Middle and Upper Income Classes Less likely to spend in 2006

Belated Kung Hei Fat Choi, totoys and totoyettes.

Your "doom and gloom" blogger here again to bring you yet another reason to support the thesis that those interested in reviving the local comics industry should focus their attention on the low income D-E market which comprise 55% and 35% respectively of the Philippines' income distribution.

What? Local comics selling at P6 of P7 a copy or even less? Filipino comics entering the tingi-tingi and sachet culture? You better believe it, brother. Start your market survey and re-evaluate those business plans. Time to make an overhaul and rethink those logistics and distribution networks. According to a February 1, 2006 market report by A.C. Nielsen, the middle to upper income class are in extreme savings mode right now so that means less spending on a lot of consumer and--dare I say it: LUXURY GOODS--especially those dear old, licensed foreign comics and globalized Filipino comics that retail for about a minimum of P75 to P85 a copy. Here's the PDI newspaper article:

"Filipino consumers have become less inclined to spend their excess cash and are more likely to save it due to lingering concerns about the economy and the country's political stability.

This was the finding of the latest AC Nielsen worldwide survey on consumer confidence which the multinational research firm released yesterday.

In the survey, the Philippines' consumer confidence index declined "marginally" to 93 points in November 2005 from the results of the last survey conducted in May, 2005.

"Filipinos are now more conservative in terms of spending money", AC Nielsen managing director Benedicto Cid, Jr. said in a briefing, even as he stressed that the results were "relatively unchanged" from the previous results "particularly in the areas of job prospects and personal finances."

The regular survey is used to gauge customer sentiment and confidence in the future of different economies by examining spending and saving patterns.

More importantly, the survey revealed that consumer confidence in the country remained below the global average of 98 points during the period. Consumers in India and New Zealand were the most optimistic, garnering 132 and 123 points, respectively Korean and Portugese consumers were the most pessimistic with 62 and 60 points, respectively.

According to Cid, local consumer confidence took a hit mainly due to concerns about the Philippine economy, with an overwhelming 69 percent of respondents expressing their worry over it.

"Rising oil prices and the value-added tax are factors which contributed to this perception in the Philippines", Cid said.

Respondents in the Asean region also ranked the economies of their countries as their main concerns, specifically Thai, Indonesian and Malaysian respondents.

Aside from the economy, local consumers were also reining in spending due to worries about the country's political stability, the survey found.

"The Philippines takes first place in terms of political stability concerns," Cid said. "This is because we're all aware how it will affect our lives. The resolution (of political troubles) is important if we want our country to move forward."

The local AC Nielsen chief said the Hello Garci wiretapping controversy, the Hyatt 10 mass resignation, and the ensuing attempt to impeach President Macapagal-Arroyo--all of which happened during the run-up to the survey--made politics one of the top concerns of Filipino consumers at 42 percent, versus an Asia-Pacific median of only 18 percent.

Surprisingly, the survey also found that Filipino consumers have also become very conscious about saving their spare cash after all their essential living expenses are covered.

AC Nielsen said 60 percent of Filipinos indicated an "inclination to save"--the second highest in the region after the Taiwanese.

This contrasts sharply with official statistics which show that the country as having one of the lowest savings rates in the region with only 24 percent of the country's economic output being stashed in banks.

This divergence may be explained by the profile of the survey's respondents, which are mainly middle-and upper income bracket Filipinos with access to the Internet--presumably groups that have higher disposable incomes and a higher propensity to save.

More than 23,000 consumers were polled over the Internet covering 41 countries in November 2005. In the Philippines, about 500 respondents were surveyed, AC Nielsen said. (Source: Daxim Lucas, "Consumers less inclined to spend, survey shows", Philippine Daily Inquirer, February 1, 2006 issue).

Thank you and enjoy your meal.