Now that we have wrapped up 2012 and embarked on yet another year, it is an appropriate time to reflect on the year's events and achievements. The last twelve months were full of newsworthy events in the United States and around the world, but because the media seems to prefer coverage of tragedy and devastation, it is easy to forget the progress our civilization is making. Many exciting and groundbreaking events happened over the course of 2012 including the landing of NASA's Curiosity rover on Mars, record-breaking moments at the London Olympics, and major scientific strides in the treatment and prevention of diseases such as Alzheimer's, multiple sclerosis, and HIV.
It is impressive, the strides mankind has made. Yet it is also astonishing that there still exists such a divide in wealth and development. The one thing that remains unchanged is the presence of the global consumer and the inherent aspiration for more. As we consider some of the preferences that emerged over the past year, we are able to predict five of the top consumer trends that will undoubtedly characterize the year 2013:
- Emerging Markets Matter: Consumers in emerging markets will continue to enjoy an increase in disposable incomes. Latin America's disposable income grew 29.5% in real terms from 2006-11 while Asia Pacific was close behind with a growth rate of 26.6% in the same time period (Source: Euromonitor 2012). This growing middle class has been eager to flex their purchasing power as they aspire to move up the consumer ranks. Additionally, the 2012 World Wealth Report indicated that the number of high net worth individuals (known as HNWIs with liquid assets of at least US$1.0mn) living in Asia Pacific has overtaken that of North America for the first time with total wealth of US$10.7tn. While many of these HNWIs are concentrated in the developed market of Japan, China is home to the second largest population. In addition, significant growth in the number of HNWIs occurred in India and Indonesia. This increase in wealth directly correlates to increases in discretionary spending such as dining out which McKinsey & Co. forecasts to grow at 10.2% per year over the next decade.
- Healthy Living: Though a common trend among developing countries for years now, the significance of health and wellness has begun to reach consumers across the globe. As consumers move to urban areas and earn more disposable income, they have better access to healthy, good-for-you products. The global retail sales of food and beverages for health and wellness (natural, functional, better-for-you, and allergen-free) was on pace to exceed US$663bn in 2012. This is up from US$524bn in 2007 and US$375bn in 2002. (Source: Euromonitor 2012).
- Green for Good: Sustainable, earth-friendly products continued to expand their reach across the globe as well. As disposable income of emerging markets continued to grow, so too did the ability of consumers to make eco-conscious purchasing decisions. A Euromonitor International survey found that over 70% of global respondents would be willing to pay a slight premium for a “green” product than one that did not possess those features. As an example, the global organic baby food market has grown at over 5% annually for the last nine years with only the exception of the recession year of 2008-09. The global “green” market is still in its infancy, but can be valuable for those brands looking to differentiate themselves in developed markets.
- The Urban Migration: Beginning in 2008, there were more people living in urban areas than there were in rural communities. Currently, there are about 3.3 billion people living in cities. By 2030, it is expected that more than 60% of the population will reside in urban areas (Source: The World Bank 2012). As more of the population shifts from subsistence living to working in industrial or professional roles, their material needs are also changing. The demand for products that provide value through convenience (such as on-the-go food and apartment storage solutions) is growing rapidly. Datamonitor expects these urban customers to incorporate more dining out into their lifestyles and forecasts that the world foodservice industry will reach US$992bn by 2014.
- Constantly Connected: The internet is not yet worldwide, but its saturation is accelerating. From 2006-2011, internet usage grew at a rate of 96.7%. It has not only become an important mode of communication, but is also responsible for retail growth in the form of online sales. In 2012, global online sales were US$453.6bn, up 30.5% from US$347.4bn in 2010 (Source: Euromonitor 2012). The advent of the smartphone now facilitates consumption on the go with apps for shopping, sharing, and mobile payments. In October 2012, the number of smartphone users reached 1 billion. The smartphone is still considered a luxury item in many markets, making it an even more coveted accessory for the emerging middle class. A Keller Fay Group study found that internet users mention an average of 7.6 food and dining brands each week via social media, making these newly connected consumers a prime opportunity for food and beverage markets to create brand advocates.
As we consider these top global trends in consumption, it is fascinating to consider how these developments will impact the global economy over the course of the year. 2013 promises to continue to provide challenges in the marketplace as the global consumer becomes richer, savvier, and increasingly selective. The number and strength of food and beverage manufacturers is growing, but there is still plenty of opportunity for the company that is willing to understand what the consumer wants and needs in for his or her modern lifestyle.