On the flip side, when budgets are reduced by 10 percent, discretionary spend—especially in the areas of ‘apparel’ (-21%) and dining out’ (-18%)—are reduced. Consumers also indicated a spending cut back on ‘electronics and appliances’ (-14%). “If the global economic climate worsens, these three sectors appear to be particularly vulnerable,” continued Dr. Bala.

In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10 percent. “The asymmetry with expansion suggests that while respondents would like to preserve or add to their savings and investments, they also recognize that they may be bumping up against harder economic realities,” said Dr. Bala.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.

“Third quarter was volatile and challenging for global economies and financial markets amid stagnant U.S. unemployment figures and a worsening euro zone debt crisis,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “A recessionary mindset is growing among consumers as more than half say they are currently in a recession—up four percentage points from last quarter and seven points from the start of the year. The result is continued spending restraint for discretionary expenses, which is expected to continue into the next year.”

The survey tracks consumer confidence, major concerns and spending intentions among consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. U.S. consumer confidence dropped one point to an index of 77. Consumer confidence also fell by one point last quarter in China from 105 to 104 and one point in Germany, Europe’s largest economy.

Economic and job security concerns mount
In the latest round of the survey, conducted between August 30 and September 16, 2011, the economy re-emerged as the top concern among 18 percent of online consumers around the globe. The economy last topped concerns in Q4 2010, before it was replaced by worries over increasing food prices in the first half of this year. Job security follows close behind for 14 percent of consumers, rising five percentage points from three months ago. Managing a work/life balance, increasing food prices and concerns about health round out the top five most stressful issues for respondents.

“Driven by a stalled job market and uncertainty about the future course of the global economy, concerns over job security and other economic risks rise to new heights in the third quarter in many parts of the world,” said Dr. Bala. In North America, one-in-three are concerned about the economy—up seven points from second quarter and more than one-in-10 (12%) are worried about job security—an increase of five points from three months ago.

In Latin America, concerns over job security (15%) and crime (12%) took a slight edge over the economy (11%). In Middle East/Africa, while job security retained the top spot in this region, the quarter-on-quarter increase is noteworthy—jumping nine points to 20 percent up from 11 percent in second quarter. In Asia Pacific, the economy (18%) and job security (15%) rose eight and seven points, respectively.

For more detail and insight, download Nielsen’s Q3 2011 Consumer Confidence report.

While South Africans were the most pessimistic in Nielsen’s Middle East, Africa and Pakistan region, the decline in confidence was hardly unique. Global online confidence declined for the first time in six quarters as economic recovery hit a stumbling block and recessionary jitters again reverberated around the world. Consumer confidence in the U.S. fell to its lowest level on record in the second quarter

Roughly two-thirds (66%) of South African survey respondents said that they believed that their country was in a recession. They are also no longer as upbeat about their job prospects; with half believing that employment opportunities were not good – a 3 percent rise from the same period a year ago. Almost half (46%) felt negatively about the state of their personal finances, a 2 point rise from Q1, and 83 percent said that they had adjusted their spending habits to save on household expenses, an 18 percent increase from the previous quarter. Almost a quarter (24%) said they have no spare cash.

The major concerns for South Africans in Q2 2011 are no different from the previous two quarters: increasing food and fuel prices, rising cost of utility bills, job security, debt, the economy and crime. “Rising food prices are taking its toll on consumers worldwide as more and more households are spending a higher proportion of their disposable income to put food on the table, and South Africa is not exempt from this trend,” said Diane Johnstone, Managing Director, Nielsen Southern Africa. “South Africans may have weathered the worst of the storm, but the frugal behavior prevalent in 2010 will continue into 2011 as headwinds to growth persist. As disposable income continues to shrink, consumers are constantly re-adjusting their spending patterns to save on household expenses by cutting-back on non-essential, luxury items and activities.

Retail Landscape
The retail sector was affected by these changing consumer patterns, posting slowing growth in 2010 with majors outgrowing non-majors. Overall sales of fast-moving consumer goods (FMCG) grew 3.3 percent in 2010 compared to last year. By contrast, growth in 2009 was up 14.6 percent from 2008. Price increases accounted for about half of the growth in 2010 compared to almost 82 percent in 2009.

Inflation has been on the rise since the start of the 2010, but while many countries are experiencing skyrocketing prices for basic goods, South Africa has seen some deflation among several staples categories such as rice, corn meal, flour, margarine and tuna. All of this is good news for consumers, who are highly price-driven. Meanwhile, prices for fresh milk, ready-to-eat meals, instant coffee, carbonated soft drinks and sugar all rose. Nonetheless, retailers are increasingly optimistic that volume growth will be promising in 2011.

So where are consumers spending their money if not on food? A review of consumer spending trends over the period 2000 to 2010 shows that of discretionary disposable income, the average consumer spent three percent more on out-of-home entertainment (from 35% in 2000 to 38% in 2010). Meanwhile, communications, which encompasses cellphones, Internet and cable/satellite TV, almost doubled during the decade, from 11 percent of spending in 2000 to 21 percent in 2010.

Modern trade has continued to expand, and now accounts for more than 62 percent of all FMCG trade in South Africa. Nielsen has noted a consistent annual shift of one to two percent of trade moving from traditional channels to modern trade. Branded retailers, such as Shoprite and Pick n Pay, continued to grow at the expense of smaller, independent retailers, which are also being squeezed by wholesalers. Shoppers at branded outlets not only visit them more, but also spend more per trip. Nonetheless,independent retailers continue to have the highest level of market penetration.

While most categories saw overall value and volume declines in the first quarter compared to a year ago, one category stood out for growth on both measures: dry groceries. Comparing trends from Q1 2010 to Q1 2011 tells a slightly different story, however, with several categories (toiletries, dry groceries, perishables and household goods) recording solid growth in both value and volume. Key gainers over the past year include ready-to-eat meals, canned pilchards, instant coffee and toilet tissue. Much of the growth was driven from middle income consumers.

South African retail brands, or private label, currently make up about 11 percent of the market (excluding fresh food), the highest among developing markets, but still below developed markets. Overall share has remained stable, but value-oriented South Africans have taken to retail brands in a number of categories including chicken (38% of category) and dishwashing liquid (36% of category). Most notably, consumers from the higher income levels have turned to retail brands with some enthusiasm, and 60 percent of the retail brand market value comes from these shoppers. Nevertheless, there remains room for significant growth with middle income consumers, provided retailers know what drives the performance of private label brands.

Aside from brick-and-mortar shops, online commerce has taken off in South Africa. Fully 71 percent of the six million Internet users in the country are online shoppers.

Challenges for Retailers
Promotions are a boon to budget-conscious consumers, but present a number of challenges for retailers to overcome. For instance, reaching the consumer is difficult, particularly in a country as diverse as South Africa, where profiles can vary by a few kilometers. National retailers need to manage overall shopper engagement while remaining locally relevant and focused. Meanwhile, competition in the food category is intense, as grocers – branded and independent – are fighting for a larger share of sales. Ready-to-eat meals and in-store solutions are gaining popularity, while liquor, pharmacy, food courts and hardware all continue to grow at a faster pace than the center store.

This decline in confidence is also seen with the country’s senior business leaders who participated in Nielsen’s Vietnam Business Barometer survey. Nearly two-thirds said that business conditions were worse now compared to a year ago, and 48 percent fewer leaders expect to beat their targets as compared to a year ago. Only one-third think that conditions will improve over the next twelve months, with the majority thinking that the status quo will prevail. Inflation and recent devaluations of the Vietnamese Dong ranked as the top concerns of these executives who, nonetheless, claimed that they had managed to achieve their targets thus far.

Consumers also feel the pressure of price increases

Top 5 Manufacturer Concerns

1. Inflation
2. VND devaluation
3. Ability to pass on price increase
4. Competitive pressure/activity/growth
5. Low GDP Growth

Top 5 Consumer Concerns

1. Health
2. Increasing food prices
3. Increasing utility bills (gas, electricity, water, etc.)
4. Job security
5. Children’s future/welfare

Despite these concerns, the vast majority (90%) of business leaders still expect double-digit growth in their businesses. The financial services, telecom and pharmaceutical sectors seem set to continue to grow, while FMCG is likely to be affected by consumers reducing spending in the face of inflation and will show slower growth. Most executives plan no reductions in advertising spending however, and 43 percent actually plan on increasing spending over the course of the year to capture the increasingly value-driven consumer. TV continues to be the top channel for advertising, followed by point-of-sale materials and in-store signage, while online continues to show promise.

The value-driven consumer is faced with steadily increasing prices – fuel has increased 18 percent, retail electricity prices are up 15 percent – so they are increasingly saving their money when they can and buying more goods on promotion. Almost two-thirds (64%) indicated that they would be looking for promotions, an increase from 51 percent in the second half of 2010. Half said they would do without some non-essential goods (up from 41% in the second half of 2010) while 41 percent said they would be trading down to less expensive products. Confectionary, health and beauty and beverages were deemed to be the categories most likely affected by changing consumer purchase patterns.

“GDP growth in Vietnam is set to slow this year, and macroeconomic challenges facing the country require business leaders to work even harder to achieve success. That means expanding into rural areas to capture growth, identifying new potential categories, and understanding their pricing and promotion mix better, and how much of a price increase can be passed on to customers. Understanding consumer price sensitivity is critical, and passing on price increases should only be undertaken with a solid understanding of your consumer and category said Darin Williams, Managing Director, Nielsen Vietnam.

Our latest Top Media Advertisers report delivers a positive outlook on Australia’s advertising industry, with a strong rebound in ad spending to an estimated $10 billion plus.

As the advertising recovery gained momentum in the first half of 2010, there were substantial year on year increases in activity particularly among the major spending categories that were most impacted by the advertising cutbacks of 2009; including Motor Vehicles (+14%), Finance (+13%), Real estate (+19%), Communications (+12%) and Insurance (+12.8%).

The report contains good news for all 10 main media sectors with most recovering from the dip in advertising revenues during 2009 and building on a stronger revenue base for the year ahead. Overall, advertising spending in 2010 by our estimates increased by almost 10 percent over 2009. In the case of advertising performances across Television in the major Metropolitan and Regional markets, estimated spending lifted to almost $4 billion; representing nearly 40 percent of all Australian media spending.

2011 Outlook
The levels of growth across most of 2010 have certainly slowed in 2011; albeit reflecting that media activity has returned to business as usual pre GFC trends. Recent media reports indicate patchy results across some media, possibly due to the recent devastating floods and cyclone damage, consumer caution over escalating food and energy costs, and concerns over the impact of the Government’s proposed carbon trading levy.

However, our dollar is currently at parity to the U.S. dollar, our commodity export markets have maintained positive economic performances, particularly China and India. All these factors considered, our advertising sector should still maintain solid growth over 2010.

For more, download the Top Media Advertisers Sampler Report: Australia

Indonesian consumers have proven themselves to be optimists. Throughout the economic turbulence that started in 2008, Indonesians remained confident and positive about the country’s economic outlook according to Nielsen’s Consumer Confidence Index. Even among businesses, despite the hard times in 2009, the majority (52%) said that year on year conditions had improved, according to the Nielsen Business Barometer.

Indonesia’s economy is growing, with GDP at 6.1 percent in 2010 with consumption contributing 2.7 percent, according to Indonesia’s Bureau of Statistics. Businesses expect conditions to further improve over the next one to two years, and FMCG companies are even more positive than average. This confidence can be attributed to their experience that Indonesian consumers tend to shop their way out of everything!

In the midst of the global financial crisis in 2008, consumer spending in Indonesia flourished, almost seemingly as if the word “crisis” was not a part of the vocabulary in the country. Sales of FMCG products increased 21 percent in 2008, car sales were up 39 percent and cellphone penetration reached 48 percent in Indonesia’s big cities. Consumers spent even more in 2010, with sales of FMCG products rising 12 percent from 2009 levels and car sales blazing a trail with a whopping 58 percent increase. Businesses took a cue from that optimism and spent 29 percent more on advertising in 2010, marking the highest growth in five years.

All is not picture-perfect, however. Even as consumers continued to spend, they are not spending the same way. As the crisis hit and economic conditions deteriorated, they became more budget conscious and showed a high propensity to save on spending related to basic needs so that they could allocate the savings to satisfy their lifestyle purchases.

Businesses were quick to respond, wooing consumers with many new innovative offerings such as downsized products, cheaper and more flexible telecommunication tariffs and low-cost airfares. An example: for just Rp. 10,000 (around US$1), a consumer could purchase fresh coffee from 7-Eleven, buy a ticket to Kuala Lumpur or even do a “top-up” for two-days’ worth of unlimited BlackBerry service.

The new era

With per capita GDP set to hit US$ 3,000, Indonesians’ buying behavior is very likely to change as a result, as consumers adjust to more affluence and spending power and look at options to satisfy their increasingly sophisticated lifestyle needs. There are three emerging trends worth looking at that will help businesses fine-tune the way they engage their consumers.

• Time poor, cash rich
  With the worsening traffic in Indonesia’s big cities, we saw a defined emergence of “time poor, cash rich” consumers: those who are hard-pressed for time and want to do as many things as possible in the shortest period of time. These consumers are mostly from the middle to upper classes, working in the heart of the big cities but living in the suburbs. They are value conscious: they are willing to pay more for higher quality ingredients – even during downtimes – if they can see the value of the products in their lives. Private label products are unlikely to attract them.

  As a group of consumers with high purchasing power but little time, businesses have a good incentive to make their products and services more convenient and within easy reach of these consumers.

• Increasingly more connected
  The growth of Internet penetration in the country has been phenomenal. In 2005, Internet penetration in Indonesia’s nine largest cities was only 8 percent; today, penetration has tripled in these big cities, making it the only media that saw growth in the last six years.

  Just two years ago, a tiny three percent of consumers surveyed by Nielsen had made an online purchase in the past six months. Now, 80 percent say they will buy something online in the next six months. Although it is below the average of the Asia Pacific region, Indonesian consumers have a very high propensity toward online shopping – perhaps higher than many would have expected.

  The telecommunications industry in Indonesia is aggressively adding more consumers to their networks, as evidenced by the 58 percent increase in advertising spend in 2010 as measured by Nielsen. Mobile penetration in Indonesia has also tripled over the past five years, aided by the kaleidoscope of offerings.

  The rapid upward trend of Internet and mobile penetration will result in another new phenomenon in the country: real time information will become the “oxygen” for consumers as they interact and share information, via social networking and other sites.

  Consumers increasingly expect to be able to interact with companies in cyberspace or via mobile channels. Companies who offer consumers the ease of “shopping at your finger-tips” or receiving promotional offers via these new communications channels stand to win, and the time for companies to offer these options is “soon,” if not “now.”

• Family time matters
  Indonesians have strong family values and like to spend time together. One popular way for parents to spend time with their children is by shopping. Increasingly, modern retail formats are adding a recreational solution for families by providing one-stop shopping-and-entertainment centers with restaurants, arcades and cinemas in addition to the usual stores. And with many creative and attractive in-store promotions, consumers are engaging in retail therapy more frequently. One sign of this trend is that sales of consumer goods have doubled since 2006. But don’t count out the traditional retail establishments yet. They continue to play an important role in the retail scene, with 80 percent of Indonesian consumer spending allocated to this channel.

In conclusion, a new era is coming soon, if it’s not already here. It offers FMCG manufacturers and retailers an immense opportunity to engage the “new” Indonesian consumer in new, “fresh” ways. Key to winning the hearts of these consumers is a complete review of how and where consumers want information and offerings presented to them, what unmet needs they have and what digital conversations they are having in the online space. Product and channel innovation will need to start with these key considerations.

Asia Pacific

The Value-Conscious Consumer Rises in Asia
CNBC Asia Squawk Box interviewed Karthik Rao, Managing Director, Custom Research, The Nielsen Company to discuss spending intentions, concerns about inflation and the state of the economy in Asia. [Watch the Video]

Confident but Cautious: Asia Pacific Consumers Spend, But Seek Value
Consumer confidence in the Asia Pacific region gained six points year-on-year in the fourth quarter of 2010 to an index level of 97. With this jump, Asia Pacific became the second-most confident region in the world at the end of 2010, just behind Latin America. [read more about Asia Pacific Consumer Confidence]

Aussie Consumer Confidence Stumbles
In a reversal of fortune to the previous quarter, Aussie confidence ended 2010 with a slight drop as consumers looked to curb expenditure in the wake of rising utility and food costs. [download Australia's Consumer Confidence release]

Chinese Consumers’ Reluctance to Spend Weakens Confidence
China’s consumer confidence index fell four points to 100 at the end of 2010. Rural consumers’ confidence remained relativity stable while urban consumers’ confidence experienced a pull back. The primary driver behind this decline: inflation in consumer prices, particularly food. This, in turn, has led to a decrease in consumers’ willingness to spend money. The high price of homes and rising interest rates has also impacted spending.
[download China's Consumer Confidence release]

India Retains Top Spot on Global Consumer Confidence Index, but Inflation Affects Discretionary Spend for Some Categories
India has topped the consumer confidence survey in all four quarters of 2010 and has also seen a steady rise in index points. This is a good sign for India as this means that the economy is fast moving out of the slowdown. But global economic conditions have made Indians wary about the future and they are exercising some restraint in their spending habits. [download India's Consumer Confidence release]

92% of Japanese Say Job Prospects Are Not Good
Japan’s consumer confidence index of 54 ranked in the bottom four of 52 countries measured. A sense of stagnation is due to the economic recession and continued job insecurity, which remains regardless of the recent change in government. [download Japan's Consumer Confidence release - in Japanese]

Consumer Confidence in Malaysia Hits Four-Year High in Forth Quarter 2010
Malaysia ranked ninth globally in consumer confidence as consumers feel more positive about local job prospects and the state of their personal finances. Consumer confidence in Malaysia rose four points in December 2010 to 107, reaching its highest level since the third quarter of 2006. [download Malaysia's Consumer Confidence release]

Singapore Ranks Among Top 10 Most Confident Countries in the World
Singapore wrapped up 2010 on a positive note, posting a consumer confidence index of 109 in Q4 2010. The results reflected a 9-point jump year-on-year, as confidence in the country was boosted by strong economic growth, buoyant stock and property markets as well as a strong Singapore dollar. At 109 points, Singapore is the seventh most confident country our of 53 measured after India (131), Philippines (120), Norway (119), Indonesia (116), Australia (112), and Switzerland (110). [download Singapore's Consumer Confidence release]

Taiwanese Consumer Confidence Drops Slightly
While Taiwan’s consumer confidence dropped two points from 88 to 86 in fourth quarter 2010, the percentage of Taiwanese respondents believing that Taiwan is in an economic recession decreased from 59 percent to 51 percent. The drop is due to consumer’s pessimistic attitude about personal finance prospects and purchasing intentions.

Thai Consumer Confidence Rose 10 Points in Second Half of 2010
Thailand finished the year with a consumer confidence index of 102, which remained relatively high compared to the first half of the year. The second half of 2010 saw a strong rebound in consumer confidence in Thailand, underscoring the country’s resilience. Over the years Thai consumers have consistently demonstrated a great ability to bounce back from political challenges and serious threats from natural disasters. [download Singapore's Consumer Confidence release]

Europe

Consumer Confidence in Austria Continues to Rise
After rising nine points in the third quarter 2010, Austria’s consumer confidence index increases another two points to reach 96 – an historic high. Austrians showed improved job prospects, personal finances and readiness to spend. [download Austria's Consumer Confidence release - in German]

German Consumer Confidence Remains at a High Level
After hitting a high point in the third quarter 2010, German consumer confidence dipped four points in fourth quarter to an index of 83. However, it is at a high level in comparison to the European regional index of 79. [download Germany's Consumer Confidence release - in German]

More Than One in Four Great Britain Shoppers Have No Spare Cash – A New High
As pressures on personal budgets mount, the proportion of people saying they ‘have no spare cash’ was six percentage points higher at the end of 2010 than it had been a year earlier and the highest since the survey began in 2005. [download Great Britain's Consumer Confidence release]

Greece’s Consumer Confidence Falls to Historic Lows
Greece’s consumer confidence marked one of the bigger declines, leading to the country’s lowest historical drop. The index plunged nine points to a score of 48. Only Portugal and Croatia were lower, with an index of 45. One of the most concerning findings from the survey is that the overwhelming majority of Greeks (83%) do not think the country will emerge from the recession in 2011. [download Greece's Consumer Confidence release - in Greek]

Ireland’s Consumer Confidence Slips Once Again in Fourth Quarter 2010
Consumer confidence in Ireland fell in Q4 2010 following four consecutive quarters of growth and stabilization. While consumer confidence levels remained unchanged in Q3, the latest results do not bode well, showing that Irish consumers still maintain a level of gloominess. [download Ireland's Consumer Confidence release]

Scandinavian Consumers Are the Most Confident in Europe
The Scandinavian countries continue to top the European rankings for the most positive nations regarding their personal finances and their willingness to spend. The situation is different in Scandinavia, with Norway as the most optimistic country in Europe in regards to job prospects, personal finances and their ability to buy the things they want and need. Sweden and Denmark are close behind, even though consumer confidence declined in Denmark, driven by increased concern about job prospects. Consumers in Finland are far less optimistic. [download the Scandinavian Consumer Confidence release]

Spainish Unemployment and Job Security Are Main Concerns
Unemployment and job security continue to be main concerns for Spanish consumers and these factors greatly influence consumption. The crisis continues to force Spanish consumers to change consumption habits, something they have already been doing for months. Saving measures, such as reducing use of utilities and consolidating shopping trips will continue even when the economy improves. [download Spain's Consumer Confidence release - in Spanish]

Russian Consumer Confidence Recoils to Second Quarter Levels
Russian consumer confidence dropped two points in fourth quarter to an index of 88. Since the beginning of recession the index never rose higher than 90 points and fluctuated in the range of 86-90 points. Consumers in Russia have retained confidence in the job market and many believe in the stability of their personal financial situation. But with growing grocery and utilities prices, they now find themselves with less disposable income. [download Russia's Consumer Confidence release]

Switzerland’s Consumer Confidence Hits Historic High
Switzerland’s consumer confidence index of 110 rises 10 points from the previous quarter reaching an historic high. Switzerland’s results show a constant upward trend throughout 2010. Within one year, the index rose 25 points, which is not only the highest value in the past five years, but also the second highest in Europe. Only Norway’s confidence is higher in Europe. Worldwide, Switzerland ranks sixth. [download Switzerland's Consumer Confidence release - in German]

Latin America

Latin America is the Most Optimistic Region in the World
Latin America continued to show a consistent and strong performance at the end of 2010. Brazil finished the year with a consumer confidence index of 108 points, leading the growth in the region and occupying eighth place consumer confidence world-wide growth. The growing confidence of the Brazilian consumer is a reflection of several factors, among them is the positive performance of the Brazilian economy. Colombia and Argentina also finished the year strong with high index scores. In Mexico, a consumer confidence level of 86 points was the lowest in the region. [download Latin America's Consumer Confidence release - in Spanish]

Middle East / Africa

Consumer Confidence in South Africa Dipped 3 Points in Fourth Quarter 2010
While positive sentiment in South Africa drove confidence levels up in second and third quarter 2010, consumer confidence declined three index points to 84 in fourth quarter.  There simply hasn’t been enough consistent and positive news to sustain the euphoria consumers felt during the World Cup. The reversal of global consumer confidence in the fourth quarter highlighted the fragility and uncertainty of the global economy at the time, and above all, the divergence in pace of recovery among international markets and regions. [download South Africa's Consumer Confidence release]

United Arab Emirates Ranks in the Top 15 of Most Confident Countries
Consumer confidence in the UAE dropped four points from the third quarter of 2010 to 97 points in the fourth quarter of 2010, placing it in the top 15 of 52 countries measured.  UAE’s ranking fell out of the top ten most optimistic nations after being in top 10 consecutively for the last three quarters of 2010. The drop can be attributed to 14 countries ending the year with a consumer confidence index of 100 points or greater as compared to 11 countries who hit the 100+ index mark one year ago. UAE consumer sentiments have remained the same throughout 2010. [download UAE's Consumer Confidence release]

North America

Canadian Consumer Confidence Declines and Returns to Early 2010 Levels
More than half of Canadians still feel the country is in a recession and nearly one-third report they have no spare cash. While Canadian consumer confidence continues to decline, falling two index points to 99, Canada still ranks higher than many nations around the globe, including the United States. Canada’s highest Index score of 114 was recorded in 2006. [download Canada's Consumer Confidence release]

U.S. Consumer Confidence is Just One Index Point Away From its Lowest Level on Record
Forty-five percent of North Americans still expect the recession to last for another year, compared with 39 percent of Europeans and 19 percent of Asia Pacific consumers. The U.S. jobless rate remains at the heart of the issue for Americans. While the jobless rate dipped a meager 0.3 points in December to 9.4 percent – its lowest level in 19 months – it has topped nine percent for 20 months straight, which is the longest streak on record.

• Download the Nielsen Global Consumer Confidence Index

Consumption is Growing
According to a study by Nielsen Brazil, the Northeast is recording the most consistent growth. In addition, the increase in consumption in the Northeast also outstrips the average. While the region has grown by 8 percent, Brazil’s average consumption has risen by 6 percent in the product categories tracked by Nielsen. This growth is having very positive effects. Over the past two years, the number of low-income consumers has dropped three percentage points, from 67 to 64 percent.

On average, households in Northeastern Brazil have four to five members (43%), low incomes (64%), and consist of younger homemakers who tend to shop based on price and promotions. These households predominantly patronize traditional and wholesale channels.

Local Brands Dominate
Regional brands greatly stand out in the Northeast, exceeding national brands by double digit percentages in seven of the 12 categories Nielsen studied. In the first half of the year, regional brands of bottled water and powdered milk increased in volume by 39 and 21 percent, respectively, far outpacing the 8 and 2 percent growth rates recorded by national brands. While many of these products are manufactured by national or global companies, they are branded under names specific to the region to better fit the consumption profile there.

This growth phenomenon may also be attributed to manufacturers’ adaptation to the region’s needs through more competitive pricing (30 percent below the market’s average) and packages that prioritize cost rather than benefit. Manufacturers are investing in the pursuit of customers entering a new consumption phase.

Influencing Factors
Factors such as sophistication and indulgence are also starting to emerge and influence lower-income consumers. An example is the toilet paper category’s two-ply segment, which recorded a volume increase of approximately 40 percent compared to 2009, with the Northeast again standing out. In terms of indulgence, this shift is illustrated by sandwich cookies. In value, the biscuit category (wafers, Marie, salted, water crackers, etc.) increased by 4 percent compared to 2009, with sandwich cookies accounting for 59 percent of that growth.

These are good examples of how manufacturers are innovating to meet the needs – both economic and preferences – of a local population. And in Northeast Brazil, consumers are rewarding these brands with their business, proving once again that businesses have to intimately know who their customers are and how to appeal to them.

Chinese consumers are notorious savers. They consistently show a high saving rate — the highest in the Asia Pacific region and substantially higher than developed economies like those of the United States and the United Kingdom. And while economic theory based on forward looking models suggest that countries experiencing strong GDP growth should see a drop in savings rate, China’s savings rate has continued to remain high despite its remarkable GDP growth.

A popular explanation is that China’s legendary savings habit is influenced by the Confucian values of thrift and frugality. But does this theory apply in the present day?
While the notion of not going into debt is a strong traditional sentiment in China and many East Asian countries, Nielsen’s research shows that aversion to debt is slowly changing. As incomes grow and attractive loan schemes and investment opportunities present themselves, Chinese are keen to avail themselves of them, proof that the cultural factors may not be telling the full story.

Nielsen takes a deeper look into the strength of the frugality hypothesis by exploring non-cultural factors that may have a role in explaining China’s high savings rate.

So Why Do Chinese Save So Much?
Nielsen’s research reveals that three key factors play a stronger role in explaining the savings rate than the frugality theory:

1. Young Demographics
   Since the late 1980’s, China’s demographics have favored the younger working group, defined by economists as Prime Savers (20-49 years). Typically this group displays a higher propensity to save as it has to finance a variety of life-stage needs.
2. Big Expenses
   A comparative cost index analysis between first jobbers in China and the United States was conducted to get a deeper look at their saving needs and how they are likely to fund these expenses. Taking into account expenses such as weddings, the purchase of a house, children’s education and the purchase of durables, the research shows that Chinese consumers need to save a greater portion of their salary to fund these expenses than their U.S. counterparts.
3. Medical and Post-Retirement Costs
   China’s social security funds are much lower than those in developed economies, representing just 2% of the country’s total household wealth compared to the U.S. level of 20%. Precautionary savings to cover medical and post-retirement expenses remain an important factor in explaining China’s high savings rate.

   

Read Nielsen’s full report:  Saving a Top Priority for Chinese…But Why?

• Consumer confidence declined in 19 of 53 global markets.
• One in four North Americans and one in five Europeans have no discretionary income.
• Rising food prices are a top concern for one in four Asians.
• Increasing utility prices are Europeans’ biggest concern.
• Recovery is back on track in North-West Europe, while the recessionary mindset lives on in Southern Europe.
• Nine of the top 10 most confident nations hail from the Asia Pacific region.

After an upbeat start to the year with two consecutive quarters of increased optimism, global consumer confidence fell three points in September to an Index of 90, according to the latest edition of the Nielsen Global Consumer Confidence Index.  Consumer Confidence Index levels above and below a baseline of 100 indicate degrees of optimism and pessimism.  The 90 Index mark reflects that consumers around the world are largely pessimistic about job prospects, personal finances and their ability to buy the things they want and need over the next year.

Click to enlarge

While positive sentiment drove confidence levels up in the first half of this year, consumer confidence declined in 19 of 53 global markets in the third quarter.

“There simply hasn’t been enough consistent and positive news to sustain the positive outlook and momentum that consumers showed at the start of this year”, said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of The Nielsen Company. “The reversal of global consumer confidence in the third quarter highlights the fragility and uncertainty of the current global economy, its ongoing vulnerability to macroeconomic shocks and, finally, the divergence in the pace of recovery among international markets and regions.”

For many consumers, spending on non-essential goods has become more restrained this year compared to the height of the global recession two years ago. Discretionary income reached an all time low for many consumers in the third quarter, with 27 percent of Americans, 19 percent of Europeans, 17 percent of Middle Easterners/Africans and 16 percent of Latin Americans left with no spare cash after paying essential living expenses.

Nielsen’s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among more than 26,000 Internet users in 53 countries.  In the latest round of the survey conducted between September 3 and September 21, 2010, consumer confidence in most markets showed continued spending restraint.  More than half (56 percent) of global consumers believe they are currently in recession and 48 percent do not believe they will be out of a recession in the next 12 months.

“While slipping back into a full blown global recession is unlikely, in the last few months consumers have accepted that there are no quick fixes to the persistent economic issues of unemployment and government budgetary woes that continue to dampen and constrain economic revival,” said Rick Kash, CEO of The Cambridge Group and co-author of How Companies Win, a new book written with Nielsen CEO David Calhoun. “Tapping into consumers’ need states to understand latent demand has never been more important.”

Rising Concerns

In addition to economic issues, many consumers in Asia and Europe are grappling with additional concerns such as rising food and utility prices, which are squeezing already constrained family budgets. In Europe, increasing utility bills replaced the economy as the number one concern over the next six months and in Asia Pacific, one in five consumers are most concerned about rising food prices — an increase of 13 points over the second quarter of 2010.

The economy remains the number one concern for more than one in four North Americans (27 percent) and worries about health jumped five percentage points. Health is now the number one concern for 10 percent of respondents in North America. Among Latin American consumers, consumers ranked work/life balance, job security, debt, crime and children’s education ahead of the economy as the number one concern.

Download the Nielsen Global Consumer Confidence report for a country-by-country analysis and region-level review.