Global consumer trends 2025

 Across the globe, the consumer economy is sending mixed signals. In the United States, inflation is showing signs of renewed momentum despite cooling energy prices. In Europe, retail spending is sagging under the weight of high interest rates and not forgetting Asia, particularly in China where consumers remain cautious despite efforts at stimul

And here in South Africa, household debt has climbed to record levels while wage growth stagnates. At the same time, tech-led retail innovation and shifting demographics continue to reshape consumer patterns. This is No Ordinary Wednesday, an Investec Focus Radio podcast where we take a deep and considered look at the forces shaping business, markets and investments, not just locally, but across the globe.

I'm Jeremy Maggs. 

JM: And maybe let's start off if we can, with a broad view and a take on current consumer purchasing patterns, particularly in developed and emerging markets, and there's going to be a big difference, I would imagine, between the two.

EH: Yes, well thank you Jeremy and it's very nice to be back here in South Africa. Seeing my friends and colleagues at Investec in this wonderful country. Listening to the sort of background that you paint it sounds a bit of a depressing picture, but I think you're right that there are differences across different markets.

But one thing to bear in mind is that I think that times have always been tough for consumers and consumer companies. I wrote a research note a while back because I'd noticed that company chief executives, who I'm lucky enough to meet quite a bit kept using the word challenging when describing the environment, and so I did a bit of a jokey study, if you like, to see how many times these CEOs had mentioned the word challenging in their earnings reports over the last 10 years, and across 40 consumer companies, 75% of earnings reports over 10 years mentioned the word challenging, so you can see that they're always aware of difficulties facing both themselves

EH:  That's right, that's right. Yes, but right now, around the world,  consumers are looking to buy a pair of Nike shoes, Heineken beer or tequila in a bar or Nestle chocolate bar,  I think it's true to say that consumers are finding it particularly difficult in the market, and if we look at the big ones, they're in the US and China.

In the US the stats show that consumer confidence is very low by historical standards, and that's showing up in the actual goods that they're buying and the price they're willing to pay and overall sales are trending down in most categories, and that's both at the bottom end where we're seeing consumers increasingly going to discount stores like Dollar General and Dollar Tree, the two big ones in the US or to club stores like Costco, which are known for their low prices.

But also, at the top end, quite surprisingly, we're now seeing luxury goods sales falling and they have been falling for over a year now. In China the other big market that has been very sluggish for several years now because property prices there, as we know are under pressure and the Chinese consumer is just nervous about paying out for most goods.

Similar story really in India and Mexico, perhaps not quite so pronounced and elsewhere, a mixed picture but overall, under pressure. And the reason for this, I think, is you can take it back to COVID, where, which is an existential change to the world you know, every country, every consumer affected by lockdowns that led once COVID was over to price inflation in the market and what happened was that the companies I look at move their prices up to reflect the increase in raw material prices and the price of moving goods between countries as they were only opened up gradually for trade and what happened was that we got to a stage where so much price had been taken, that it became impossible to continue doing that, and that's led really to the pressure that the companies that I look at are facing.

Now on top of that, we've had Ukraine, Middle East conflicts, and more recently tariffs where US tariffs are, or will on the 1st of August be standing a 90 year high and inevitably some of those extra costs will be passed through to the consumer. So, it's a worrying time for the consumer, both right now in terms of prices and when they're looking forward to thinking what's going to happen in the future.

JM: So, let's pick up then on two things - one of the tariffs but secondly then what real impact that is happening on pricing, brand choice and consumer sentiment, particularly our approach, our behavior, our thinking patterns as consumers Eddie, I'm assuming, are changing all the time.    

ED: Yes. I think that goes back to what I was just saying that the fact that the tariff levels are moving so much and so frequently, and with great uncertainties to how they will end up. That inevitably makes consumers nervous. But we must remember that tariffs don't have a blanket impact on all sectors and so even within the consumer environment, there are certain areas such as footwear, so Nike and Adidas, where, because they import a lot of goods from Asia, not just China, but Vietnam, Bangladesh, etcetera, those prices going up significantly, so those companies will be hit quite hard and are being.  In spirits, Diageo world's biggest spirits producer sells other scotch whiskey in the US. They can't produce scotch whiskey anywhere other than in Scotland for obvious reasons and so they will be hit in terms of pricing by the tariffs. Same with Remi Quantro with cognac. 

And then we have some retailers in the US like Target, who historically have imported a lot of goods from China, so they too are learning to deal with these. I don't think we're seeing a lot of change in consumer patterns within the US other than what we've said before about the decline in sales because of the prices increasing.

But one thing that has been noticeable, when I met Coca-Cola management recently in France, they brought out a bottle of Coke and pointed out that on the metal cap, on the glass bottle, it now says, made locally, rather than made in the US as a consumer might assume. And they said that this is one small way we can do to try and counter a certain amount of anti-American feeling amongst consumers.

And that's been very pronounced in a brand like Tesla, where sales in Europe have absolutely plummeted since we have the general disruption within the US and particularly tariffs being increased. 

JM: So, we've looked at purchasing pattern. We've looked at sentiment. Now let's pivot if we can, Eddie, to technology and obviously artificial intelligence is reshaping everything from product discovery, customer service, pricing strategy. How is this impacting brands? And again, the way in which consumers actually make purchases.

EH: Yes, you're absolutely right Jeremy, that AI is completely front and center of what the management teams of these companies are looking at, the trends that they're looking at, and we can see it in our everyday lives.

I think it's sensible to look at it three ways. One, from the point of view of the brand owner and producer, two, from the perspective of the retailers and three from the perspective of consumers themselves. So, if we start first with the brand owners had a good example from Colgate recently where I'm just going to give some examples rather than try and explain everything about such a huge topic, they've got a 70% share of the global toothpaste market.

So, they're very dominant. That means they sell a lot of their product in tiny mom and pop stores in emerging markets, India being perhaps the biggest for them, where they have 250,000 to 300,000 stores owned by locals who may have no affiliation with a larger group. And it's impossible for someone from Colgate to go around all of these stores regularly for obvious reasons.

So one thing they've started doing is to ask the store owner, to upload some pictures of their store showing how their shelves are organised, and then when Colgate received that, they have an AI program that scans the photos, then comes up with a recommended reshuffle of how the retailers are displaying the products on their shelves, they send that back and the retailer might move the Colgate toothpaste to the left a bit or down a bit, or up a bit. It might move less frequently purchased goods down to the bottom. It might move higher margin products to the middle, and the result of that is a win-win because the retailer gets more profit overall because, he's displaying the goods in a more appropriate manner.

And from Colgate's perspective, they get a closer relationship with their retailer and get more data from them. And so that is a total win-win almost with no human intervention, so, the cost of it is very low indeed, and many companies are doing this. I think Colgate are probably at the fore of it.

L'Oreal is another one which has masses of little stores everywhere in emerging markets. And the other way that the brand owners are using it is just to come up with different formulations of ingredients for their brands to try and lower the price, maybe come up with new flavors, that sort of thing.

And they can experiment and do that far more quickly than human beings can. So that's the brand, producer. The retailer, a great example of how they're using AI actually is Walmart were telling me that historically if they had a huge truck come into one of their warehouses to unload that truck and make sure everything was on it that was supposed to be on, it would take about two days, which isn't too surprising when you think about the amount of stuff that you can get in one of those trucks.

Now using ai, they can almost unbelievably reduce that two days to less than an hour. And so, the cost savings involved in that in terms of time, in terms of getting stuff into the store very quickly are absolutely huge. And the other thing that they can use it for is just demand forecasting. So if Walmart historically hasn't been too sure how swiftly they'll be able to sell a batch of washing powder or something like that, they can use scenario analysis, all sorts of things to reduce the amount of inventory that they hold in store, and we're seeing a lot of that to what's called in the trade destocking to reflect the shorter timeframe that they can operate within. And so, it's just more efficient all round. 

And then finally number three, looking at things from the consumer's point of view. I think that they're using, whereas before, they might use a search engine like Google to look for where they could buy products. Increasingly, particularly younger consumers are using ai, whether it be ChatGPT or other similar programs to conduct a deeper search of what's available and recommended ways of purchasing.

So, I think what that means is that the companies that we look at need to be absolutely sure that they're connecting with the consumer, where the consumer is. Are they online more than they used to be, and not in certain other more traditional marketing areas where they might effectively be throwing money away rather than using their marketing dollar effectively.

JM: And Eddie Hargreaves there's no doubt as a result of that, the power balance is shifting in terms of the authority and the sway, perhaps, that consumers have themselves. And I'm thinking specifically of creator-led commerce, media fragmentation, personalized content, and a brand is not going to succeed unless it adapts to stay both visible and relevant. Critical to its success. Is that happening sufficiently though? 

EH: I think it probably is, I think that an increasingly so as we've been saying, most of these big brand owners are very savvy as to what's happening, the data they're getting is better and they can pick up on trends more quickly than they used to be able to. 

It's obvious that print, newspaper, print media is pretty much dead on my morning commute into London, it used to be the case that 90% of the people on in my carriage would be reading in newspaper 10 years ago, or certainly 15. Now I could go two weeks without seeing anyone read a newspaper that's the dramatic shift that we're seeing.  

TV not the powerhouse it used to be for the likes of Unilever, Proctor, Estee Lauder who used to be, among the top 10 advertisers on TV in the world and so, as I said, that they need to be on the internet and they need to be exactly where they need to be there employing a lot of influencers, for example, to access social media, which is where young people will be looking for their products now, and rather than relying as they used to, perhaps on one or two influences they're spreading the risk and spreading their reach that they've got in employing a lot of them, and then ensuring that content is being shown where it ought to be and where it needs to be. 

AI is also allowing a company like Unilever to produce its own adverts much more cheaply than employing a third party, as used to be the case. And you mentioned personalisation. When I talk to companies, this is a big theme that they often bring up that because they've got more data about their consumers, then they can use that to make personalized offers.  

A big pet food company owned by Nestle, was telling me that because of the feedback they get from consumers, they pretty much know the age of each individual's dog that they own in their house and what sort of food it, like when it's ill this sort of thing. So extraordinary granular detail that some of these companies have on their consumers. 

And obviously if who's buying your product and how often, and why? Then you can, with the help of technology, offer them personalised vouchers or discounts rather than printing hundreds of thousands of them, most of which get thrown away rather than used, they know that they've done lots of studies.

So, I think that is certainly right. They're also using, sponsorship is still a big thing for the likes of Adidas and Nike using sports stars. I saw Roger Federer, for example, became I think the fifth billionaire amongst sports people or form of sports people recently, these people at the top of the tree.

But there are other sports stars just below these who have a big reach and resonance with many consumers, and that hasn't really changed.  

JM: I'm still thinking of Fido and Spot wagging their tails as a result of all of those personalized vouchers. Eddie, let me ask you this. You were talking a little earlier about use of the word challenging. I'll come right back at you and say, every time I talk to somebody in the marketing space, they use the word innovation. It's the big word, but I wonder if these days, whether it actually gives brands an edge or do you think that ease and convenience is still something that's gonna win the day. What do we want?

ED: I think we want both. That's very clear and if push comes to shove, then you know, convenience is a given. You have to have your product where it is wanted. And so, I think, and most of the company management time meet are also very clear that innovation is something that really is what you want.

And one thing that it does give you is a greater ability to raise prices. It's very difficult to raise prices on a product if you've not offering the consumer anything new to go with that, or any excitement. It just seems like they're pushing the price up, or they're shrinking the pack size, I don't like that. And it creates bad feeling with the consumer. So, if you can change even the packaging, that can be helpful. And this reminds me of a story of the Morgan racing cars, which in the UK they're road legal in the UK but they're famous for being made in a traditional way. I saw a program about them some time ago, and there was someone in their workshop being interviewed, and he was just about to retire, he'd worked there for 55 years and the interviewer asked him, “you must have seen so much change over your time here over the 55 years, can you talk to me about some of them?”. And the answer was “no; I've seen no change whatsoever”. And but that is very rare to get away with that. Now, maybe in some niche, artisan jewelry products, even somewhere, something like that, you have to move with the times as Ferrari does, for example, Ferrari is just introducing in three months time,  it's new electric only model. And so they've seen the way the consumer's moving, what the consumer wants and what the world wants, and despite their rich heritage, they are taking the plunge into that new market and tests suggest that's going quite well.

Another good example, just very recently, which sort of leads onto other things really is that Marks and Spencer is a big retailer in the UK has been struggling a bit, but recently introduced a new product which was a strawberries and cream sandwich with bread, around the strawberries and cream 

JM: Just in time for Wimbledon.

ED: Yes, inked with that. But on the face of it, it doesn't sound that appealing, but it was an idea that had been brought that was popular in Japan or that was the genesis of it and when it came over to the UK it was a complete viral sensation, they couldn't sell enough of strawberries and cream sandwiches. It's obviously very Instagram-able and everyone wanted to go out and trial it. So that's an innovation, probably a short term one.

But one thing that we've mentioned already during this conversation is the possibility of flavor combinations. We saw just last week Ferrero, the Swiss chocolate manufacturer buying the Kellogg cereal business, and part of the reason for that is to diversify what they're selling in case chocolate prices shoot up, but also to give them some ability to invent new products, around the idea of chocolate corn flakes but to take that one step further with different flavors. So that's something that's happening and AI is helping with all that.

So long answer to a very simple question, but I think innovation is the key that convenience is also vital.

JM: I'm still getting my head around the strawberries and cream sandwich. I would try it, but I think my cardiologist would be very upset. 

Just before we take a short break, I want to talk very quickly about sustainability or ethical buying, and I'm wondering whether those values actually hold up in practice, given, as you alluded to earlier, margins and budgets these days are so tight. 

ED: I think the straightforward answer to that is that if you are a very low-income consumer and increasingly stretched, then inevitably the ability you might wish to buy sustainable products, but if they're significantly more expensive, you may simply be unable to. And so, sales of those products have been suffering a little bit, but that's not to say that the companies are not still producing them because there is a market for them, but regulations have been playing their part as well, so very high-profile cases of companies importing clothing from China, which has been produced using cotton in factories. They're using forced labor, that's now a practice that has been stopped, but clearly it meant that the companies didn't want to be associated with that behavior and so had to source their cotton elsewhere and that has led to prices going up as well. 

Fair deals for cocoa and coffee farmers in East Africa, Brazil, and elsewhere have come in as well. But what it's meant is that the companies have to produce it like that, and that has been an inflationary impact on prices as well. 

I think it's fair to say that corporates are pulling back a little bit as well, Adidas is a company that springs to mind, they started producing a lot of mushroom leather shoes, artificially made leather using form of fungus, believe it or not. But I think they've since realized that the market for that product isn't quite as big or expanding as fast as they'd hoped and so they've moved back more to their roots of sports and football boots produced in a more traditional manner.

And recently that paid dividends that added zero sub-brand that they own is a professional running shoe and that was worn by the new Women's Marathon record holder following the London Marathon, and the men's winner also wore that brand. So this refocus has been helpful for them. 

JM: We'll continue this conversation in just a moment with a look at retail disruption, luxury trends, and what weight loss drugs might have to do with the future of food and fashion.

But first, a word from Investec. 

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JM: So Eddie let's get back to our conversation and how are demographic changes like aging populations, reshaping consumer expectations and loyalty? I guess the question is, are brands adapting fast enough to meet the needs of this diverging market?

ED: This of course is a longer-term trend, so we've had aging populations in China, north America, Europe. For many years now, and a very young population in many emerging markets in Africa, Latin America, Mexico, and parts of Asia. This trend isn't particularly new, but we are seeing companies like an Estee Lauder or L'Oreal focusing more on creating products to address graying hair or brittle hair as people get older, aging skin so their putting a lot more resource behind the science of skincare, dermatology, in effect, to try to appeal to the increasing number of consumers who might be interested in those products. But you can't go crazy and change everything all the time. And we've seen Toblerone try to change the shape of its triangles or pyramids in the Toblerone bar, and they had to row back from that and go back to the traditional shape of the triangle because consumers young and old hated the new shape of the pyramids. 

JM: Don't mess with my triangle. Yes. 

ED: Yeah, so it's not just old people who are resistant to change, but some young people want to know what they're buying as well. But I think, when we are looking at the consumer 10 years hence , then there will be a huge number of these younger consumers coming into the workforce being the emerging middle class, which everyone's spoken about for a long time, but that is going to accelerate over the next 10 years just through the demographic profile that we're looking at. So that is really where the concentration is for most of the big consumer companies and retailers at the moment. 

JM: As far as retail categories are concerned, what are you seeing in terms of real momentum and acceleration and what is under pressure

ED: Yes, there's a bit of a mixed bag, I'd say on this, Jeremy. Some of the things that are going well are soft drinks. Coca-Cola is still seeing a very good momentum in its sales growth, not only in emerging markets, but also in developed markets. They're creating new pack sizes, new flavors, but generally finding, I think that the price elasticity, in other words, the price increase they're able to put through without affecting volumes too much, is better than they thought it would be, and then perhaps link to the demographics points that we've been making, energy drinks where Red Bull and Monster are probably the two largest worldwide. They're also performing very well at the moment. And some of this might be brand recognition. So, Coca-Cola is famously the most recognised brand in the world, 95% of consumers in the world thought to be able to recognise Coke just from the colors that they use. But it just seems to be resonating with the consumer at the moment in the luxury world. Jewelry is still selling well, despite pressure in other areas such as leather goods or spirits. 

So spirits, they've been under a lot of pressure. It does seem that there's a consumer shift away from spirits a bit, and the same can be said for a number of food categories, and this is where diet drugs come in. I think at the margin now, particularly in the US, people are using diet drugs and that does suppress the appetite and that does start to shift what people are eating and in what volume

Now, I'm not saying that's going to destroy the food business or anything like it, but clearly if even if 2 or 3% of sales go over time, then that's gonna have an impact on reported numbers. We've also got more general health concerns and a continued pressure on raw material prices. 

JM: Let me pick you up on the weight loss drugs very quickly. Ozempic, Wegovy it would be,  those are two names that would be well known to our listeners. You talk about the impact on food, but there'd be a domino effect surely on the general wellness industry and even the apparel industry. 

ED: Yes, and I've even seen it said that even the airline industry might be affected because if people weigh less than their costs will reduce because they won't need so much fuel to take people there. So, you can take it to seemingly ludicrous extremes.

I think there will be knock on effects for the apparel industry, perhaps less so because it would just mean making change in the sizes. Certainly, for food where absolute volumes might suffer a bit. It's becoming a consideration for people like me who try to follow the trends in the industry, but it's a bit too early to be sure where this is leading. I'm tending to think that it will have a moderate impact on some of these companies. 

JM: Eddie Hargrave just flesh out the state of the luxury market for me very quickly in 2025, you did allude to it. Fair to say that it's often seen as the marker, the bellwether of upper income confidence. Is that still the case? Is the resilience that has been there in the past, or is the sector also under a fair degree of strain, do you think? 

ED: It's under a significant degree of strain and I think you're right that it is a good test of the higher-end consumer confidence and general health at the moment. I mentioned before that jewelry is still selling well, but if we look at companies like LVMH or Richemont, some of their jewelry is selling well, but on the whole, the leather goods, the handbags are not selling quite as well as they used to.

And part of that is I think it's difficult to innovate in handbags compared with some other consumer areas, but partly because they're just very high-priced items and people are cutting back on that. So, the stats show that in the luxury goods industry in the US, for example, sales have been down 6 or 7% for 18 months and if anything that worsened a bit at the start of this year and things generally worsened in our industry at the start of this year, as I said, when tariffs were introduced, I think that's been a big short term impact. 

JM: And at the other end of the, I guess the demographic scale and also the financial scale of these ultra-fast fashion platforms, I'm thinking of Sheen and a Temu, for instance. That must be, or they must be surely reshaping consumer expectation? 

ED: Yes, shaping them in a way that consumers will want cheaper prices and more convenience, I think that's certainly right, but there is a bit of a backlash on the ethical front. We mentioned earlier sourcing from China, both Shein and Temu are Chinese, and so there's some uneasiness perhaps about what the provenance of what they're selling. Shein has been trying to IPO in several big markets like New York, London, Frankfurt, but in each case, the exchange has been unwilling to proceed.

It looks like they may now list in Hong Kong, but clearly there's a general nervousness about dealing with them and this of course comes down to the uncertainty of knowing what's going on in China generally from where we sit. And then there's been some change in regulation, so, tax on small packages going into the US used to be at a beneficial rate.

That's been removed now, and so, the cost advantage that a Temu who might have selling into the US or potentially into the UK has been reduced quite a bit. And then I'm also seeing the rise of pre-owned garment websites like Etsy where you can buy secondhand clothes or a big one in Europe is Vinted.

And these have really taken off youngsters that I know buy most of their clothes on these platforms because they're multiples cheaper than buying new, plus, they have the cache of being ethically better. You're not causing companies to produce more and just throw them away. And from what I've seen, the quality of what's sold on these websites can be very good.

So that's a kind of a backlash to what we are seeing from the companies that you mentioned earlier there. 

JM: Yeah, don't underestimate the power and the influence of millennials and Gen Z. 

Eddy, as we wrap up this conversation, maybe let me end with a philosophical point if I can. You've outlined a number of changing behaviors, I'm wondering if this is a short-term adjustment or are we witnessing a deeper lasting shift in how people think about brands and broader consumption? 

EH: That's a very good question, and I think it's not an easy one to answer. I think it's a bit of both. So, in some ways the consumer has been evolving forever. It's a process of continuous evolution, and we can think back to some of the trends we've been talking about, Jeremy, like the emerging middle-class demographics innovation that's always happened and it's still continuing now and will do for the next 10 to 20 years, I'm sure the type of long-term waves or trends.

But on top of that, I think the speed of change is accelerating, prompted by AI and the ability of people to connect with each other and to see what everyone else is doing. So, AI is, and technology generally is both shrinking the world of the consumer and speeding it up. 

And then we've got China, Chinese brands are developing very fast. We've seen BYD in the automobile space being very successful. 10% of new cars sold in the UK where I live are from China. Quite an amazing shift that would've never been thought possible until recently. And an interesting question for you might be the biggest fast-food outlet globally in the world. You will probably say that it's McDonald's. 

JM: I would go with a McDonald's or a KFC maybe. 

EH: Yeah, every not even close, I imagine not. Not close. It's Mixue Ice Cream and Tea, which is a Chinese fast-food company. Admittedly, 90% of their outlets are in China now, but they're expanding quite fast in Asia. 

JM: But do they serve strawberries and cream sandwiches is the big question?

EH: They probably do if it makes money that actually originated from Japan so I suspect that they're well aware of those trends, and I own a Chinese cell phone, think that they are, the quality of Chinese brands is improving and they simply can't be dismissed anymore. So that's a short-term trend. But throughout all this, brands are the key and it's gonna take a lot, given their sometimes 150-year-old history to shift the likes of Coke and Pepsi and soft drinks, or Unilever and Procter and Gamble household goods, Nike and Adidas in sports or athleisure as it's known off their purchase and I should say, of course, in financial services in Investec.

JM: And I think that is a good place to put a punctuation point on this fascinating conversation.

Eddy Hargreaves, my appreciation, Global Consumer Analyst at Investec UK. 

Thank you so much for joining me on this episode of No Ordinary Wednesday. 

EH: It's a pleasure, Jeremy. 

JM: Now, as always, if you enjoyed the episode, please follow Investec Focus radio essay wherever you get your podcasts. We will be back in a fortnight with more analysis on the major economic trends that are shaping our markets.

Until then. Goodbye from me, Jeremy Mags and the entire focus radio team.

The views expressed are those of the contributors at the time of publication and do not necessarily represent the views of the firm and should not be taken as advice or recommendations. Investec Limited and subsidiaries authorized financial service providers, registered credit providers, and long-term insurer.