Income distribution rather than average income, key to understanding market opportunity and consumer dynamics in emerging markets, which allows for targeted portfolio strategies.
Our monthly U.S. recession predictor, based on a Federal Reserve model, has identified all recessions since 1955. In 2007, we used it to warn clients of the high likelihood of an impending recession.
There is currently no sign of a coming recession. The latest analysis is based on May 2017 data. (more…)
Our new white paper by our colleague Nicole Boyd is truly important. It lays out how to quantify market opportunities geographically using income distribution and category data.
The paper reflects how we go about market sizing and the methods described have been proven over the past 13 years in hundreds of our projects. (white paper…)
It is our experience that companies, like people, have personalities: some are extraverts and others are introverts. However, while people tend to be one or the other, companies can be both – acting like an introvert in regard to one aspect of business while behaving as an extravert in another. (more…)
We are often asked if a particular country is over- or under-performing in economic growth. As one executive told us: “it’s all about macro”.
After carefully defining economic growth, we find that among large countries, China is the superior performer over the past 25 years. The United States and the European Union grow slightly above expectations. Russia and Brazil are under-performers.
In this post we look at the detailed analysis of economic growth and the performance of all countries. (more…)
In the era of “American carnage”, as proclaimed by Trump, it is instructive to look at which countries are at-peak or off-peak in economic performance terms.
The United States and 54 other larger countries are currently at-peak, while 26 larger countries are off-peak. But the story within the U.S. differs. (more…)
The telecommunications industry is experiencing change with the evolution of the mobile industry and growing importance of connectivity for consumers. For companies to manage change and have long-term success, one necessary ingredient is the size of a company’s subscriber base. We look at the importance of having at least 150 million subscribers or subscriber equivalents and a top 2 position in a market. (more…)
This short video shows the relative performance of city economies 2001-2016 (go to video…)
This EIU Canback special report explains how Asia’s consumer landscape will evolve over the coming decade and how companies can capture growth by leveraging analytics to anticipate turning points such as ‘take-off’ or plateau points in the life cycle of a product category. (more…)
While we take a sharply analytical approach to quantify market opportunities for today and tomorrow, this alone is not sufficient to provide our clients with a comprehensive view of what is happening in those markets.
Canback consultants have therefore walked the ground in nearly 80 countries over the past ten years, in order to complement our quantitative expertise with an intimate understanding of the markets we visit.
Most large U.S. fast-moving consumer goods companies find it difficult, if not impossible, to grow at the rate of the economy. One part of the solution is to premiumize and to move to a more organic or sustainable brand portfolio.
We thus constructed the “Whole Foods Test” to see if this is happening. Arguably, Whole Foods’ assortment shows where the FMCG market is heading, especially in food and beverage. What today is the territory for primarily higher income and better educated consumers, is tomorrow’s mainstream norm. (more…)
Before any Olympic Game, the media revel in doomsday prophecies that never materialize. Today, the day before the opening of the Rio games, we did a fact-based analysis of whether these Olympics will be troubled. We conclude they will be a success.
Cities, not countries, organize Olympic Games. We thus quantified the cities’ hosting ability from 1948 till 2016. Rio is at the lower end of the spectrum, but not glaringly so. (more…)
As part of a large research project to understand where leading edge cities are found in the U.S., we started with the more modest goal of finding buzz (sought after, wanted) cities.
We find that tourist destinations have the highest buzz factor, topped by Daytona Beach. Hipster cities also score high, like Portland, Oregon, Austin, Texas, and Madison, Wisconsin. At the bottom is Worcester, Massachusetts. (more…)
The VRIO concept was introduced by Jay Barney in 1991. It is now the cornerstone of corporate strategy development. We apply it in our strategy work, and it is also the foundation for how we think about adding value to clients.
A resource like management consultants has to be valuable, rare, inimitable, and organized. (more…)
The highest quality food in the world is by any objective measure French, and the ultimate arbiter of fine dining is Guide Michelin.
We used the guide’s global restaurant ranking for 2016 to statistically analyze which countries have the highest love of food and what drives gourmet dining. Belgium ranks first, Poland last, among the 25 countries. (more…)
Developing a strategy that creates a sustainable competitive advantage is a vexing task. Our approach combines the two dominant strands within strategic thinking: Structure-Conduct-Performance and the Resource-Based View. Our projects aim to build strategies that are VRIO–a central concept in modern strategy development theory.
Here is advice for current and future business analysts at large corporations or consulting firms.
Your most important goal should be to add value. This means thinking long and hard about whether you copy, tabulate or analyze information. Only analysis truly adds value. (more…)
The global luxury goods market has enjoyed spectacular growth over the past 30 years. We predict this will continue based on an analysis of luxury goods retail stores. We mapped Burberry, Chanel, Gucci, Hermes, Louis Vuitton, Prada, and Apple stores around the world by city. In total 2,176 luxury good / high fashion stores. (more…)
Highly profitable companies earning a very high return on capital should be viewed with skepticism. Why? Because they may not be maximizing shareholder value as they defend a high P/E ratio, and not capturing good, but lower P/E opportunities. Maximizing profitability is not the same as maximizing shareholder value. (more…)
How quickly should a category or brand grow to avoid standing still? It depends on how fast the relevant part of the population is growing. We updated (May 2015) our popular analysis and it now covers 2015-2025. India, Bangladesh, Viet Nam, Pakistan, Indonesia are the top 5 countries. (more…)
Making diversification decisions–be it brand extensions, introducing new products, or entering new geographic markets–is hard for large companies. Few new initiatives seem to add significant value compared to what already exists. Yet companies fade without renewal. (more…)
Linear regression is the most popular method to forecast demand, but it does not always give the best results. Using an example from the fast-moving consumer goods industry, we introduce what are often better alternatives and discuss how to measure predictive accuracy (and no, it is not R²). (more…)
Many executives look for a high R² to assess the quality of a regression analysis, but this is often a mistake. One common example that illustrates why, is the relationship between the stock market and GDP. Regressing the S&P 500 index against GDP, we get an R² of 0.99. (more…)
We developed an interactive chart to show how total alcohol consumption per capita and the main categories beer, spirits and wine have shifted over the past 40 years. It uses publicly available data from the WHO with some adjustments by us (notably China). (more…)
There are a wide variety of consumption patterns for fast-moving consumer goods around the world. What explains the differences in consumption levels among countries? And what are the implications for global businesses as they consider investing in different markets? (more…)
We took a long term look — years 1-2034 — at global income equality using the C-GIDD dataset. In line with other research, we found that inequality was more or less flat before the industrial revolution, rose sharply from around 1800 till 1980 and then started to decline, and is projected to decline further. (more…)
Over the years, companies and managers have come to rely more and more on the Canback Global Income Distribution Database (C-GIDD). C-GIDD’s uniqueness lies in the quality and completeness of our GDP and income distribution data, which covers 212 countries, 694 subdivisions (states, provinces, etc.) and 997 major cities from 2000 till 2025. (more…)
More media coverage of our whitepaper and expertise on emerging markets. This time our managing director, Staffan Canback, is interviewed by Michael Avery, host of South Africa leading business radio program Classic Business. (more…)
With the the never-ending stream of alarming news about the world economy, it is difficult to form an opinion about what is really going on. This post takes a dispassionate look at 2017–a nowcast.
We find that 2017 is expected to be materially better than the average year. Out-performers: Emerging countries in general and especially Asia. (more…)
Billion dollar brands are usually import profit and cash flow generators. But focusing solely on those brands can be dangerous.
Consumer needs are fragmenting and new demand is seldom met by these large brands. Large FMCG companies need to efficiently bring both large and small brands to market. (more…)
We expect cellular data services in emerging countries to continue to grow rapidly, almost independent of income growth. Data has rapidly developed into a key driver in the wireless telecommunications industry. While this trend is happening worldwide, the development of data-focused services and devices is nearing maturity in affluent countries but remains early in development in emerging countries. (more…)
We have updated the analysis of the personal popularity of the 22 main party U.S. presidential candidates in light of the 2016 election. Trump under-performs his party’s popularity, Rodham Clinton out-performs her party. We use the same method as when we analyzed 1960-2012 well ahead of this election. (more…)
Mobile operators in the United States are going through an upheaval as they see previously key sources of revenue decline. The earlier ecosystem of operators providing voice, messaging, and data sources is transforming into one that serves as the connection for everyone and everything.
Fortification is the practice of deliberately increasing the content of an essential micronutrient, such as vitamins and minerals in food and beverages. We took a look at the price premiums associated with fortification after eliminating other effects such as branding, pack size and geography.
We find that fortified foods command a 11% price premium over non-fortified equivalents, but with wide variability. (more…)
Our managing director Staffan Canback was recently interviewed on Business Day TV, the leading South African business channel. He commented on recessions in the US and South Africa, outlook for African countries, and other topics (8 minutes). (go to video…)
The best measure of company size is its value added (VA) because this reflects what the company does internally. VA is the sum of labor cost and capital cost including taxes. The ranking based on VA differs significantly from the Fortune 500 which uses revenue.
Based on VA, here is the Canback 50. Walmart tops the ranking, as it does in the Fortune 500, and Apple takes 2nd place (up from 3rd). Berkshire Hathaway is 3rd (up from 4th). ExxonMobil drops from 2nd to 29th. (more…)
Our most famous project is “Cheese in China”. In 2005-06, we were commissioned to create a 20 year prediction for where the market was heading. At the time, the Chinese hardly ate any cheese. We predicted it would be the second largest market in the world by 2025.
Today we are half-way there. We predicted 32% annual growth (far above any other observer). Actual growth is 32%.
Why this remarkable success? Because we look at predictions as a strategic exercise, not a statistical modelling exercise. Never commission a consulting firm to model the future. Commission them to understand the future (supported by a model). (more…)
Lately, the cellular operators in the United States have made acquisitions outside their core activities. Why is this? The key reason is that cellular services are a maturing market. Yet free cash flow is still high, providing funds to finance acquisitions. (more…)
Part of the Wal-Mart family, Massmart is the largest retailer in South Africa. A Canback team recently assisted Massmart with their Africa expansion plans and they included some of our recommendations as the backbone of the year-end results for 2015. (more…)
Setting prices in various countries that also make sense globally is a difficult tasks. The same product–be it a soft drink or a consulting project–sold in the United States and in South Africa should not carry the same price. How should companies determine the price difference? (more…)
The explosive growth of craft beer is one of the most interesting phenomena in U.S. consumer markets over the past 20 years. It is an almost perfect illustration of the J-curve concept.
We took a look at the characteristics of craft beer demand and found that affluence, importance of the services sector, and size of student population are the key factors driving craft beer penetration. New York is the leading craft beer market. (more…)
The UN Climate Change Conference in Paris set the goal of limiting global warming to 2 °C, by lowering CO₂ emissions. Using the elasticity concept from economics we shed light on how much countries can feasibly lower the emissions.
We find that global emissions may be reduced by almost 60%. China, the US, Russia and India together contribute 71% of the global reduction. North Korea has the largest relative reduction opportunity: 91%. (more…)
We recently quantified how global 12 well-known consumer-facing companies are: Apple, Coca-Cola, Diageo, Electrolux, l’Oréal, LVMH, McDonald’s, Nestlé, Nike, Procter & Gamble, Toyota and Vodafone. Diageo is the most global of these companies. There is still plenty of room for high growth, be it organic or through acquisitions. (more…)
We are excited to introduce Market Explorer, a joint development between the EIU and Canback. It is a new online tool that allows immediate insight into market opportunities worldwide. With detailed coverage of over 90 countries and 200 cities, forecasting through 2030, and application of over 1,600 data points per city, the intuitive tool provides an unmatched expertise of economic modeling and a reliable analysis of where growth can be found. (go to video…)
In our work for cellular operators, COAT is the underpinning for our analysis of performance. It applies structural equation modelling to a dataset of 36 countries / 62 operators over several years. Drivers of profit and growth, among other things, are quantified using this statistical technique. (more…)
We look at the provincial GDP growth rates in China. The redder (hotter), the higher growth; the bluer (colder) the lower growth. Growth is relative to the provincial median growth of 9.1% p.a. for the entire period (so in a given year, all provinces can be red or blue). Note that deep blue would still be solid growth in any other country. (go to video…)
We are delighted to report that The Economist Group, through the EIU, has acquired Canback & Company effective July 15, 2015. We will operate as a largely independent unit called EIU Canback. (more…)
The cost-of-capital concept is a cornerstone of corporate finance. Here we take a different view: What is the cost to society for managing its capital? We look at the U.S. and find that the cost is surprisingly high compared to the capital return: around 25 cents for each dollar returned. The analysis explains parts of the financial crisis and the pressure on the financial sector since. (more…)
After May’s hard Brexit speech on January 17, it is now clear that the United Kingdom will leave the EU fully. Yet many of us struggle with understanding what is the EU. Here we give a simplified definition of the Single Market and the European Union’s role within it. We also present some metrics. (This post was originally published in April 2015.) (more…)
The third, and final, risk is inflation. We view inflation as less important to companies because it does not have a direct impact on demand (except when extreme). But it makes pricing difficult and changes consumer behavior. Germany has the best performance, Turkey the worst. (more…)
We quantify currency risk by measuring the standard deviation of exchange rate changes. The Tunisian dinar and the U.S. dollar carries the lowest risk; the Congolese franc the highest. Currency risk is at the same level as economic growth risk and should be carefully considered when making investments outside the home country. (more…)
When making investments in various countries, country risk is always a concern. How should such risk be measured? We suggest that the best metric is the standard deviation of GDP growth. With our metric, Australia has the lowest country risk, and Timor-Leste the highest. (more…)
J-curves explain how consumer preferences change over time. They tell the story of how, initially, reduced cost and standardization create markets. Ultimately, this leads to homogeneous and bland products. At this point, consumers start demanding choice and quality–premiumization begins. (more…)
This article by Staffan Canback and Frank D’Agnese describes how global markets can be analyzed using income distribution data. It leverages the Golder-Tellis model for demand predictions. It also discusses how macro and micro data can be combined in marketing. (more…)
Canback & Company is revolutionizing the management consulting space because of our commitment to continually innovate. To be truly revolutionary requires us to not only be on the cutting edge of analytical methods but includes all aspects of being a global consultant. One area in particular that we feel we are head and shoulders above the competition is our philosophy on travel. (more…)
This 2-pager by Staffan Canback is the third most downloaded paper on SSRN’s M&A Practice download list. (more…)