pet stores. However, banking on a consumer shift towards mass-market channels in search of high-quality products at a better price, Freshpet began marketing its line of fresh/frozen dog and cat food through leading grocery and mass chains in Canada, including Wal-Mart and Loblaws operated stores and other grocery retailers. The move, while not without its risks to brand equity, is supporting the brand’s expansion and is attracting more consumer attention, with retailers so far reporting good sales.

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April 21, 2014

At-Home Soft Drinks Machines Should Focus On Variety, Not Replication

JonasFelicianoAnalyst Insight by Jonas Feliciano - Beverages Analyst

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While at-home soft drinks systems have been available globally for some time, the recent Coca-Cola/Keurig Green Mountain strategic partnership, coupled with PepsiCo’s announcement that its own brands would be available on the Bevyz Fresh Machine have put at-home carbonation (and soft drinks creation) under the spotlight. As consumers await details surrounding the respective systems, machine and beverage manufacturers still have several obstacles to overcome. With both Coca-Cola and PepsiCo making their iconic brands available in capsule form, flavour, formulation, price and distribution represent just some of the many challenges that await.


Taste Comparisons will Naturally be a Focal Point

The most effective positioning for at-home soft drinks systems is to correlate the machines with consumer demand for diversity. Across the globe there is an extremely wide and expanding variety of soft drinks available to consumers who can afford a Keurig Cold or Bevyz Fresh system. The advantage of owning an at-home soft drinks maker is bringing the variety of a convenience store cooler to one’s kitchen countertop. However, because of the pairing with Coca-Cola and PepsiCo, the first thing the machines will be judged on is their ability to replicate the companies’ flagship cola brands.

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Chinese Economy: Stable and Sound? Or Slowing Dangerously?


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The first quarter of 2014 has seen the Chinese economy slow further to 7.4% year-on-year. China’s major trade partners will be looking on anxiously. Despite the National Bureau of Statistics announcing that growth is “Stable and Sound” is a major stimulus on the cards?

First of all the facts:

  • China has released its GDP figures for the first quarter. Q1 2014 saw GDP grow by 7.4% year-on-year, a slowdown from Q4 2013’s 7.7% and the lowest rate of growth since Q3 2012;

Real GDP Growth Q1 2010 – Q1 2014

SB China 1

Source: Euromonitor International from National Statistics

Note: Data are non-seasonally adjusted


  • Beneath this headline figure, the service sector saw the strongest growth at 7.8% year-on-year;

  • Disposable income in both urban and rural areas also saw strong growth in the first quarter with annual real increases of 9.8% and 12.3% respectively.

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April 19, 2014

Dishwasher Manufacturers Must Educate to Penetrate New Markets

Jamie_KoAnalyst Insight by Jamie Ko - Head of Consumer Appliances

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Dishwashers remained the smallest category in major appliances in 2013, accounting for a mere 4.4% share of overall volume sales. It is also a category in which average unit price, at US$609, is significantly higher than in major appliances as a whole (US$444). Dishwashers are generally not perceived as an everyday necessity, but rather as a luxury item in the kitchen. So, why do appliances with similar washing and cleaning functionality but for different items enjoy such a contrasting degree of popularity? That said, over the forecast period Euromonitor International predicts a credible volume CAGR of 3.6% for dishwashers globally.

Expenditure Per Household on Dishwashers by Region and Growth, 2008-2018

Source: Euromonitor International

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Can Travel and Tourism in Iraq Pick Up Speed?

Nadejda_PopovaAnalyst Insight by Nadejda Popova - Senior Travel and Tourism Analyst

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New violence across much of Iraq in 2013 has stifled any recovery for the travel and tourism industry. Unrest ignited by the crisis in nearby Syria and political conflict have brought Iraq back into the world news. And yet, despite ongoing violence across much of the country, there are pockets of safety in Iraq, such as the Kurdistan area, which is completely removed from the war zone. Indeed, Erbil was chosen as Arab Tourism Capital 2014 by the Arab Tourism Committee, beating Beirut in Lebanon, Taif in Saudi Arabia and Sharjahn in the UAE. However, although Erbil is attracting a number of GCC and Arab businesses, it will prove very challenging for the country to attract more diverse nationalities long term, due to the lingering negative image of Iraq, but also strong competition from GCC countries, which have already established a good track record in the region.

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April 18, 2014

Latin American Travellers Prefer Pampering, Indulgence on Holiday

EileenBevisAnalyst Insight by Eileen Bevis - Survey Manager

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Preference for Indulgence while on Holiday

Vacationing Latin Americans Like to be Pampered

There are many ways to relax and have fun on a short city break or a week-long vacation to the beach. However, Latin American travellers have a particular recipe for rest and recuperation while on vacation – and its main ingredient is pampering. A day at the spa? Luxurious lodging? Latin Americans like to be pampered while on vacation more than holiday-makers from any other region in the world.

Consumer Enjoyment of Pampering while Travelling


Source:    Euromonitor International Consumer Survey; Out and About 2012.

Note:        Showing per cent of respondents who like to be pampered while travelling, by continent. Results shown give equal weight to 15 markets surveyed. “Latin America” includes: Brazil, Colombia, Mexico; “Europe” includes: France, Germany, Spain, Turkey, Russia, UK; “North America” includes: US; “Australia” includes: Australia; “Asia” includes: China, India, Indonesia, Japan.

It is worth noting that Spanish travellers also depart from the rest of the world in their preference for pampering while out of town. Spain shares many cultural similarities with Latin America and Spanish travellers are just as likely to appreciate a facial or another indulgence while on holiday as travellers from Brazil, Colombia and Mexico.

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April 17, 2014

Western European Phosphate Ban to Reward Innovative Formulations

Anaïs_MirvalAnalyst Insight by Anais Mirval - Ingredients Analyst

The 2010 phosphate ban in North America forced manufacturers of automatic dishwashing detergents to move away from sodium triphosphate, and this has not been without consequences. The performance of automatic dishwashing products has declined and the habit of using cheap automatic dishwashing powders and liquids is very much alive. Consumers are trading down while also adding automatic dishwashing additives to their shopping trolleys.

However, the impact of the 2017 phosphate ban in Western Europe could take another direction. With a wide range of new performing builders now available on the market, Western Europeans may not trade down and sales of automatic dishwashing detergents could even increase. Thus, glutamic acid diacetic acid tetrasodium salt (GLDA), methylglycine diacetic acid trisodium salt (MGDA) and trisodium citrates (TSC, TSA) are very much in line to benefit the most from the ban, even though product manufacturers remain sceptical about the potential of newly developed ingredients. 

Consumption of Automatic Dishwashing Detergents

Source: Euromonitor International

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Scenario Analysis of a Successful Modular Phone Project

MykolaGolovkoAnalyst Insight by Mykola Golovko - Senior Consumer Electronics Analyst

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On 15 April, Google Inc held its first of three planned developer conferences for Project Ara developers. The project is still in its early stages, with some of the most important issues set to be addressed in autumn 2014. The project timeline puts the phone’s launch in January 2015, but with things like regulatory and carrier certification, manufacturing and supply chain management, after market support, and OS support for a modular design still in the future, it is impossible to make any forecasts about the project’s commercial success and unit sales with any degree of certainty. What is clear is that any increase in ownership of modular phones will have an adverse effect on aggregate smartphone demand


Continue reading "Scenario Analysis of a Successful Modular Phone Project" »


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Recent Posts

UK Tea Tastes Turn Premium

A New Consumer Health Powerhouse: GSK and Novartis to Form a Joint Venture

Freshpet Rapidly Expanding in Mass-Market Retail in Canada

At-Home Soft Drinks Machines Should Focus On Variety, Not Replication

Chinese Economy: Stable and Sound? Or Slowing Dangerously?

Dishwasher Manufacturers Must Educate to Penetrate New Markets

Can Travel and Tourism in Iraq Pick Up Speed?

Latin American Travellers Prefer Pampering, Indulgence on Holiday

Western European Phosphate Ban to Reward Innovative Formulations

Scenario Analysis of a Successful Modular Phone Project