Tuesday, August 11, 2009

World's Top Brands Set to Rise in the East

Forget all the "bubble" talk about the emerging markets from the US financial media. They are just trying to get more money into the US casino known as Wall Street, instead of having people invest into a great place for their hard-earned money - into areas that have true long-term growth, the emerging markets.

There were two recent and very interesting studies conducted by consultants Wolff Olins and US-based Bain & Co. One study estimated that one-third of the FT Global 500 companies will come from the emerging markets by 2015.

A partner with Bain & Co. said that established western consumer brands were being forced to "battle it out" with emerging market brands as they moved eastwards to take advantage of rising demand for branded products. Many western firms are buying prominent local brands. Others are either taking stakes in or forming joint ventures with local brands.

An example of the joint venture approach is SABMiller's joint venture with China Resource Enterprise to brew Snow Beer in China. Snow Beer is the world's best-selling beer with more than 6.1 billion kiloliters sold in 2008, up 19.1% from 2007

A strategist at Wolff Olins hit the nail on the head and stated "It used to be possible to be a global brand by dominating the US market. That's changing rapidly. Now you have to be number one in Asia."

Wolff Olins believes that the world's next top global consumer brands are set to rise in the east. They named five fruit and drink brands from emerging markets that they believe are ready to become global brands:

ChangYu, China's biggest wine producer; United Spirits, India's largest liquor group; Almarai, a Saudi dairy and fruit juice company; Patchi, a Lebanese boutique chocolate chain; and Juan Valdez Cafe, a Columbian coffee chain.

I don't know how well their picks will fare but I do know that investors looking for profitable long-term investments should look toward the emerging markets that are home to the vast majority of the world's consumers.

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