China - Alcoholic Beverage Consumption

I have recently performed a bit of business advisory work in the alcoholic beverage sector. One of my recommendations focused on the emerging markets for this USA based company. One of the reports I read provided very good insights on the decline in the Western markets versus the growth in Asia-Pacific, and in specific China. The report here highlights that:

"The global market for alcoholic drinks was worth US$979bn in 2007, equivalent to 1,460bn servings. Although sales of alcoholic drinks are typically relatively immune from recessions, although the current economic downturn has coincided with a period of higher inflation and rising prices which have dampened demand for alcoholic drinks. However, the downturn itself is likely to have a positive effect on demand. In developed markets consumers will spend more time socializing and drinking at home. In emerging markets consumers will buy fewer consumer durables and spend part of the savings on everyday treats such as beer, wine and spirits."

A few of the key findings of the report are:

"The volume of alcoholic drinks consumed in western Europe is forecast to decline over the period 2007-2012 by an average of 0.2% per annum. Between 2007 and 2012 the annual sales of spirits globally is forecast to increase by over 1bn liters. 70% of this increase will take place in Asia-Pacific markets. China is the largest beer market in the world, having overtaken the US in recent years. This growth is being driven by a growing middle class that has increasingly Western tastes plus a shift away from traditional spirits consumption. Globally, there will be an additional 18.7bn liters of beer/cider/FABs sold in 2012 compared to 2007. 62% of this increase will take place in Asia-Pacific and 29% will be in Eastern Europe. Less than 8% of this growth will be in North America and these regional rises will be a result of the decline in the Western European market."

The World Bank - "Doing Business"

I was prompted to dig deeper into "Doing Business" here, an effort under the World Bank. Ratings on 181 countries showing rankings such as "Ease of doing business", "Dealing with construction permits", "Protecting investors", "Paying taxes", etc. See the complete list here.

The Economist quotes Robert Litan, of the Kauffman Foundation, "... the World Bank may have done more good by compiling "Doing Business" than by lending much of the money that it has."

The Time has Arrived for Entrepreneurism

A very good article from the Economist - "A special report on entrepreneurship: An idea whose time has come" here. The report connects entrepreneurship and economics:

"Today entrepreneurship is very much part of economics. Economists have realised that, in a knowledge-based economy, entrepreneurs play a central role in creating new companies, commercialising new ideas and, just as importantly, engaging in sustained experiments in what works and what does not. William Baumol has put entrepreneurs at the centre of his theory of growth. Paul Romer, of Stanford University, argues that “economic growth occurs whenever people take resources and rearrange them in ways that are more valuable…[It] springs from better recipes, not just more cooking.” Edmund Phelps, a Nobel prize-winner, argues that attitudes to entrepreneurship have a big impact on economic growth."

The report believes that entrepreneurship going mainstream also lies in "... that the social contract between big companies and their employees has been broken."

The report discusses a fantastic effort by the World Bank:

"In 2003 the World Bank began to publish an annual report called Doing Business, rating countries for their business-friendliness by measuring things like business regulations, property rights and access to credit. It demonstrated with a wealth of data that economic prosperity is closely correlated with a pro-business environment. This might sound obvious. But Doing Business did two things that were not quite so obvious: it put precise numbers on things that people had known about only vaguely, and it allowed citizens and investors to compare their country with 180 others."

Open Innovation Driven Solutions for the Poor

Interesting article by Ms. Tara Acharya of the Rockefeller Foundation "Users can drive creative innovation for the poor" here. The author believes that Open Innovation can help deliver to the poor of the world that is either not developed for them or if provided, does not deliver the service required. The article states:

"Innovation guru Eric von Hippel of the US-based Massachusetts Institute of Technology says users are motivated to develop and modify products and services "because they can't get from the manufacturers exactly what they want". "

As I have stated before, I believe satiated people do not innovate. Open Innovation may truly find the breakthrough it promises through consumer innovation or User Driven Innovation (UDI) in the poor of the developing countries - because the desperate need for survival and a desire for a better life lies with them. The article gives an example:

"The Rural Innovations Network, based in India, takes another approach to UDI. It identifies, incubates and distributes grassroots technological innovations that can have a significant impact on rural lives. For example, it helped an innovator develop a novel energy-efficient burner for kerosene stoves that is cheaper, longer-lasting, safer and easier to maintain than conventional burners — making it appealing to the rural consumer. The Rural Innovations Network provided the innovator with critical market research and marketing services."

Boeing Receives $17b Order From India

Mr. Bob Evans' blog on InformationWeek "Boeing Lands $17B Outsourcing Deal From India" here. It states:

"This $17 billion deal placed by Indian airlines pushes to $25 billion the total value of orders they have awarded to Boeing in the past three years. On top of that, Boeing said a much larger 20-year commitment from Indian airlines for 1,000 aircraft valued at $105 billion is still valid, according to the president of Boeing India, Dinesh Keskar."

The blog concludes with Mr. Evans views on protectionism.

Technological Innovation in BRIC Economies

Good article focusing on an evaluation of knowledge driven innovation in the BRIC (Brazil, Russia, India and China) countries here. Interesting to note are comparisons with developed countries and with VISTA (Vietnam, Indonesia, South Africa, Turkey, and Argentina) countries.

Cisco to make SmartPhones

Since I published my blog on Cisco being the 21st century eCPG leader here, I have been provided with some insightful links on Cisco's further plans in the eCPG sector.

In an article "Are Smartphones on Cisco's Wish List?" here on Chinese website C114, analyst Mark Sue of RBC Capital Markets is stated as declaring:

"Considering its big push into the consumer market, we believe Cisco may be developing a smartphone of its own, slated for mid-2010."

To further the claim, the article cites:

"On Mar. 31, Cisco was awarded a patent for managing time delays in relaying video wirelessly to consumer electronics devices. The same day, it received a patent for a network-connected phone able to stream video. Many of Cisco's recently filed patents mention a personal digital assistant as a device that could potentially use the innovations described."

The article also provides good insights on the USA's broadband capabilities reaching a point where tele-presence will start to become a retail service along with cable TV, etc.

I look forward to the consumer digital services and values generated through competition.

eCPG (electronic consumer product goods) in China 2008-2009 report

I had an opportunity to review the report "2008-2009 Annual Report on the Development of China's Consumer Electronics Industry" here. Continues to validate the direction for the global consumer spending as I discussed in my blog on Cisco here. I cannot document anything from the report as it is copyrighted and can be purchased from the above link.

21st Century eCPG (electronic consumer products goods) Leader - Cisco?

The appetite of the 21st century consumer when it comes to electronic or digital products is an area that continues to see expenditure versus other sectors. In the digital world all bits flow to the routers, just like all water flows to the oceans. Cisco is starting to own all the digital waterways with it's over 130 acquisitions in the last few years. The recent acquisition of Flip has me wondering if Cisco will be the P&G of the electronic consumer product goods of the 21st century?

If nothing else, I declare that the new term eCPG requires application to Cisco. Question is if growth through M&A activity or acquisitions can be considered consumer innovation?

Curious as to where is Intel?

April 1st Launch of The Economist's New Theme Park

A look at the current econo-state of the world at "New Magical Monetary World of Econoland" - explore the clickable map of the theme park here. A few details on Econoland:

"The currency high-roller: Float like a butterfly with the euro and drop like a stone with the pound!"

"Fiscal fantasyland: Watch the economy shrivel before your very eyes as you struggle to stop growth falling!"

"The Severe Contest: Try your strength against a bear market!"

And further details from the spokesman in the article:

"“Econoland will appeal to the kid in everyone”, said a spokesman for The Economist Group, “although children themselves will not be admitted”. The park will open on April 1st."

Social Media Trend Alert

Gulliver of the Economist provides insights for the world travelers. In a recent article "Trusting the people" here, he states the following regarding online sites providing reviews of travel services:

"...the small storm stirred up by the news that Royal Caribbean cruises had contacted people who had repeatedly put up positive reviews about them—mainly on the CruiseCritic site (owned by Tripadvisor)—and offered them rewards in return for more positive online coverage."

Gulliver concludes:

"As a result Gulliver finds himself increasingly drifting away from such sites in favour of single-source guides, such as Alastair Sawday or Mr and Mrs Smith. It's not that the accumulated wisdom of online reviewers is to be sniffed at; more that the crowd's objectivity is not always guaranteed."

I believe this is the new social media trend that has been prevelant and now going mainstream.

For further reading, please see my blogs, "Debunking "Wisdom of Crowds" Myth - Two Examples" here, "Crowds, Their Self Management - Empirical Data" here and "Mind-Meshes" here.

Reckitt-Benckiser Invests in Web Advertising

Colleague Franz Dill writes about the shift in advertising spending at Reckitt-Benckiser here. Web ads will receive $20m of an estimated $475m where 90% usually goes to TV media.