Why are Emerging markets important for Consumer Product Companies?
Developed markets are expected to grow at low single digits for next 3-5 years on the back of low economic growth rates, ageing population and the ever changing consumer preferences.
Emerging markets will likely play a large role in the growth of consumer packaged goods (CPG) companies, given the positive outlook for most of these markets long term.
Geographic diversity will help companies generate more consistent profitability, as periods of economic weakness in one region can be offset by economic strength in another. The biggest European consumer product companies–Unilever PLC, Reckitt Benckiser Group PLC, Danone, and Nestle S.A. posted solid results despite tough macroeconomic conditions facing them in developed markets.
However, operating in emerging markets doesn’t come without risks, like currency volatility and election uncertainties. Therefore, we expect companies to enter markets slowly or through a joint venture and to diversify manufacturing.
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