Tassos Stassopoulos, AllianceBernstein’s portfolio manager for emerging consumers, was in Sydney yesterday after spending some time in Indonesia.
Indonesian consumers are very much focused on their families, he said. They spend their spare time visiting relatives or going to shopping malls (from the lowest sociological group to the lowest) and they are very risk averse, according to Mr Stassopoulos.
But Nigerian consumers, on the other hand, are extremely driven and have a ‘can do’ attitude, he said.
“Nigerians are out to make money, and if you drive around Lagos the advertising slogans reinforce that,” said Mr Stassopoulos.
AllianceBernstein has developed similar ‘grassroots wisdom’ from its time spent in eight countries over the last two years, including Inner Mongolia, Africa, the Philippines, Indonesia, Thailand and India, he said.
“[We want to] meet consumers in their homes, understand their hopes, dreams and aspirations, debunk myths and gain insights,” said Mr Stassopoulos.
The ‘grassroots’ approach is at odds with traditional approaches to the emerging consumer theme, which usually involve defining a benchmark and then narrowing it down to consumer plays.
But that kind of approach only gets you the “success stories of today” – not the success stories of tomorrow, according to Mr Stassopoulos.
“Similarly, if you just use a purely bottom-up analyst approach … you find that they’re missing big areas of growth and at the same time they’re missing the developed market stocks,” he said.
The solution is to “behave like a company” and seek the wisdom to invest in the “trends of tomorrow”, said Mr Stassopoulos.
“Your top down tool will give you a disciplined methodology to identify the most likely areas of emerging market growth. Once you identify those areas [you undertake] grassroots research,” he said.
Through its interactions with consumers around the world AllianceBernstein has ‘busted’ a number of myths about emerging consumer investments.
For example, Mr Stassopoulos discovered during his overseas visits that half of the products in grocery stores tended to be local and half were global, which put paid to the myth that emerging market exposure should be through emerging market listings.
Other myths cited were that: consumers want cheap goods; eating habits simply shift from carbohydrates to protein; consumers in all fast growing emerging markets are optimistic about their future; all multi-national companies can leverage brand strength into emerging markets’ leisure time is only for the emerging middle class; and luxury goods consumption is just a China bubble.
