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February 25, 2015

LEGO Tightens Its Grip on Global Construction Toys

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

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As highlighted in our recent global company profile, LEGO, the world’s third biggest manufacturer of traditional toys and games, continues its dynamic expansion bolstered by the success of 2014’s The LEGO Movie. The world’s leading construction toys manufacturer was among the most dynamic toymakers in the world over 2009-2013, more than doubling its sales.

LEGO’s global strength is founded on its dominance of the construction toys category, in which it held a 65% value share in 2013. Construction toys accounted for 94% of the company’s global toys and games value sales during the year, with games and puzzles responsible for most of the remainder. However, LEGO decided to phase out its LEGO Games board game product line in 2013, judging that it did represent a sustainable fit with the company’s core long-term operations.

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Craft Crisps: Is Savoury Snacks Ready for the Craft Movement?

Pinar HosafciAnalyst Insight by Pinar Hosafci - Packaged Food Analyst

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ChipsFlamegrilled Aberdeen Angus. Red Leicester & Carmelised Onion. Parmesan, Asparagus & Truffle. These may sound like dinner meals but in fact they are just some of the many intricate flavours the crisps category is flooding with. Even for the classic vinegar flavour, the descriptions are hymns of gastronomic hyperbole:  “Modena Balsamic”, “Chardonnay Wine”, “Somerset Cider” and “Aspall Cyder”. Not only their names but also their packaging is becoming more sophisticated and gourmet-inspired. Tyrells Hand Cooked English Crisps is perhaps the most well-known brand in Europe but there are many more out there, increasingly emphasising their hand-cooked potatoes and the place of origin the salt or vinegar is sourced from (eg Anglesey Sea Salt). Recently, PepsiCo has expanded into gourmet snacks through the launch of Market Deli – premium priced thick-cut crisps made from selected potato varieties bearing no sign of the company logo on the pack bar a small statement reading “from the Makers of Walkers”. Is this emerging craft movement a fad or likely to be the next big thing in savoury snacks?

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February 24, 2015

2015 Outlook for Emerging Market Economies

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EMEs will face a diverging growth outlook in 2015, while continuing to lead the global growth momentum. Low fuel prices will benefit energy-importing countries thanks to savings to countries and consumers and narrow current account deficits, but it will depress the revenues of commodity-exporting emerging countries. Meanwhile, increased volatility in capital inflows and currency, and further geopolitical destabilisation in some countries/regions remain the major risks for EMEs.

Key points 

  • In 2015, annual real GDP growth in 25 key EMEs is forecast to increase by 4.4% (fixed US$ constant terms), marginally up from 4.3% in 2014. While growth is expected to pick up in some emerging countries thanks to falling oil prices and an improving US economy, fragilities in the global economy and existing weaknesses will affect other countries’ growth prospects;

  • Apart from global oil prices, China’s slowdown, the prospects of interest rate hikes in the USA and geopolitical risks are the major factors impacting the growth outlook of EMEs in 2015. China’s slower growth will have knock-on effects on commodity exporters, while a rise in interest rates in the USA will have immediate impacts on some emerging countries’ current account balances and currencies. Turkey’s current account deficit stood at 5.3% in 2014, down from 7.9% in 2013;

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Virtual Reality vs Augmented Reality

Matt HudakAnalyst Insight by Matt Hudak - Toys and Games Analyst

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As the video game industry continues to prepare for the arrival of virtual reality (VR) headsets in the next few years, a new headset device has just been unveiled that also has the potential to radically change the gaming landscape: Microsoft’s HoloLens. The new product is an augmented reality (AR) device akin to the Google Glass but is also radically different in many ways, capable of simulating three dimensional images in the real world. And while this product is likely some years away from entering the home it still gives rise to questions about the future of video games. Will we play in a virtual world or an augmented one?

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February 23, 2015

The Future of Ferrero: Possible Scenarios for the Confectionery Giant

Jack SkellyAnalyst Insight by Jack Skelly - Food Analyst

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Ferrero has been the subject of plenty of speculation this week, with much discussion regarding the future of the company. As a fiercely private, family-owned company, such conjecture is difficult to qualify.

However, there are a range of possible scenarios for the company. Across a series of reports, Euromonitor International will examine these scenarios, although, as with all predictions about Ferrero, they should be taken with a pinch of salt. Could Ferrero be acquired by another packaged food giant, which Nestlé was rumoured to be considering in 2013? Could the premium chocolate confectionery manufacturer actually look to consolidate its share by looking to acquire a rival? It is this latter question that will be the focus of this article, specifically with regards to Lindt.

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Macro Model Quarterly Forecast Update, 2015 Q1

Daniel SolomonAnalyst Insight by Daniel Solomon - Economist

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The global economic outlook for 2015-2016 presents a mixed picture. The Eurozone’s recovery remains weak, with Italy re-entering a recession at the end of 2014 and slower than expected growth in Germany and France.  Eurozone growth is expected to reach 1.1% in 2015 and 1.6% in 2016. Japan’s economy is expected to barely grow by 0.3% in 2015 after entering a technical recession in the 3rd quarter of 2014. The US and the UK are expected to continue their relatively strong expansion in 2015, with GDP growth of 3.3% and 2.5% respectively.

China is expected to slow down towards an average growth rate of 6% in 2017-2021. India is expected to rebound in 2015-2016 towards an annual growth rate of 6.4% in 2017-2021. Meanwhile our outlook for Brazil has worsened yet again with 0.5% growth in 2015, followed by below average growth of 1.7% in 2016. Russia is now expected to spend 2015-2016 in recession with output falling by 3.8% in 2015 and by another 0.4% in 2016, and the risks are heavily tilted to the downside.

In the rest of this report, we take a closer look at the economies of the US, Eurozone, China, Japan, Russia and the UK. In this report, we have also started to publish long term potential growth rate forecasts for 2022-2030.

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February 22, 2015

Can Expo 2015 Feed the Economic Recovery in Europe?

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With the theme ‘Feeding the Planet, Energy for Life’, Nutrition will be the central focus at Expo 2015, the world exhibition that will take place in Milan from May to October 2015. The event will see pavilions organised by more than 145 countries together with international organisations and corporate entities exhibiting new ideas and projects themed around food sustainability and nutrition. The event, thanks to its scope and size, represents an opportunity both for Milan and for the broader European economy.

The previous edition of the event was held in Shanghai in 2010. The legacy for China was that the event boosted the international visibility of the country and changed the perception of China from being just the “workshop” of the world and showed that among Chinese consumers there is a sizeable middle-to-affluent class capable of turning China into an export market for foreign goods.

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Further Insight into Coca-Cola’s Q4 Challenges

Howard TelfordAnalyst Insight by Howard Telford - Senior Beverages Analyst

Both Coca-Cola Co and PepsiCo made their fourth quarter and full-year results public last week. At the top-line level, these results offer a mixed bag to analysts and investors. On the positive side, both companies beat quarterly market expectations in terms of profitability. On a more negative note, earnings and volumes were weak in developed market beverages and both companies had to lean on diversifying their respective category portfolios and strengthening emerging market presence in order to secure and defend global pockets of growth.

Last week, I discussed four challenges for Coca-Cola ahead of its reported results. Perhaps the most immediate strategic concern among these challenges is the risk of a general slowdown in these emerging markets, and the loss of valuable positions in these growth regions to either local players or larger, multinational competition:

“Is share performance in these vital growth markets holding up, or is the company losing ground to domestic players, particularly brands with value positioning?”

Euromonitor International’s Competitive Analytics tool allows us to better visualise the importance of emerging markets to Coca-Cola’s recent volume growth strategy over 2008-2013 – and the very real, specific dangers that an emerging market slowdown in 2014-2015 would pose to the company’s strategy.

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February 21, 2015

Brands Turning the Tables on Consumers and Reviewing Them Too

Daphne KasrielAnalyst Insight by Daphne Kasriel-Alexander - Consumer Trends Consultant

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Perhaps it was just a question of time before being critical of brands became a two-way street and brands got the chance to rate consumers in the sharing economy. Two high profile examples of hosts rating guests are home-sharing service Airbnb and ride-sharing app Uber, but there are many more.  It’s significant that this more commonplace phenomenon of brands rating customers is impacting on their future buying opportunities, rather like a bad credit rating. Emerging studies already show that consumers are much more cautious about negatively rating their consumption experience if this ‘feedback’ is enabled. Other brands are making their impressions of the customer integral to the service offered. 

Part and parcel of the sharing economy?

London financier,  Mr. Kanji, was upset to learn that he had a lower passenger score as he feels his requests as an Uber passenger were all reasonable ones. He told the New York Times:  “I’ve asked drivers to turn up or down heat, to not play music loudly, or to roll up windows” – however he found that he was unable to get a ride for three weeks as drivers preferred not to serve him.  

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Lecciones de lujo: Lo que puede aprender el fast fashion en México

Amanda BoulierPor Amanda Bourlier, Analista de investigación en Euromonitor

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En los últimos años, México se ha visto inundado por la entrada de marcas internacionales de ropa de precios estándar y bajos. El año 2012 entraron al mercado mejicano Forever 21, Express, Stradivarius y H&M, mientras que 2013 vio la entrada de tiendas como Under Armour y American Eagle Outfitters, así como también el lanzamiento de tiendas propias de Banana Republic. En contraste, todas las tiendas de lujo monitoreadas por Euromonitor International en México, han estado en el país desde 2008, con la excepción de Miu Miu (2012), y Tag Heuer (2013). A pesar de las diferencias de posicionamiento, precios y consumidor objetivo, las marcas de moda rápida pueden aprender algunas cosas de las exitosas estrategias implementadas por las marcas de lujo que tienen más tiempo y experiencia en México.

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