With growing economies, rising incomes and expanding middle classes, the five emerging countries that form the BRICS (Brazil, Russia, India, China, South Africa) offer a wealth of potential for consumer goods companies facing stagnant demand in the West. However, these markets are far from homogeneous and each has its own advantages and pitfalls. This new global report compares and contrasts the characteristics and buying behaviour of BRICS consumers, and identifies future opportunities for grow
The BRIC markets of Brazil, Russia, India and China were joined by South Africa in 2010 to form the BRICS. The group provides a formidable new force, accounting for 40% of the world’s population, a quarter of its land mass and a fifth of global GDP.
These countries’ vast and growing pool of middle class consumers are providing immense opportunities for consumer goods companies facing stagnant demand in developed markets. However, they are a disparate group with diverse characteristics and habits.
With its GDP of US$13.5 trillion (at PPP) being 22 times the size of South Africa’s. China also saw the fastest economic expansion over the 2008-2013 period.
India has the second highest GDP of the BRICS group, projected at US$5.2 trillion (PPP) in 2013. India has also witnessed consistent economic growth over the last five years and, like China, was relatively unaffected by the global recession.
Russia and Brazil had similar GDP levels measured at PPP in 2012, at US$2.7 and US$2.5 trillion, respectively. Russia was more severely impacted by the global recession than other BRICS, but was quick to recover on the back of high oil prices.
South Africa has by far the smallest economy of the BRICS, but is a significant force within the Middle East and Africa region, with a well capitalised banking system, abundant natural resources and an established manufacturing base.
Unemployment levels are relatively low and falling among most of the BRICS, contributing to growing consumer confidence and spending levels. However, South Africa suffers from very high joblessness, at over 25% in 2013, which is especially severe among the young.
Despite the wide and growing gap between rich and poor, per capita disposable income rose strongly in all five markets over the 2008-2013 period. Forecasts for 2013 show per capita income to be highest in Russia and Brazil, at US$9,432 and US$8,345, respectively.
Disposable incomes in India are still very low by international standards, amounting to just US$1,331 in 2013, with the majority of the rural population still living in extreme poverty.
A strong, largely urban middle class consumer base has emerged in all markets, boosting domestic consumption in a wide range of categories, such as household durables and everyday goods, housing, communications, financial and healthcare services, education and leisure.
The share of “middle income” households is highest in India and Brazil, at 29% and 28%, respectively, and is particularly low in South Africa, at 15%. However, Russia has the highest share of households with an annual disposable income over US$10,000 (PPP), at 86%.
One visible indicator of the growth of middle classes is the rapid growth in car use. While in Russia, over half of all households possessed a car in 2013, only 7% of Chinese and fewer than 5% of Indian households did so, suggesting huge potential for growth in these markets.
Despite growing incomes in general and the rise of the middle classes, income inequality remains a massive problem facing all of the BRICS economies. South Africa is the most unequal society in the world, with a Gini coefficient of 0.64.
Brazil and Russia were the only BRICS markets to see a slight improvement in equality over the review period as government measures to reduce the income gap began to bear fruit.
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