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August 21, 2014

In Focus: 70% of Households Globally will be Urban by 2030

Urbanization-HeaderAnalyst Insight by Media Eghbal - Head of Countries Analysis

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The importance of urbanisation at a global level cannot be underestimated as it is transforming the world we live in. Euromonitor forecasts that by 2030, 70% of households worldwide will be in urban areas and that the growth in urban households globally is faster than that of total households, highlighting where the investment opportunities lie. This shift in household dynamics corresponds to changing population structure where we expect 60.2% of the world’s inhabitants to be urban dwellers in the same year. There will be an extra 598 million urban households in 2030 compared to 2010 although the corresponding trend of smaller households is also driving household numbers upwards. Urban consumers enjoy higher incomes than their rural counterparts with a leaning towards higher skills and educational attainment, so urbanisation results in greater consumer market gains. Despite obvious growth opportunities, the rise in the number of cities is accompanied by numerous challenges, especially when it is unplanned.

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Big Data: What’s the Big Deal?

Pavel_MarceuxAnalyst Insight by Pavel Marceux - Technology, Communications and Media Contributing Analyst

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The digitalisation of business and consumption brought on by the widespread use of the Internet has created a dilemma for companies: what to do with all that data? The concept of Big Data has been borne out of this excess information lying on servers, devices and web pages across vast networks and mainframes. The growing realisation that data can actually be harvested, monetised and strategised is the underlying ideology behind the implementation of Big Data, which is creating entire industries and offering businesses additional revenue streams from previously dormant sources. Opportunities in Big Data are considerable, but strong human and capital resources are necessary to organise and utilise it accordingly.

Broadband Business Use and Population Internet Penetration in Selected Economies: 2013

Source: Euromonitor International from UNCTAD/Eurostat/International Telecommunications Union/OECD/national statistics

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The Four Aspects of PayPal’s Current Growth Strategy

Michelle EvansAnalyst Insight by Michelle Evans - Senior Consumer Finance Analyst

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When PayPal launched in 1999, online card payments were still a challenge for many merchants. PayPal’s great breakthrough was determining how individuals and businesses could more easily accept money over the web. PayPal’s founders figured out early on that it could make a decent profit in this low-margin business of processing transactions if it could encourage enough users to fund PayPal payments via bank accounts rather than financial cards.

In time, it was speed, convenience and security that made PayPal’s online platform popular, especially among eBay’s small-time sellers. PayPal went public in 2002, and immediately its market value skyrocketed. Within a year, eBay, which once dominated the e-commerce market, bought the start-up for US$1.5 billion, as it realised PayPal was squeezing out its own in-house payment option.

The core component of PayPal’s strategy today still hinges on this online platform that dates back to its roots. Today, the online platform enables its 150 million registered users to send money in 26 different currencies to over 200 countries and territories. Over time, PayPal has also moved into other aspects of financial services, including consumer credit, mobile card acceptance and even card issuance.

Even so, PayPal, which dominated the e-commerce storyline a decade ago, now finds itself fighting to stay relevant as consumers shift their focus to the emerging mobile channel. PayPal today is in the more established role as payment incumbent, facing increased competition from younger start-ups. The entire payments landscape today is filled with innovative start-ups all are aiming to solve problems while siphoning a portion of the payment transaction fees from more established players like PayPal.

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August 20, 2014

Asian Fast-Fashion Conquers Spain

Jorge MartinAnalyst Insight by Jorge Martin - Contributing Analyst

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With consumers in Spain suffering sky-high unemployment rates, record low consumer confidence levels, and enormous public spending cuts – stretching already fragile domestic budgets – consumers have to be more cost-conscious than they’ve ever been in the past. Ironically, this has run parallel to the arrival of modern retailing concepts, such as e-commerce and Asian fast-fashion, which has challenged the existing status quo, and has given consumers in Spain the ability to better shop and compare.

The internet, enabling e-commerce, was first key in allowing consumers the opportunity to better compare prices, giving them the chance to buy top brands at cheaper prices and to have access to lesser known ones. The impressive success of Privalia, Asos, La Redoute, and many others, showed that the traditional clothing and footwear retailer was now being challenged by a new class of competitor.  In response, Inditex, and other mid-priced fast-fashion giants, quickly opened their own online store, despite their ubiquitous presence on the Spanish high-streets.

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August 19, 2014

Who is Winning the Global Battle for Accessories Sales?

Sulabh MadhwalAnalyst Insight by Sulabh Madhwal - Personal Accessories and Eyewear Analyst

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LVMH, Richemont and Swatch Group continue to lead overall personal accessories, but the dynamics are changing in individual categories. We discuss the state of global competition as seen through the new edition of personal accessories published on 11 August 2014.

Top Three Lose Ground in Bags and Luggage

The respective market shares for LVMH, Kering (formerly PPR) and Coach all declined between 2012 and 2013. This was not only due to the slowing demand for luxury brands across the world, but also the rise of leading competitors such as Michael Kors, Samsonite and Prada Group.

Global value sales for bags and luggage will grow at a CAGR of 4% over 2014-2019, with luggage and business bags spearheading growth. Although handbags will remain by far the biggest category in 2019, the growth potential for luggage and business bags is likely to inspire several marketing efforts targeted at the male population.

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Wine Demand Shifts from Mature to Developing Regions

Karine.DussimonAnalyst Insight by Karine Dussimon - Senior Packaging Analyst

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The future of packaging for still light grape wine is rather positive. By 2018, global retail demand is set to rise by a 2% CAGR to reach 20.3 billion units. Yet it is also going through rather revealing changes. While the ‘Old World’ continues to dominate still wine consumption in glass bottles in 2013, Western Europe is predicted to see a decline and glass is finding a new lease of life among developing regions. Asia Pacific holds some of the best opportunities for packaging and closure unit volume increase in still red wine but also white and rosé. 

A Seemingly Homogenous Market

Demand for still light grape wine packaging is on the rise, globally. Still wine packaging also remains rather concentrated in format, with the ubiquitous 750ml glass bottle and cork representing the bulk of volumes. Glass holds a share of 85% of the entire category; a characteristic which comes to a great extent from the traditions of wine production and consumption in the Old World. Western Europe still accounts for 49% of global wine packaging sales in 2013. This homogeneity in the market for still wine packaging and closures is not expected to change in any drastic manner through to 2018; yet there are some areas of diversification in evidence.

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August 18, 2014

Smaller Packs for Bigger Sales? Part Two: The Importance of Pricing

James MaddockAnalyst Insight by James Maddock - Packaging Analyst

In part one of Smaller Pack for Bigger Sales? some of the arguments relating to the value of lower-income consumers in emerging markets were explored. In part two, we will look at the importance of pricing and the role packagers can play in this. Although there are a number of challenges to overcome when it comes to connecting with lower-income consumers in emerging markets, packaging manufacturers are in a good position to deal with the key issue of affordability

Affordability a Key Concern for Packagers, Consumers and Brand Owners

Goods must be packaged in a reasonable pack type and size in order to meet the household budgets of low-income consumers. For example, although it may be commonplace for UK shoppers to buy milk in a four-pint HDPE bottle, such a size would represent a considerable outlay for both a consumer and a small retailer in a developing country.

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The Rich World of Emerging Markets

Sarah-B-Banner

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High-income earners in emerging economies are a diverse group and what constitutes a high income is dramatically different across countries. The relative wealth of the highest earners, when compared to low and middle income consumers within their own countries, can also be poles apart. Winning over this group can be crucial for market success particularly in categories such as transport, education and hotels and catering where they dominate consumer spending.

A Seven-Fold Difference

Looking at the disposable incomes of decile 10 households – the highest earning 10% of households – across the world’s largest 20 emerging markets, reveals stark differences.  The richest of the rich are in Saudi Arabia where decile 10 incomes are more than 7 times higher than the rich in Pakistan, the lowest-earning decile 10 households in this ranking. A decile 10 Pakistani household earns US$17,332 which places it on a par with the lowest earning 20% of households in the USA.

Average Disposable Income of a Decile 10 Household in the World’s 20 Largest Emerging Markets: 2013

SB1

Source: Euromonitor International from national statistics

Note:  Deciles are calculated by ranking all of the households in a country by disposable income level, from the lowest-earning to the highest earning. The ranking is then split into 10 equal sized groups of households. Decile 1 refers to the lowest earning 10%, through to Decile 10, which refers to the highest earning 10% of households.

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August 17, 2014

Tata’s State of Play in Global Coffee and Earth Rules Acquisition

Hope.LeeAnalyst Insight by Hope Lee, Senior Beverages Analyst

Tata Global Beverages Ltd’s (TGBL) global ambitions are clear and well laid out. The company is aggressively acquiring and building a comprehensive beverages portfolio through both the extension of existing core brands and new brand acquisitions. Geographical expansion was also a priority from previous acquisitions. The company aims to achieve revenues of US$5 billion by 2015. This is achievable if it sustains its rapid expansion. TGBL’s long-term corporate goal is to become a major player in tea, coffee and bottled water. While the company is already a leading player in tea globally, it would take many years to replicate that position in coffee if relying solely on organic growth over the medium term. Its recent acquisition of Australian company Earth Rules is a positive move in this direction. Bronski Eleven Pty Ltd Australia was the holding company of Earth Rules Pty Ltd. However, the country’s limited growth potential may have an insignificant impact on TGBL’s global coffee position unless it expands its newly acquired business to other countries.

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Mobile Travel Agencies: Next Game-Changing Business Model in the Travel Industry?

Angelo RossiniAnalyst Insight by Angelo Rossini - Travel and Tourism Contributing Analyst

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The shift from desktop to mobile internet access is having a significant impact on the travel industry making smartphones and tablets an important booking channel, as well as customer service tool. This technological shift is affecting travel companies, and online travel agencies in particular, resulting in the development of their mobile services and even of mobile travel agency (MTA) business models, which Euromonitor International was the first market intelligence firm to analyse.

The development of mobile travel services and of mobile travel agencies in the next few years is expected to result in a change, and possibly strengthening, of the role of online travel intermediaries, which will need to provide real time assistance to their customers and will expand their reach to the booking of further tourist services and activities.

 

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