OVERVIEW

Around the world, fears for the economy and job security were foremost in consumers' minds as the recession began to bite. At the start of 2009 the global average on the Nielsen Consumer Confidence Index was down to 77 points – the lowest level since the company launched its worldwide consumer confidence survey in 2004.

LOOKING TO 2010...
While purse strings may be loosening in some markets, there’s clearly a big difference in the pace of expected recovery between the emerging and developed markets.
In the more developed economies, consumers' increased confidence is not yet translating into a widespread readiness to start spending.
James Russo, Vice President, Global Consumer Insights, The Nielsen Company

Although the index increased five points in the second quarter, consumers remained pessimistic. As in the UK, they responded by spending less on fuel, clothing, entertainment and groceries.

However, while the economic concerns remained broadly consistent, their influence on purchasing behaviour was strongest in countries with more mature soft drinks markets. In less developed markets, sales continued to thrive.

In the saturated United States market the picture was almost uniformly negative. Consumer confidence was below the global average and soft drinks sales value and volumes dropped, reversing the promising performance of 2008. In the Republic of Ireland, one of the countries hardest hit by the recession, deflationary pressure on many consumer categories, including soft drinks, made for a difficult time.

This was in marked contrast with Brazil and India: growth in these two confident, developing nations continued unabated. In India sales of soft drinks soared, with fruit/vegetable still drinks leading the way. Health was also high on the agenda in South Africa, where there is growing enthusiasm for pure juice and diet carbonates.

Sports and energy drinks surged in popularity, with double-digit sales increases in the less developed markets of India, South Africa, Brazil − and France, where bottled water is still the dominant soft drink sub-category.

As the world emerges from recession and consumer confidence grows, it will be interesting to see how long consumers maintain their cautious spending patterns. Meanwhile, as we have seen in the past, strong brands are likely to continue showing their resilience in tough economic conditions.