The BRICs (Brazil, Russia, India and China) were once the fastest-growing economies, oozing potential and opportunity. But having emerged and taken their place among the economic greats over the last decade, they have naturally settled and slowed in growth. Now, there’s a new set of fledging countries to follow. The CIVETs*—Colombia, Indonesia, Vietnam, Egypt, Turkey—have hit the radar as the fastest-rising economies with growing middle classes, soaring domestic consumption, vast natural resources and surging youthful populations. These countries are posting growth rates higher than 5% (with the exception of Egypt), according to ‘The Decade of the CIVETs’ guide, compiled by HSBC Global Connections, released in 2013.
But the path into emerging markets like the CIVETs is rarely easy. Players who have gotten a head start, with local partners helping them navigate start up and developmental complexities, are likely to reap the rewards. BW Confidential assessed the opportunities and challenges for each market in travel-retail and duty-free shopping:
Colombia’s reinvention
Colombia has reinvented its image as a tourism destination. As a result of improved security and active promotions, international and domestic tourism has been able to flourish. Colombia’s tourism agencies have been actively promoting a new, safer image of the country through campaigns such as “Colombia, el riesgo es que te quieras quedar” (Colombia, the only risk is wanting to stay).”
To underpin this commitment, a 10-year, $55 billion infrastructure investment plan has been passed, about half of which will come from private-sector investment, according to HSBC Global Connections.
Indonesia capitalizes on tourism
Indonesia is among the fastest growing economies in East Asia and the Pacific, with growth rates of 6.2% in 2012, according to the World Bank East Asia and Pacific update April 2013.
A swell in the middle classes complete with wanderlust, has prompted airports to develop at a rapid rate to capitalize on both tourism opportunities and the high-spending power of its nationals. Duty-free and travel retail is following suit, with no evidence of red tape or structural obstacles holding back development as yet. In fact, there has been a burst of tender activity of late and international travel retailers are lining up to get in on the action, as are international brands.
Vietnam: A new Asian tiger?
After China and India, Vietnam is expected to see the fastest growth in terms of passenger traffic at an average of 8.6% a year until 2020, according to the Airports Council International. To meet this rising demand, its government will invest around $20billion to further develop the airport sector over the next few years. Around 90% of the 37 million passengers at Vietnamese airports every year are concentrated in the country’s top three airports (Ho Chi Minh, Hanoi and Da Nang).
Egypt: Unstable politics and violence
HSBC’s Global Connections report described Egypt as poised to embark on a period of fast growth, but currently, the news is more about the country’s violence and unstable political situation. In addition to the human cost, the current situation is likely to deter foreign investment and hurt the tourism industry, which was booming only just last year—in 2012, 11.5 million people visited Egypt versus 9.8 million tourists in 2011.
Turkey: Beauty continues to flourish
As a country that bridges the gap between the East and the West, Turkey’s potential is vast. While the beauty sector is flourishing, so is the country’s aviation sector, both in terms of passenger numbers and future evolution.
*Although technically part of the term CIVETS coined by the Economist Intelligence Unit, BW Confidential excluded South Africa from their report citing analysts’ disputes as to whether it belongs in the group, adding that South Africa was also sometimes added to BRIC to form BRICS, especially just after the term was born.
To read BW Confidential’s full report on the CIVETs in travel retail click here.
