Morningstar is out with an epic research report that highlights the investment opportunities for Consumer Staple stocks, specifically how investors can take advantage of the tremendous growth coming out of Emerging Markets. I took some time to highlight statistics that really put into context how global demographics are changing. Everything has been taken directly from their report which I certainly encourage you to check out if you have some time, enjoy.
By 2020 the number of middle-class consumers in emerging markets will likely exceed the United States and Europe combined.
Euromonitor forecasts that emerging markets will account for nearly three fourths of the world’s urban population by 2015.
Per capita beer consumption has had an R2 of 0.96 with per capita GDP growth in the largest 10 beer markets since 1999. We estimate the R2 of beer consumption and GDP growth in developed markets to have been just 0.05 over the same time period.
1) According to the United Nations’ Department of Economic and Social Affairs, China’s population grew approximately 9% annually between 1975 and 1995.
2) In March 2014, China’s State Council approved plans to move more than 60% of the country’s total population to urban locations by 2020, up from approximately 53% today. This will effectively shift 15 million–20 million rural residents—roughly equal to the current size of the New York City metropolitan statistical area—to urban locations every year through the end of the decade.
3) According to China’s Ministry of Human Resources and Social Security, the average yearly wage in China grew by a CAGR of 13.8% from 2003 to 2013.
4) China had more than 600 million Internet users at the end of 2013 (according to World Bank data), representing a penetration rate of 45.8%.
5) Less than half of China’s Internet users are online shoppers, compared with 74% in the United States.
6) China has the world’s largest mobile Internet base with 500 million users (37% of the total population).
7) Based on data from iResearch, merchandise purchased on mobile devices is expected to increase by a CAGR of almost 60% over the next four years.
1) The population is expected to grow at a 1% CAGR to 2025, adding 167 million more people.
2) Just under two thirds of the population is of working age and that 64% is under the age of 35. By 2025, the World Bank expects that as the young generations age, around 68% of India’s population will be of working age, an increase of almost 137 million people.
3) The country’s consuming class (annual disposable income greater than $5,000) is expected to grow from under 100 million to between 450 million and 500 million individuals over the next decade according to Financial Times.
4) India’s GDP per capita growth rate (7.7% CAGR since 2000) outpaced the global average, but at just over $5,400, GDP per capita trails the world average ($13,301) by more than half.
5) More than 65% of India’s population still lives in rural areas.
6)The Internet and Mobile Association of India estimates that 70% of India’s active rural Internet population accesses the network via their mobile phone.
1) According to World Bank, Mexico and Brazil, the two largest Latin American markets, have only 38% and 14% of roads paved, respectively.
Central and Eastern Europe
1) The long-term opportunity in the Central and Eastern Europe (CEE) region is less attractive than that of some other emerging markets because of unfavorable demographics. The population of the region is aging and shrinking.
2) Low birth rates are the driver of the population decline in Eastern Europe…. the equally weighted total fertility rate across the region has fallen from 3.6% in 1960 to 1.8% in 2012.
3) Net migration has been negative for a decade.
4) The transition from centrally planned to free market economies has been rapid, and almost 25 years after the fall of the Iron Curtain, the accession of several post socialist nations to the European Union is confirmation that these countries are becoming integrated players in the global economy. This maturity is reflected in the material slowdown in GDP per capita growth, from 17.9% (nominal and in current U.S. dollars) between 2000 and 2008, when the region’s output growth was third only to that of China and India, to just 0.7% since.
5) Eastern European consumers are quite price-sensitive relative to those in developed markets. Between 2008 and 2013, retail value sales of private-label packaged food in Russia increased at a 31% CAGR. This is much faster than the 9.6% and 5.0% CAGRs of the United States and United Kingdom, respectively.
1) Africa’s population is anticipated to exceed China and India combined by 2065, according to U.N. projections.
2) According to U.N. projections, Africa’s population is expected to grow from approximately 1.1 billion to 2.4 billion by 2050 using medium-variant fertility rate assumptions (Exhibit 2). This represents an 11.3% CAGR between 2010 and 2050, outpacing world population growth estimates of 4.4% and making it the highest potential growth region we’ve examined in this report.
3) Africa is also made up of a younger population than many emerging markets, with a median age of 19.7 years, using U.N. estimates, compared with just over 30 in Asia and north of 40 in Europe
4) According to an October 2012 McKinsey survey of African urban residents, 16- to 34-year-olds account for 53% of the continent’s income.
5) Africa’s workforce is currently made up of approximately 382 million individuals, with another 122 million expected to enter the workforce by 2020 according to McKinsey. This suggests that Africa’s consuming class could reach 500 million by 2020.
6) According to the International Labour Organization and McKinsey, almost 60% of Africa’s labor force was composed of government and agriculture jobs in 2010.
7) Over the past 10 years, Africa collectively posted a GDP CAGR of 4.7% (compared with 2.7% globally) and is home to six out of the 10 fastest-growing economies, according to The Economist.
8) Roughly 40% of the African continent lives in cities—a percentage similar to China and surpassing India—compared with 28% 30 years ago. 2030 is estimated to be the tipping point when more Africans will reside in urban areas than in rural areas.
Find the whole report (which you have to register for) here.