10 Global Macro Trends for the Next Five Years

EXECUTIVE SUMMARY

1. An uncertain future

2. The emerging middle classes

3. The disaffected youth

4. The rich/poor divide

5. The climate challenge

6. An ageing world

7. The urban transition

8. People on the move

9. A more connected world

10. China goes global

Summary 1 Impact of macro trends on consumer markets over the next five years

INTRODUCTION

TREND 1: AN UNCERTAIN FUTURE

Trend outline

The Eurozone crisis drags on The US’s looming fiscal cliff Political uncertainty also takes its toll Summary 2 Factors Contributing to Uncertainty in 2012 Developed markets face economic stagnation Chart 1 Real GDP Growth Forecasts 2011-2016

Implications

Unemployment remains high as businesses unwilling to hire Consumers remain cautious Chart 2 Global: “In the next 12 months do you intend to change any of the following habits?”

Outlook

No change in sight Spending will be uneven Chart 3 Forecast Per Capita Consumer Expenditure Growth by Country 2011-2016

TREND 2: THE EMERGING MIDDLE CLASSES

Trend outline

A shift in global economic power Disposable incomes rise fastest in emerging and developing markets Brazil’s growing middle class Turkey gets richer Table 1 Per Capita Disposable Income by Country 2006/2011/2016

Implications

Spending on discretionary items set to rise Table 2 Expenditure on Food and Non-alcoholic Drinks as % Total Expenditure in Developing/Emerging Markets 2006/2011/2016 Opening up new markets The challenge for marketers

Outlook

Chart 4 Forecast Number of Households With Annual Disposable Income Over US$100,000, 2011/2016

TREND 3: THE DISAFFECTED YOUTH

Trend outline

A lost generation? Voicing discontent The extent of youth unemployment Overqualified but inexperienced Are mini-jobs the solution? Table 3 Youth Unemployment Rate By Country 2006-2011

Implications

Delaying adulthood Youth remain enthusiastic shoppers Opportunities for the education category Chart 5 Global Attitudes by Age Segment 2011

Outlook

TREND 4: THE RICH/POOR DIVIDE

Trend outline

Income inequality and social unrest The pros and cons of wealth generation Summary 3 Reasons for Economic Inequality The extent of income disparity Urbanisation causes growing divide in China India’s rural-urban divide Europe is more egalitarian Table 4 Gini Coefficient by Country 2006/2011/2016

Implications

The rise of the super rich Chart 6 HNWI Population by Country 2010-2011 Polarisation of demand Demand for luxury travel The poor seek value Discounters benefit Fast food increases budget offerings

Outlook

The need for reform Progress will be slow

TREND 5: THE CLIMATE CHALLENGE

Trend outline

Summary 4 Regional impacts of global change

Implications

Food shortages and the battle for water The poor will be worst hit The droughts of 2012 Importing countries suffer the most Meat prices set to soar Biofuel also affected Chart 7 Commodity Food and Beverage Price Index

Outlook

What can be done? Consumers will be more willing to take action Chart 8 Global Attitudes to Taking Responsibility for Climate Change 2011 Temperatures will continue to rise... Summary 5 Global Climate Change: Future Trends ...Along with food prices Meat to become a luxury

TREND 6: AN AGEING WORLD

Trend outline

Lower fertility, longer lives Regional differences Chart 9 Population of 65+ by region 2011/2016

Implications

Economic burden Financial security will be a priority Chart 10 Global Attitudes Towards Saving 2011 The pensions crisis Chart 11 Forecast Old-Age Dependency Ratio by Country in 2016 Seniors to take more responsibility for their care Opportunities for marketers Focus on health Adapting to an ageing consumer base

Outlook

Chart 12 Mean Age of Population by Country 2011/2016

TREND 7: THE URBAN TRANSITION

Trend outline

City growth speeds up Urban-dwellers in majority since in 2008 Chinese and Indonesian cities to expand the fastest Table 5 % Urban Populations 2006/2011/2016

Implications

Positives: rising incomes, growing demand Negatives: Pressure on resources, pollution and social unrest Different approaches to urbanisation

Outlook

The shift from West to East will continue China to host more mega cities “Citysumers” will form the bulk of new middle classes Chart 13 World’s Largest Cities in 2016

TREND 8: PEOPLE ON THE MOVE

Trend outline

Economic migrants on the increase The US melting pot Italy and South Korea become more attractive to migrants Chart 14 Number of Foreign Citizens 2011/2016 Remittance flows Chart 15 Leading Recipients of Migrant Remittances 2011 Foreign study Chart 16 Number of Foreign Students in Leading Host Countries2011

Implications

Filling the labour force gaps Rich migrants fuelling demand for luxury goods Creating diversity Lack of integration

Outlook

Chart 17 Forecast Net Migration by Country 2006/2011/2016

TREND 9: A MORE CONNECTED WORLD

Trend outline

Internet use burgeons in developing markets China and India drive growth Obstacles persist in Latin America Table 6 Number of internet Users by Country 2006/2011/2016 Access goes wireless Smartphones for all Table 7 Number of Mobile Phone Subscriptions by Country 2006/2011/2016

Implications

The world gets smaller Online crime Information overload Global shopping The growing importance of social media The success of viral marketing Crowdsourcing Chart 18 Global Use of Internet by Activity 2011 Wireless communication Chart 19 Global Frequency of Mobile Phone Usage by Activity 2011

Outlook

Internet user base to expand further Cloud computing will be the way forward Chart 20 Forecast Growth in Number of Internet Users by Country 2011-2016

TREND 10: CHINA GOES GLOBAL

Trend outline

A greater role in world trade Overseas investments soar Focus shifts to North America and Europe Table 8 FDI Outflows – Top 10 Countries 2006/2011 Export growth Chart 21 Exports from China 2006-2011 The rise of the Chinese brand Learning from past mistakes Lenovo becomes a household name Raising the stakes in fashion Bosideng establishes flagship store in London Domestic brands fend off competition at home Chart 22 Global Shares of Selected Chinese Consumer Goods Companies 2006/2011

Implications

The advantages of Chinese investment The corporate responsibility challenge The threat to Western brands

Outlook

Overseas investment will step up The rise of the Chinese brand Brands to watch Summary 6 Top 20 Chinese Consumer Goods Brands 2011