Nielsen recently released a comprehensive study about the spending and media habits of women across 21 developed and emerging countries. At the Nielsen Consumer 360 conference in Frankfurt Germany, new findings about the women of Germany were revealed.

Plateau of Hope
While the majority of German women believe they have more opportunities than their mothers did, there is plateau of hope when it comes to expectations for their daughter’s future. Less than one-third of German women believe their daughters will have more opportunities to travel (29%), to buy the things they want (32%) and need (30%), to define their career (38%), or to pay off debt (20%).

Spending Patterns
One in three (31%) German women expect they will achieve positive income growth over the next five years. This is more than in France where only one in four women believes the same, but less than the average of women across other developed countries (55%). “However, German women long for things that allow for ‘me time’; that create comfort in their lives,” explains Sarah Auer. “To fulfill their need states, women need breathing space amidst the different roles they fulfill throughout their lives.” German women would therefore spend any income gain primarily on holidays (70%), clothes (59%), food (52%) and savings (47%). Only one in five (22%) said they would spend extra money on their children’s education.

These percentages contrast sharply with women across other developed countries – especially when it comes to holiday spending: 58 percent of developed women agreed that they would spend additional income on holidays, but 53 percent would instead buy clothes and 55 percent would save the money.

“Less than 10 percent of all food purchase decisions are decided by men,” explains Sarah Auer from Nielsen. “The point is the ‘feminization of money’, with women of today and tomorrow ready to exert their economic power – and not only in traditional areas of female spending.” German women exert more control over spending in typically male-dominated industries when compared to the global average for other developed women. Seventeen percent of German women make decisions on personal electronics spending – double the average among women in other developed counties (9%) – 14 percent on cars and home electronics (compared with 6% and 9% respectively), 19 percent on insurance (compared with 13%) and 22 percent on family finances (compared with 15%).

What Women Trust
By far, German women trust recommendations from people they know (72%) more than any other source of information. Consumer opinions posted online (55%) and editorial content such as newspaper articles (38%) round out the top three most trustworthy sources, which is consistent with the average for other developed women around the world. German women are more reticent to trust text ads on mobile phones (42%), ads on mobile devices (38%) and ads on social networks (36%), which is also in sync with the global average.

Advertisers, however, who offer real value exchange above and beyond traditional sell-to messaging, can generate exceptions. Here the key is to understand womens’ different needs, tailor messaging and where necessary adapt strategies to appeal to this discerning and highly influential population segment.

When it comes to the most important attributes when deciding what stores to shop in, German women place “good value” highest when shopping for items across all industry sectors: food, beverages, apparel, home/personal electronics Rx and cars.

Across Generations, Women are Connected
From daughters to mothers to grandmothers, women around the world are connected in many ways when it comes to shopping decisions and entertainment choices. However, there are also some unique differences that marketers need to be aware of when communicating with them. Women make more use of the telephone and send more text messages than men, also using the Internet more intensively with longer spent per web page. While younger generations are typically more impulsive and heavy media users, older generations are frequently the most habitual relying more on recommendation for purchasing decisions. As technology usage continues to expand and become more accessible, the generation gap is closing.

To read more about women of tomorrow around the world, download the full report, Women of Tomorrow.

Germany consistently ranks as one of the top four leading countries to conduct innovation testing with Nielsen. Last year Nielsen coded over 100,000 new items in its German databases. But are the innovations matching what consumers actually want?

The fact remains that only few new products succeed in market. However, the notion that German consumers are not interested in innovation is simply not true. Actually, German consumers are just as interested to try new products as their British and French neighbors. “Germans like innovation, but expect value for money,” says Ben Schubert from Nielsen. “This especially applies for the premium price sector.”

With limited space on store shelves, only the very best will survive. “About one-third of new product launches manage to grow beyond year one”, adds Ben Schubert. “Here also Germany is on the same level as France and the U.K. – it is not necessarily more difficult to be successful in Germany with new products.“

A Better Way Forward
New product success must be built on a strong foundation of meeting critical consumer needs. From developing a unique value proposition and creating clear messaging to gaining credibility and delivering on the promises made, Nielsen’s 12 factors for success help to assess the chances of a successful launch. But you are only as strong as your weakest link. Even one risky factor can seriously derail the success of the launch.

Nielsen’s research shows that the likelihood of success can be improved dramatically when an innovation performs on all the 12 factors for success. The “wheel of success” provides a critical roadmap to help navigate the right course for any new product innovation and it can significantly improve the chances for success.

Consider these stats:

• There are 5.2 billion mobile subscribers globally (77% of the world’s population).
• In 2012, smartphone sales will overtake computers.
• By 2013, more people will access the Internet through their mobile than through a PC.
• By 2015, mobile broadband could be 3-4 times faster than fixed line broadband in many countries.
• 79 percent of U.S. consumers use a smartphone to help with their shopping.
• On average, people look at their phones 150 times per day.

With smartphones rapidly reaching critical mass in some markets, mobile is evolving from a “discovery” to a purchase tool for consumers. At the Nielsen Consumer 360 conference in Frankfurt, Germany, strategies for driving an integrated mobile strategy were revealed.

Growth Potential in Germany is Big

With more than one mobile phone per person in Germany, it is a strong mobile market, but the potential for growth exists. German mobile consumers are connected and getting smarter. Nearly two out of every three (63%) mobile purchases in Germany are smartphones. Today, 30 percent of Germans own a smartphone, compared with 45 percent in the U.K., 40 percent in the U.S., and 36 percent in Russia.

And with 83 percent of German smartphone users contract-billed by a carrier, higher monthly spending patterns follow: users spend an average of 1.5 more than feature phone users on their bills. The advanced user interface is also prompting more sophisticated communication. Over 65 percent of smartphone owners use email and half are active social network users.

Perhaps most compelling is the fact that more than half (58%) of mobile Internet usage occurs in the home, virtually changing the way people shop and opening up new opportunities for advertisers. Fifty-six percent of Germans react when receiving mobile advertising on their phone and more than one in five purchased the item advertised. “Mobile truly serves as the bridge between the online and the offline world,” explains David Gosen from Nielsen. “Mobile is empowering consumers to interact with stores, brands, friends and family in a way they never have done so before.”

Go Mo-So-Lo (Go Mobile, Go Social, Go Local)
More than 250 million active users currently access Facebook through their mobile devices and they are twice as active as non-mobile users. In Germany, nearly 50 percent of all smartphone users have used a social networking app in the last 30 days.

A mobile and social media strategy must go hand-in-hand (having a Facebook page is not enough). And proximity is influence. Location-based mobile alerts are impacting decisions to buy in a particular store. Creating a successful mobile strategy requires 4Cs:

• Content – be engaging.
• Conversation – create two-way dialogue
• Community – connect through advocacy programs
• Continuity – think long-term and on-going

Mobile is a big part of your customers lives – be a part of it. Build deep and more engaging personal dialogs – be where they are. Creativity and innovation differentiates your brand at every stage of their journey. Understand the real insight and behaviors of your mobile consumers to drive success.

Richard Reeves, Associate Director – Consumer Research, The Nielsen Company, Australia

Brand promotions are vital weapons in the sales and marketing arsenal, whether they are price discounts, multi-buys or additional quantity. In Australia, it is estimated that up to 30% of all grocery purchases are made on promotion and trends indicate that this could increase among key retailers. This proportion is similar to the U.K., where one-third of groceries are bought on promotion.

Nearby, our New Zealand kin are serious about promotions, with almost half (46%) of all grocery purchases being bought on promotion – reflecting the strong historical value focus of this market.

Just as there are differences between countries when it comes to promotions, there are even greater differences by category – this can range anywhere from 25% of volume being sold on promotion in one category, to a staggering 75% in another!

Clearly, for the manufacturer and retailer, promotions represent significant investment in time and money. So, the question is, how do these promotions affect the Australian shopper and what strategies or tactics can be employed to increase their effectiveness?

The Australian Shopper
Nielsen research has shown that the impact of the global financial crisis caused Australian consumers to re-assess how they spend and shop. We have witnessed a fundamental shift in shopper sentiment from the spendthrift, debt-driven early 2000s to a greater sense of caution and restraint post crisis. We have seen the rise of the “savvy shopper” who is happy to buy private label in one category and premium priced brands in another. We have also seen private label products being launched successfully in more and more categories. It would appear shoppers are becoming more willing to try and stick with these products where they perceive them to be just as good or just plain good enough.

Shoppers are increasingly using coupons and visiting more stores during their shopping trips as they search for the best value. This behavior has been observed in Australia with shoppers increasing their store repertoire. Furthermore, 30 per cent of Australian shoppers claim “they will still look for cheaper grocery brands even though the crisis is over” (Nielsen Global Consumer Confidence Survey, June 2010).

Given the shoppers’ search for value, a promotional strategy looks to be an excellent response. However, relatively speaking the Australian shopper is less sensitive to promotions than shoppers in other countries.

We see in this chart that nearly half the shoppers claim promotions rarely change their brand choices, or they only buy promotions when they already like the brand.

It is a minority who claim to regularly buy different brands because of promotions. These results are congruent with the view that shoppers tend to have a limited number of brands that they buy regularly even if their total repertoire is quite broad.

Australian shoppers’ knowledge of the prices they pay is relatively weak  with nearly half unsure of what they actually pay.

Nielsen research has found that in some heavily promoted categories such as beer and bread, (among consumers who have some knowledge of price); shoppers believe the promoted price is the normal price – not the shelf-price. So, it appears that the number and frequency of promotions has fundamentally shifted shoppers’ price perceptions.

There is also strong evidence that shoppers are aware that another promotion ‘will be along in a minute’ and are willing to wait. This can be seen across the grocery channel and in other areas such as the petrol market with the “cheap Tuesday” phenomenon, the automotive equivalent of pantry stocking, i.e., filling the tank.

So what options are open to the manufacturer in the face of these almost contradictory behaviors of the shopper, that is, being value-focused, but uncertain of the shelf price? We all know sales increase when brands are promoted, but are these additional sales profitable and is the promotion actually supporting the brand?

Key Considerations for Promotions

1. Is the promotion a tactical response to competitor activity? For example, is it a response to a new entrant into the category; or is it to take advantage of above-the-line support? The strength of the brand’s equity and percentage of volume sold on promotion versus its shelf price need to be understood. Relatively speaking, stronger brands tend to sell more at full price than their weaker competitors.
2. Does the promotion increase the number of households buying the brand (household penetration) or does it increase the amount spent on the brand per household (Average Weight of Purchase – AWOP)? If it is the latter, the promotion may be rewarding loyal buyers and protecting share, but may undermine a brand’s price premium in the long term.

To understand if the additional sales are coming from new households (increased penetration) or increased AWOP, one needs to use actual purchase data from services such as Nielsen Homescan.

Nielsen has found in a number of categories that there are a proportion of shoppers who only buy on promotion. We have seen this group to be as high as 60% in some categories. While shoppers are loyal to specific brands, when their preferred brand is not on promotion it’s likely a competitive brand they know and may be partial to is. The role of the preferred brand in this situation is to ensure the competitor is only considered and not purchased.

This presents a dilemma for the brand. Above-the-line support may be needed to help reinforce the brand and its unique position, but if funds are diverted from in-store promotional support, it will lose significant share. Innovation within the category may be the only way to break the promotional cycle.

Additional Considerations

• How does the brand repertoire change when on and off promotion?
• What is the depth of the price cut, and how deep does it need to be to be effective?
• Is it better to have more frequent promotions with smaller price reductions or the opposite?
• Is the promotion reflective of historical practices? For example, if the brand has always had a promotion at Easter. Is this really the best time for the promotion?
• Is the promotion communicating the right message about the brand?
• And finally, will the promotion generate additional profit, as well as generating additional volume?

We know shoppers are looking for value, or at least value among their preferred brands, so communicating the promotion and using the best triggers is vital to maximize its impact. Therefore, are gondola ends and shelf labels enough to drive awareness of the promotion; or is it worth considering additional communication channels?

Given the importance of promotions, it is vital to treat them with the respect they deserve, as their correct use can drive the brand and profitability. Conversely, ill-considered promotions can weaken a brand and undermine a company’s bottom line. So, the question remains: Can you identify what purpose your promotion is serving?

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.

United States
Surprisingly, the U.S. squad wasn’t even the most buzzed-about national team. England, Argentina, Brazil, Serbia, and Spain were just some of the countries more closely correlated to the World Cup in conversations online. American consumers were also talking about various World Cup sweepstakes, whether they be corporate-sponsored (from Yahoo!, EA Sports, and McDonald’s) or privately-run pools where members pick the winners. There was also lots of Buzz around David Beckham, who’s not even playing in the World Cup due to an Achilles injury.

United Kingdom
Many World Cup discussions involved Fantasy football leagues as consumers took a more active role in the tournament as it gets closer. England fans have high expectations for their national team, as indicated by the frequency of terms like like “winning” and “champions” tied to the team. But fans also see a strong foe in Brazil, with similar terms grouped around the Latin American soccer power. England’s manager Fabio Capello was the most closely linked person to World Cup messages, followed by the injured Beckham.

South Africa
The World Cup’s host country has more than just soccer on its mind. Visitor and tourism messages drove a significant part of World Cup conversation, as well as ticket inquiries. Key FIFA and Local Organizing Committee (LOC) representatives Jerome Valcke and Danny Jordaan were often cited for addressing these issues. Overshadowing the matches were discussions about security concerns. South African messages also voiced disappointment of Shakira’s “Waka Waka” as the official World Cup song.

Australia
Even as Australia prepares for the this year’s tournament, it’s the fate of future World Cups that’s on the minds of many of the country’s online consumers. Messages about luring the 2018 or 2022 Cup to the Land of Oz – even speculation about potential venues – were prominent in online discussion. As the future of Australian soccer is discussed, many chose to wax nostalgic about the past, with dialogue about retired soccer great Mark Viduka.

Italy
In the weeks leading up to the World Cup, Italians buzzed about the “Will-he-or-won’t-he?” saga of golden boy Francesco Totti coming out of retirement to play for the national team (ultimately he was never called up). Fans of the defending world champs also talked about several members of the Azzurri national team – including head coach Marcello Lippi – and some of the team’s top competition, including Brazil, Argentina, and , perhaps surprisingly, Cameroon.

Germany
The Internet provided lively discussion forums for German soccer fans debating who should and should not have made the national team. Leading the debate was who should replace starting goalkeeper Rene Adler who suffered a rib injury that prevents him from playing with the team in South Africa. Speculation of Germany’s Group D competition was also very high, with tough matchups against Serbia, Ghana, and Australia in the tournament’s preliminary round.

Spain
Spanish fans have been preoccupied with comparisons to South American soccer power Argentina. Messages compare young Spanish phenom David Silva with Argentine superstar Messi and coach Vicente Del Bosque with soccer legend and current Argentina coach Maradona. A classic goalkeeper controversy was also brewing with some calling for Victor Valdes to start over Iker Casillas. Finally – after Sogecable, the leading pay TV company in Spain, sold the rights to Telecinco for some matches and to Cuatro for others – Spanish fans worried about which TV channel to watch the matches and who will be commentating.

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