Recovery in the West, Deterioration in the East

The first quarter of 2010 shows a positive trend in nominal value growth rates in most countries, which was driven primarily through volume growth improvement. France’s 2.4% year-on-year nominal value increase was the result of inflation while Portugal’s 4% volume growth and Spain’s 3% volume growth can both be attributed to a decline in deflation. Hungary and The Czech Republic were the poorest performers in the region, reporting nominal value declines of 3.5% and 3.2% respectively.

With a marginal reduction in shopping trips in the first quarter across Italy and Germany and flat overall spending per trip in the top five European countries (Germany, Italy, France, United Kingdom and Spain), shopping behavior is stable, but shows no significant improvement.

However, the economic turmoil reached Eastern Europe with a 12-month lag. In the latter part of 2009, these eastern markets severely deteriorated with volume decreases occurring in Latvia, Lithuania, Russia, Serbia and Ukraine. Albania, Bosnia and Macedonia remain the positive exceptions. With this sudden and delayed worsening in the east, a steep upturn will now be necessary to return to full recovery.

Europe Total View Q1 2010

Positive Growth Trends
Across Europe, nominal value growth continues to climb, increasing to 4.1% in the first quarter of 2010, a 1.2 percentage point gain over the fourth quarter 2009. The steady gain in volume coupled with latter unit value growth has kept Europe on an uphill trend with momentum continuing to build from the low point in the third quarter of 2009 when nominal value plunged to 2.6%.

The volume growth rate accelerated in most countries: Norway (7%), Finland (5%), Sweden (4%), Portugal (4%), Slovakia (4%), Austria (3%), Ireland (3%), Italy (3%), Spain (3%), Belgium (2%), Poland (2%), Switzerland (2%), Denmark (1%), France (1%), Germany (1%), Netherlands (1%) and U.K. (1%). Both volume and unit value declines were reported in Hungary, Czech Republic and Greece.

Country Analysis—A Divided Europe
The latest quarterly Europe Growth Reporter measuring volume and value sales in the fast moving consumer goods industry across markets in Europe is showing encouraging signs of improvement with all but four countries measured recording positive volume trends, which have helped drive increases in nominal value growths across the region. Unit value, however, shows an even split, with increases reported in eight countries and declines shown in eight. Four countries report flat unit value.

Turkey shows the most significant spike in unit value, increasing 21% since last year, which has unsurprisingly lead to volume decline (-1%). Russia has experienced double digit growth in unit value (+11.4%) once again and here volume declines remain significant (-7.2%), though they are slightly improved from Q4 2009 (-8.7%). The Nordic countries of Norway and Finland report the greatest increase in volume, rising 7% and 5% respectively, driven by deflation in Finland and low unit value growth in Norway. Sweden also reported low unit value growth although volume growth was lower here at +4%.

About the Nielsen European Growth Reporter
This report compares overall market dynamics (value and unit growth) in the fast moving consumer goods sector across Europe. It is based on the sales tracking Nielsen performs in every European market, and covers sales in grocery, hypermarket, supermarket, discount and convenience channels.

The report is based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels, and this edition reports on week two of 2010 through to week 14 of 2010.

Overall, the active unique audience to social networks grew nearly 30%, from 244.2M to 314.5M in the last year. In the U.S., the average active unique audience grew to 149.M from 115M in February 2009.

Across the 10 countries measured, Facebook drew the largest active unique audience globally and claimed nearly three times the sessions per user of MySpace, the next closest network. Facebook users also spent more time per session, logging nearly six hours per user across the globe.

Jean-Jacques Vandenheede, European Business Insight Director

SUMMARY: Drawing on Nielsen’s unique data assets and geographical footprint the European Growth Reporter compares overall market dynamics (value and unit growth) in the Fast Moving Consumer Goods sector across Europe.

Based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels, the fourth quarter 2009 shows nominal growth, which has remained stable since the prior quarter, and around 3% for four consecutive quarters.

The fourth quarter of 2009 has shown nominal growth at 2.9%, a stable growth rate hovering around 3% for the year, once again outperforming the United States which ended the year with a 0.6% nominal growth rate. European inflation remained low at 1.3% in the fourth quarter. Deflation held at the -5% level in Slovakia, Finland and Portugal.

Europe experienced higher volume increases in 2009 than the prior year, increasing by 0.6% to 1.6% in the fourth quarter. Volume growth is accelerating in Austria, Finland, France, Ireland, Norway, Spain and Turkey.

The Big 5 European economies (France, Germany, Italy, Spain, United Kingdom) ended the year at various stages of recovery. France and Spain recorded solid volume improvements while Germany and Italy stayed close to the zero line. Value growth in the United Kingdom reached the 5% mark with 3% points of this coming from volume increases.

By year end, 2009 performance delivered better volume growth than 2008. The best volume improvements came from the United Kingdom, Sweden, France, Austria and Germany. Offsetting those gains were volume losses recorded in Switzerland, Slovakia, the Czech Republic and Poland.

Total European View

Nominal Volume Growth
Across Europe, nominal volume growth inched up to 2.9% in the final quarter of 2009, gaining 0.3% point over the third quarter. This small gain in volume places European volume growth ahead of the United States which saw volume drop by -1.2% in the fourth quarter.

The volume growth rate is accelerating in the following countries: Austria, Finland, France, Germany, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Turkey and the United Kingdom.

The Big 5 European economies are showing a mixed picture. While France, Germany, Spain and the United Kingdom recorded volume gains over 2008, Italy lost ground.

Ireland, Slovakia, Hungary and the Czech Republic recorded the greatest volume declines in 2009.

Value Growth
Unit value growth fell precipitously from 5.7% in 2008 to 1.5% in 2009, underperforming the prior year in every single quarter of 2009, reflecting slowing inflation and price compression implemented at retailers as a result of economic pressures.

Country Analysis—Western Europe
The latest quarterly Europe Growth Reporter measuring volume and value sales in the fast moving consumer goods industry across markets in Europe is showing encouraging signs of improvement with more than half the countries measured recording positive volume trends. 2009 volumes increased to +1.7% in 2009 from 1.1% growth in 2008. This is still some way from 2007’s 3% growth rates; a slow but steady improvement.

As the chart above demonstrates, the leading Western European growth countries in fourth quarter 2009 were Turkey, Norway, the United Kingdom, Poland, Sweden, France, Austria, the Netherlands, Belgium, Spain and Switzerland.

About the Nielsen European Growth Reporter
This report compares overall market dynamics (value and unit growth) in the Fast Moving Consumer Goods sector across Europe. It is based on the sales tracking Nielsen performs in every European market, and covers sales in grocery, hypermarket, supermarket, discount and convenience channels.

The report is based on the widest possible basket of product categories that are continuously tracked by Nielsen in each of these countries and channels, and this edition reports on week 41 of 2009 through to week 52 of 2009.

“While these results are encouraging, consumers in most parts of the world remain cautious about spending their money, and are increasingly moving to value channels.  At the same time, retailers are selling more on promotion.  It’s likely these trends will continue until economic recovery has solidly taken root,” said James Russo, Vice President, Global Consumer Insight at The Nielsen Company.

Nielsen Economic Current Key Indicators
Country	Trend	Aug-09	Sep-09
Brazil		1	1
Canada		2	2
China		2	2
France		3	2
Germany		3	4
Hong Kong		2	2
India		1	1
Italy		3	3
Spain		3	3
Taiwan		3	1
United Kingdom		2	2
United States		3	3
Source: The Nielsen Company 1=Very Strong Growth >/= +5%; 2 = Growth between +1 and +4%; 3 =Neutral Between -1 and +1%; 4 =Negative between -1 and -4%; 5 = Very Negative

Country by Country Highlights

• U.S. – Consumers continue to be skittish about the recovery and their willingness to spend money.  Store brands, value channels and buying on promotion all showed growth as manufacturers continued to step up incentives and deals.
• Canada – Volume and value sales grew in September 2009, with strong growth in the number of retailers selling on promotion.  Unit sales rebounded as price increases stabilized at 2 percent.
• France – Volume and values sales showed some growth, but with confidence dropping in the September survey, French shoppers actually reduced their shopping frequency.
• Germany – Volume sales remained neutral, while value sales recorded a small decline.  Germans continue to watch their Euros as their confidence in the economy has dipped.
• U.K. – Volume sales improved, and premium brands returned to growth.  Consumers were taking advantage of the strong promotions on offer, shopping more frequently and spending more per trip – despite slightly decreased consumer confidence.
• Italy – Italian consumers cut back the frequency of their shopping trips, but spent more per trip, taking advantage of retailer promotions and switching to store brands.  Volume was up, but value sales were down.
• Spain – Spaniards remained neutral in their spending habits, but did start shopping more frequently for the first time in nine months.
• Brazil – All indicators show that Brazil has returned to levels prior to the global economic crisis.  Volume and value sales were up, and shoppers were feeling confident: shopping frequency and spend per trip both increased.
• India – Volume and value sales indicators each posted better than 5 percent growth, and Indians are feeling very optimistic about the economy and finances.
• China – While retail sales were relatively flat, growth is now apparent in modern trade outlets, which may be the first sign of fast moving consumer goods sales recovery.
• Taiwan – Volume and value sales increased solidly for the first time in nine months.
• Hong Kong – Increased consumer confidence has driven growth of volume and value sales.

The Buzz
In an analysis of blog buzz in seven countries, Nielsen found that online discussions about the global recession have leveled off as consumers have accepted the “new normal.” At the same time, however, mentions of recovery have not gained traction, and actually declined in the most recent week reviewed.

“It seems as if people are accepting the new reality of an ever present recession, which through our analysis of online buzz illustrates that despite a dip in recession discussions in the spring, that they have now leveled off but not subsided completed. Perhaps it is not on the front burner for all consumers as it was in 2008 thru mid 2009, but definitely still on the back burner where it continues to impact consumer decisions,” concluded Russo.

• Download the Nielsen Economic Current.

According to Nielsen’s latest European Growth Report, the third quarter of 2009 has shown nominal growth at 2.4%—the lowest growth over the past 18 months. Inflation is decelerating, recording a low 1.4% in the third quarter. The inflation rate almost halved compared to the start of the year and is down 0.8 points compared to the second quarter 2009. Deflation has been recorded in 10 markets.

Europe experienced a modest volume growth of 1% in the third quarter, down 0.9% compared to the prior quarter. However, this growth is still ahead of the United States. Volume growth rate is accelerating in the nine countries.

The Big 5 European economies (France, Germany, Italy, Spain, United Kingdom) are showing a mixed picture. Several Eastern European countries (the Baltics, Bulgaria, Croatia, Czech Republic, Ukraine) report a severe volume growth drop over the summer.

Emerging optimism?

Consumer confidence sees a significant rise globally as shown in the latest Nielsen Global Consumer Confidence survey.

Consumer Confidence rose in 45 out of the 52 countries compared to six months ago. After hitting its lowest point of 77 index points in April, confidence began to recover due to massive global stimulus plans in the second quarter.

Nielsen’s latest survey, which polled 30,500 online consumers in 54 countries in early October 2009, showed that global consumer confidence is rebounding, jumping 9 index points in the last six months to 86 since the Q1 2009 survey. Brazil and key Asian markets are posting double-digit increases in consumer sentiment, while the U.S. recorded its first increase in consumer confidence since 2007. Despite this renewed sense of optimism, actual behavior remains restrained; many consumers remain skittish about spending their money, and in some countries, spending habits appear to have changed permanently. Hong Kong posted the largest consumer confidence increase in the third quarter compared to Q2, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points).

Total European View

Nominal Volume Growth

Growth has been upheld by continued modest volume growth of +1% for the third quarter of 2009. Although this is a decline of 0.9% compared to the second quarter, European volume growth is still ahead of the U.S.
The volume growth rate is accelerating in the following countries: Austria, Belgium, France, Netherlands, Norway, Portugal, Spain, Sweden, and the U.K.

The Big Five European economies are showing a mixed picture. While Italy and Germany are experiencing deflation and volume decline, continued volume increases are occurring in France, the U.K. and Spain (which is offset by slowing inflation).

Several Eastern European countries report a severe volume growth decline over the summer. Ukraine and Bulgaria have had double digit inflation, Croatia and the Czech Republic are experiencing deflation, and a difficult economy has hit the Baltics.

Value Growth

Unit Value growth continues to fall, dropping to 1.3% in the third quarter. This is a significant reduction compared to the highs of Q3 2008 when it reached 6.4%.

Country Analysis – Western Europe

The latest quarterly Europe Growth Reporter measuring volume and value sales in the fast moving consumer goods industry across markets in Europe is showing encouraging signs of improvement with more than half the countries showing positive volume trends.

As the chart above demonstrates, the leading Western European growth countries are Turkey, Norway, Poland, Sweden, the Netherlands, the U.K., and Austria. After a remarkable Q2 recovery, Poland demonstrates a significant drop in volume and nominal growth in the third quarter. After four consecutive negative quarters, France’s volume growth is positive, recording 0.6% for the quarter. Ireland continues its overall negative trends, and Portugal, Spain, and Switzerland all see negative price growth in the third quarter.

Country Analysis—Central and Eastern Europe

The chart above demonstrates growth rates for countries in Central and Easter Europe. Ukraine’s rampant inflation continues, with a unit value growth of 27% (an improvement over last quarter’s 31%) and volume growth at -8%. Bulgaria is experiencing double digit inflation, while Croatia is seeing deflation, and the Baltics (Estonia, Latvia, Lithuania) are facing a difficult economy.

• Download Nielsen’s European Growth Report

In the U.S., consumers remain skittish.  Shifts to private label brands continued at a strong pace, as they have for the last eight months, while consumers are shopping less frequently and spending less per trip.  Canadians, on the other hand, are spending more per trip, and are taking advantage of retail promotions.  Unlike in the U.S., private label brands are struggling to gain share as national brands step up promotional activity.

In Europe, the French remain relatively unchanged in their shopping.  Value channels continued to see growth and more retailers were selling on promotion, leading to a modest increase in the amount spent per trip.  Germans showed very little change in the number of shopping trips they took, nor did they increase or decrease how much they spent.  Unit sales increased, however.  In the UK, sales volume improved slightly from the previous month, while budget store brands’ growth slowed as consumers began returning to premium brands.  British shoppers were also spending slightly more per trip.  Italians continued to move to store brands and value channels, although they were reducing their shopping frequency.  Spaniards, who have been among the most optimistic, have not seen that reflected in spending.

Brazilians showed an 8 point surge in optimism, and this translated into more frequent shopping trips and higher sales, in both volume and value terms.  Hong Kong and China both showed growth in sales, but Taiwan showed declines, and optimism there was among the lowest in Asia.  Indian consumers’ confidence was high, and volume and value sales both increased by more than 5 percent.

“While things are starting to look up, it’s clear that Americans and Western Europeans aren’t quite convinced that recovery has taken hold and remain cautious when it comes to shopping.  The labor market is clearly affecting this behavior.  It comes as little surprise that Brazil, India and China – countries that have generally been less affected by the global recession – are among the first to see renewed consumer confidence and sales growth,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.

The Buzz

While the idea of recovery hasn’t opened up global consumers’ wallets quite yet, it has started to infiltrate their discussions on the Web.  In June, 71 percent of survey respondents thought that their countries were in recession, an improvement from the 77 percent who thought the same in April.  Additionally, 26 percent believed that their country will be out of a recession in the next twelve months, up three points from April.  Global recession buzz has declined 27 percent since March.  In July, however recessionary buzz perked up, primarily in Western Europe.

“We are likely to see an overall downward trend in recession discussions, but it will be choppy until consumers really feel as if they are experiencing the recovery,” said Russo.

Download the latest Nielsen Economic Current.

A Link Between Buzz And Spending

For the latest Economic Current, Nielsen tracked online discussions about the economy and found that since mid-March 2009, recession buzz has dropped 47 percent in the U.S., UK, Germany, Italy, Spain, Australia and New Zealand.

“Globally, Nielsen is tracking online discussions related to the recession and when the recovery may emerge. While discussions about the recovery are still quite low, we have seen that the public is talking less about the recession — often dramatically less,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company.

“In the U.S., we found that recession discussions have dropped since hitting a peak in January.  There appears to be a strong correlation between what consumers are saying in discussion groups and their subsequent actual purchase behavior.  From the end of 2008 to March 2009, when recession discussions were highest, we found that sales actually declined by 2.3 percent.  From mid-March to early June, as recession chats dropped, we found that sales actually showed a modest increase,” continued Russo.  “This is an important dynamic as we look to signs of a sustained recovery, and Nielsen will be at the forefront of this research.”

Noteworthy Highlights

• After showing some positive movement in April, U.S. consumers pulled back on shopping and how much they spent per trip. Meanwhile, the shift to value channels such as supercenters, club and dollar stores continued, as did the move to private label store brands.
• Canadians are slightly more optimistic than their southern neighbors. While they aren’t shopping any more frequently than before, they are spending more per trip. But like Americans, Canadians are also turning to private label store brands and value channels.
• Western Europe remained in a neutral position. Some countries’ consumers shifted to value channels and store brands, but they generally reduced the frequency of their shopping trips and spent no more, or in some cases, less than in previous months.
• Brazilians were the most positive of the lot, with consumers shopping more frequently.

Download the latest Nielsen Economic Current.

According to a survey conducted by Nielsen, six in 10 Chinese plan to travel between September 29 and October 5 for Golden Week, while just 42% of Chinese reported making plans to travel this past February for Chinese New Year celebrations. 

More than half of those surveyed by Nielsen said they plan to travel within China, while about 10% were considering an overseas trip.  One-third of the respondents, surveyed between September 22 and 23, had not yet decided how to spend the holiday week.

Among those planning to travel internationally, Hong Kong was the most popular destination — with half of those traveling abroad claimed to be visiting the city.  Singapore (29%) and Macau (26%) were the second and third most popular destinations.  France (16%) and Taiwan (14%) also made Nielsen’s list of top holiday travel destinations.  

Within China, Dalian (20%) and Beijing were the most popular destinations, according to Nielsen.

Nielsen’s survey interviewed 2,000 Chinese Internet users nationwide.

View the full press release.

Consumers in the Asia-Pacific region, for example, are more inclined to save than to splurge if they have spare money, while Russian consumers pump their extra cash into expanding their wardrobe, according to Nielsen.

Meanwhile, people in Nordic countries continue to spend money on travel and vacations, while Brazilians are happy to stay home.

Discretionary income has also become increasingly scarce in countries throughout Europe and North America, according to Nielsen.  One-fifth of those surveyed by Nielsen in Britain, Germany, and France — and a quarter of Americans — have eliminated spending money for pleasure, The Economist noted.

Still, some small luxuries have remained immune to the economic gloom: 80% of Americans are continuing to shell out $10-$12 per ticket to catch movies on the big screen, Nielsen found.

Mobile users who own multiple SIM cards are likely to spend more money on their mobile service, the findings also show. 

A French consumer who owns 3 SIM cards, for example, will spend 28% more, on average, than a consumer with a single SIM card.  Elsewhere in Europe, the numbers are even higher: +51% in Italy, +52% in the UK, +79% in Spain, and + 89% in Germany.

“The additional revenue brought to the operators by consumers who own multiple SIMs is significant,” Jean Littolff,  Director, Europe, Nielsen Mobile noted. “The more SIM cards you own, the more money you spend.”

Nielsen’s report is based on a quarterly survey of 42,000 European customers.

View the full press release.