The marketer’s guide to the MINT countries
Mexico, Indonesia, Nigeria and Turkey - dubbed the MINT countries - have been identified as the next crucial locations on the global map for brand expansion. What potential does each have to offer and what is the passport to achieving success?
Above: Aimia, owner of Nectar in the UK, has recently bought a stake in AeroMexico’s Club Premier loyalty scheme. It believes that while the country’s retail environment is less developed than in western economies it is growing, offering the business a promising future
Mexico, Indonesia, Nigeria and Turkey have been singled out by economists as future economic powerhouses of the world, predicted to grow exponentially in terms of wealth and population over the next few decades, and this has caught the attention of some of the western world’s biggest brands.
And while marketers and investors are not taking their eyes off the previous big four growth prospects of Brazil , Russia , India and China – known collectively as the BRIC countries after economist Jim O’Neill coined the term – they are now looking for fresh opportunities in the MINT nations, also an acronym of O’Neill’s.
Explore the map below to find out key stats about the MINT countries: Mexico, Indonesia, Nigeria and Turkey. Click the icon in the top right-hand corner to view full page
“MINT countries offer interesting growth prospects for Mondelēz International,” says Valerie Moens, associate director of corporate external communications for the Cadbury owner. “They have attractive demographics and are largely untapped in many of our categories, so we’re investing in these countries to fuel growth.”
The confectionery giant is investing $350m (£213m) in a new biscuit factory in Monterrey, Mexico, for example, which is due to open in the second half of 2014. It is designed to support the brand’s growth in the biscuit market across the Americas while boosting margins by lowering costs.
It is investments like this which will help push Mexico from the 14th most wealthy country in 2012 with a gross domestic product of $1.18trn, up to 8th by 2050, by which time Goldman Sachs estimates it could be worth $6.95trn.
Likewise, Indonesia is expected to move up seven places to 9th, while Turkey will gain three places to claim 14th. Nigeria, which is currently the 39th most wealthy country in the world will rocket to 13th by 2050.
“In terms of products, we’re managing our categories globally and leveraging consumer insights to drive initiatives. It makes it possible to quickly take a good idea from one market and bring it to dozens of others without having to reinvent the wheel at every border,” adds Moens.
Paolo Marai, president of watchmaker Timex, which sees “huge opportunity” in the MINT countries, agrees that finding a global position and marketing message that attracts consumers regardless of geography is important, although he says “we may use different communication vehicles [or have] market-specific adaptations”.
Bearing local consumer habits and cultures in mind in this way is critical, warns Andrew Cosgrove, global lead analyst, consumer products at Ernst & Young.
Brands must be willing to give local managers decision-making power because these markets are incredibly competitive
“You can’t take for granted that the branding and advertising that worked in one market will work elsewhere,” he says. Selling pet food on the basis of convenience may work well in the UK, for example, he says, but in South East Asia this will devalue the relationship between owner and pet and turn people off.
“It’s nuances like this that companies really need to understand,” he adds. ”The more you are able to flex your operating model and product range to meet the needs of each market, the better you succeed. But that also means being willing to give local managers decision-making power, because these markets are incredibly competitive.”
The UK Government has identified energy, infrastructure, advanced engineering, retail and education as the most promising sectors in Mexico and UK Trade and Investment (UKTI) teams are working with the Mexican government to double bilateral trade to £4.2bn by 2015.
Indeed, Mexico is the most developed of the four MINT countries from a brand perspective because of its proximity to the US along with the introduction of the North American Free Trade Agreement in 1994, which means many companies have been operating there for a long time.
Viacom International Media Networks, owner of the MTV, VH1 and Nickelodeon brands, has been present in Mexico for 20 years and all business lines are represented, including marketing, sales and production.
“Mexico has been one of our priority markets because it is a growing market driven by the development of the middle class and the progress of technology,” says Sofia Ioannou, managing director of Viacom in the Americas.
“It is a very competitive market, though. You have the multi-channel international brands competing but there are also very strong local brands which play a big role in the market as well.
Comedy Central is the most recent addition to Viacom’s Mexican portfolio having launched in 2011 but through continued market research the brand hopes to expand quickly.
Last year its power of laughter study, a global survey of 3,600 people across 12 markets discovered that Mexicans are the nation most likely to laugh (78 per cent). Brits are at the other end of the scale with just 35 per cent saying they are heavy laughers. The average across all markets is 55 per cent.
Viacom introduced the ‘Roast’ format with comedian Hector Suarez, which attracted 190,000 viewers to Comedy Central in Mexico last year, which Ioannou claims was “a big success for the channel and comes as a result of understanding the audience through this research”.
Viacom is now looking to launch the Paramount channel in Mexico this year and will be producing local versions of show formats that have done particularly well in the market such as Mexico Shore and Ridiculousness Mexico.
Mexican president Enrique Pena Nieto passed a bill last year to increase competition within the telecoms and broadcasting sectors but despite having about 35 million viewers in Mexico, Ioannou believes it is actually “capping the access certain players have in the market”.
Three-quarters of the network’s viewers are under 35, so when it comes to reaching them, digital channels work particularly well, she says.
“Online advertising is growing 35 per cent year on year. If you look at the mobile world, penetration is 86 per cent now, which affects a lot of our decisions,” she adds.
Indeed, according to data from eBay , mobile phones and personal technology are the items most searched for by Mexicans. But while Samsung was the most searched for brand, it was actually mobile handsets from Motorola and Sony Ericsson that they purchased the most in December 2013.
Like Viacom, Latin America is a priority for eBay, with a particular focus on Mexico – considering there are 17 million online shoppers there – in addition to Brazil. The service is currently only available in English but based on insight from other BRIC countries where eBay has already launched localised experiences, a Spanish language version is on the cards for Mexico.
EBay’s deals programme, which offers discounted items for a limited time, has also done well in Mexico. At the end of January, for example, Mexican consumers purchased 225 tablets within 72 hours, which is significant when considering that just 18 per cent of the online population spends 1,001–3,000 Mexican pesos (£45.86-£137.63) and even fewer people (8 per cent) spend any more than that, according to data from the National Institute of Statistics and Geography in Mexico.
However, Jan-Pieter Lips, president of EMEA at Aimia, the loyalty programme company that owns Nectar in the UK and has a 49 per cent stake in AeroMexico’s Club Premier scheme, says the online retail environment is much less developed than in western economies but he points out that there is more room for movement, particularly as the retail sector has grown 9 per cent on average since 2009.
“Mexico has a high percentage of young people that are entering the workforce in the next 10 to 20 years so the market is growing,” he says, which is one of the reasons Aimia chose to enter the Mexican market in 2010.
Ernst & Young’s Cosgrove says too many companies underestimate the time and cost of entering new markets, however.
“Any company that hasn’t done the hard work of identifying where the best opportunities are today and tomorrow will get burnt. You can’t be complacent and expect what worked in London or New York to work in a market like this,” he says.
Indonesia is the most complex of the four markets, according to Ernst & Young’s Cosgrove, as it is made up of thousands of islands and “it can be very easy not to appreciate how diverse each island is in terms of culture and needs”.
He says for businesses to succeed they need to “change their expectations and be willing to adapt their business model, which means trusting local managers to make quick decisions and be as nimble as possible.”
According to the latest UK Government statistics, both countries have less than a 1 per cent share of each other’s market, but a commitment has been made to double bilateral trade to £4.4bn by 2015.
The UK is the 20th largest exporter to Indonesia and is one of the largest investors in the market but businesses do face a number of challenges, including legal and regulatory uncertainty, limits on foreign shareholdings in some sectors and import restrictions in others.
At the end of 2013, the UK Government launched GREAT Britain Week in the capital Jakarta. As part of the event, British products, brands and icons were showcased and brands including Debenhams, SuperDry, Dr Martens and TM Lewin hosted a fashion show to encourage Indonesians to think of the UK as a place to do business with and visit.
Meanwhile, the automotive market in Indonesia is flourishing after car exports rose 58 per cent to 112,000 annually in 2012, with the operator of Tanjung Priok car port planning to increase capacity to 744,000 units by the end of this year, according to reports in the Financial Times.
The number of consumers accessing the internet via mobile devices is on track to increase sharply too if figures from the end of last year are anything to go by, when numbers jumped from 58 per cent in the third quarter to 66 per cent by the end of 2013, according to on-going multi-market study of digital users GlobalWebIndex (GWI). This will create ongoing opportunities for brands.
To take advantage of this flourishing market, BlackBerry is set to develop a consumer smartphone for Indonesia and other fast-growing markets this year after striking a device development and manufacturing deal with Foxconn.
Social network Pinterest launched an Indonesian version at the end of January as it looks to increase coverage in the region. As it stands, 23 per cent of people in the market have an account, but just 7 per cent have actually used the platform recently, according to GWI.
The loyalty sector in Indonesia, like Mexico, is rapidly emerging and Aimia has recently completed a $2m (£1.2m) investment to increase its ownership in local loyalty business Interact from 40 per cent to 100 per cent.
Aimia’s Lips reiterates the importance of agreements like this when entering emerging markets.
“We would never have gone in ‘greenfield’ and tried to set something up from scratch. You have to mix your assets with what is already there and show respect for them. You can’t come in as a western company and think you know everything better. You have to understand the culture,” he says.
Consumer growth and demand is there but foreign companies could do a better job of adapting to the market
“In our experience having a partnership that is culturally aligned is the most effective way of doing it.”
The brand aims to have a “good mix of activity” in mature markets like the UK and Canada, in addition to developing markets where there is a lot of growth potential.
Aimia has no plans at this stage to move into Nigeria or Turkey, however. He says: “We want to remain focused. We don’t want to spread ourselves too thinly.”
Long term, Nigeria offers the biggest opportunity of the four MINT countries, according to Ernst & Young’s Cosgrove.
“Mexico, Indonesia and Turkey are already in the G20 top economies of the world, but Nigeria has the most potential. The population is about 173 million, which makes it seventh largest in the world.
”A century ago it had fewer than 20 million people so it has already grown enormously and that growth is projected to continue so that by 2050 the population is expected to hit 400 million. So in terms of the population opportunity, it’s fantastic.” Nigeria is projected to be the leading Sub-Saharan economy within the next decade, according to UKTI, and the UK and Nigeria have agreed to double bilateral trade to £8bn this year.
However, it is quite a complicated market, he warns: there is a great degree of instability – four Britains were kidnapped in 2013 – and increased pressure on consumer spending has already affected some western brands negatively.
“Some western multinationals operating in Nigeria have had bad results recently as they haven’t reacted fast enough to the slowdown in consumer spending or had a portfolio of products that enables consumers to trade down,” says Cosgrove. Woolworths South Africa pulled out of the country in 2013, while British Gas closed its operations there in 2011.
Despite the slowdown, a number of brands including Cadbury and Hello! magazine have launched new products or services in the country.
Mondelēz International has invested $100m (£61m) in upgrading its chocolate plant in Nigeria where its power brands are Cadbury Bournvita, TomTom and Trebor Buttermint. The confectionery giant also confirmed last year that it would be spending a further $30m (£18m) on the second phase of the upgrade to increase capacity.
Meanwhile, Hello! Nigeria, the first sub-Saharan edition of the magazine, hit newsstands in September 2013 and celebrated the launch with a star-studded party at the exclusive Wheatbaker Hotel in the capital Lagos.
The magazine, which is published monthly and distributed in four English-speaking West African countries, is designed to “further help in fostering the cultural integration of the sub region”, according to Maria Palacios, head of international editions business development.
She says: “The interest Nigerian readers show in celebrity news encouraged us to study the possibility of having a local edition of Hello! in the country. Its population of 173 million, a decade of growth and international luxury brands scrambling to open shops made us feel very optimistic about the potential of our brand in Nigeria.
Cosgrove agrees that it is not just the emerging middle classes that brands should be looking to engage as there is a large wealthy population too – more than 20 billionaires live in the region, more than anywhere else in sub-Saharan Africa.
Like Mexico, Turkey is one of the more developed MINT countries but businesses have been affected by an increase in regulation over the past 12 months and the Turkish Lira (TL) has come under pressure as a result of policy indecision in the US, according to Cosgrove. The government also raised interest rates last month, increasing the top rate from 7.75 per cent to 12 per cent.
“Turkey is suddenly hitting some speed bumps but prior to that it was one of the more interesting economies in Europe and one of the few places there that you could really grow,” he says.
“It’s important that companies are willing to flex, not just at the beginning but also as the market develops. As diverse as all these markets are, they will go through the same stages of development as other more established markets, so although the answers will be local, the questions will be the same as those that businesses have faced elsewhere. You can’t predict the future but you can anticipate and prepare for it.”
UK bilateral trade with Turkey reached £9.1bn in 2011 with UK goods exports of £3.7bn, according to UKTI, and there are currently 2,200 UK companies operating in the country.
This includes casualwear brand Superdry after it signed a five-year franchise agreement with Turkey’s Demsa Group, which has also brought Harvey Nichols, Mothercare and Laura Ashley to the Turkish market.
Julian Dunkerton, chief executive of Superdry owner SuperGroup, explains: “Turkey has held our interest for some time and our partnership with Demsa Group offers the perfect opportunity to enter this diverse and growing market.”
Turkish brands are also gaining traction in the UK. White goods firm Beko , for example, and Turkish Airlines – reportedly the world’s fastest growing airline thanks in part to a major ad campaign featuring footballer Lionel Messi and basketball player Kobe Bryant – are moving up in consumers’ minds.
Like in Mexico, data from eBay, which trades under the name GittiGidiyor in Turkey, shows that consumer electronics, particularly mobile phones and tablets, sell well in the country.
But the way shoppers like to pay differs in Turkey. There, consumers are particularly keen to pay in instalments where possible and are interested in bonus points when shopping with credit cards. Many credit cards offer six to 12 month instalments and give 50 TL (£13.68) or 100 TL (£267.37) in bonus points for purchases, according to Ebay research.
However, Turkey passed a new law at the beginning of February stating that consumers can no longer buy mobile phones with instalments meaning there was a flurry of purchases in December and January and sales could now slow down.
The Turkish parliament has also approved a bill that will tighten government controls on the internet allowing authorities to block websites without first seeking a court ruling, which the opposition fears will curb freedom of expression.
Turkish prime minister Recep Tayyip Erdogan has a particularly critical view of social media, claiming it is the “worst menace to society” after protesters used platforms such as Twitter and Facebook during demonstrations last year.
The vast majority of the Turkish population (93 per cent) have a Facebook account and 72 per cent have a Twitter account, according to statistics from GWI, while 67 per cent of people in Turkey used a smartphone to access the internet in the last month of 2013.
”Consumer growth and demand is there but foreign companies could do a better job of adapting to the market,” says Cosgrove. “Once this short-term volatility is over I think things will pick up. But there is always the risk of more regulation.”
The brands in the MINT
Cadbury, Viacom, Aimia, eBay, Telefónica, Timex
BlackBerry, Pinterest, Cath Kidston, IKEA, TRESemme
Guinness, Cadbury, Hello, Vaseline, Ariel
Superdry, Dove, Rolls Royce, Harvey Nichols, Mothercare