EM Consumers Prefer Local Brands Over International Brands

August 06, 2018 |Author: Edward Kerschner, CFA | Categories: Chart of the Week, Emerging Markets

 
  • Global middle class. The global middle-class market now is composed of two distinct components: a slow-growing developed country middle class and a fast-growing emerging economy middle class. This is demonstrated by the fact that the European and North American middle class is stagnating, while China and India represent an increasing share. This barbell picture is happening while the overall global middle class is growing faster than estimates, powered by emerging market economies. In total, there were about 3.2 billion people in the middle class at the end of 2016, 500 million more than previously estimated.1
  • Local brands preferred. Foreign brands have historically enjoyed some degree of distinction, particularly in luxury segments. However, within many emerging markets more consumers now prefer to buy domestic products. For example, Indians favor local brands by almost a 4-to-1 margin. This preference for local brands is also strong among Indonesians, Brazilians and Filipinos,2 as well as Chinese.3
 
Sources:
1 Kharas, “The Unprecedented Expansion of the Global Middle Class,” Brookings Institution, February 2017 
2 Ogilvy & Mather, June 2016, "The Velocity 12 markets"
3 Bain & Company Inc, 2017, "China’s Two-Speed Growth: In and Out of the Home"

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