The lOndOn Olympics Impact on the UK Economy and Global Consumer Goods Industries
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The
London
Olympics
Impact on
the UK Economy
and Global
Consumer Goods
Industries
Photo by London 2012
www.euromonitor.com
Forward
Table of Contents E
yes from around the world will be on London
as the 2012 Olympic Games begins. With
a captive audience and great expectations
industry experts across 10 major industries along
with its consumer and economy experts to dis-
cuss the Games’ effect on their respective indus-
looming, a popular question on the minds of mar- tries and global brands.
keters, brand owners, economists, media and This briefing collates the diverse views of con-
sports enthusiasts alike, is what impact will the sumer industries all vying for the attention of the
Forward....................................................................................................................................3
Games have on the economy and industry? global consumer. Starting with the macroeco-
Datagraphic: What will make the UK a winner?.......................................................4
Perspectives vary with regard to the over- nomic view our experts highlight expectations
UK ECONOMY & INFRASTRUCTURE........................................................................................5
all impact of the Olympic Games. The London and limitations of the economic impact from
VIDEO: Will the Olympics Impact the UK economy?.................................................9 Organising Committee of the Olympic and foodservice to finance, discussing what may drive
Datagraphic: Does BMI have an Impact on a Country’s Performance.........10 Paralympic Games pushed for heavy investments growth as a direct or indirect result of the 2012
Countries and Consumers................................................................................................11 in the city’s infrastructure and VisitBritain, along Olympic Games.
Datagraphic: How Different Economic Groups Compare.................................14 with local businesses, is aiming to put their best How the Games will leave its mark on these
TRAVEL & TOURISM....................................................................................................................15 foot forward in the hopes the Games bring a industries is yet to be seen – but in the following
needed boost to the economy. pages our analysts share their prospects for the
Podcast: The Real Winners in the Tourism Industry..............................................21
Euromonitor International assembled its 2012 London Olympic Games.
SOFT DRINKS...............................................................................................................................22
VIDEO: Will Coca-Cola’s Olympics Campaign Gain youth interest? ...............24
HEALTH & WELLNESS.................................................................................................................25
Podcast: Opportunities for Health and Wellness Companies.........................27
ALCOHOLIC DRINKS...................................................................................................................28
CONSUMER ELECTRONICS.......................................................................................................30
CONSUMER FINANCE................................................................................................................32
RETAILING....................................................................................................................................34
VIDEO: Will Retailing Channels in the UK See an Increase in Sales?................36
APPAREL.......................................................................................................................................37
VIDEO: Will Sportswear See Positive Growth Due to the Olympics?...............40
FRESH FOOD...............................................................................................................................41
CONSUMER FOODSERVICE......................................................................................................44
VIDEO: What is McDonald’s Planning Onsite at the Olympic Park?.................46
PACKAGING.................................................................................................................................47
Euromonitor International 2 Euromonitor International 3
Datagraphic
What Will Make the UK a Winner?
opportunity for economic growth, and it will likely
UK ECONOMY & support moderate growth in Q3 2012. However,
the probability of the Olympics lifting the UK out
DATAG R A PH I C CO U N T R I E S A N D CO N SU M ER S INFRASTRUCTURE of the 2012 economic slowdown is slim.
2012 Olympics: What Will Make the UK a Winner? The Olympics historically have an ambigu-
GDP Matters a Lot… But So Too Does Population… ous effect on economic output in host countries.
In 2008…
7 of the Top-10 total medal winners were the UK’s Rank:
How Have Other Hosts Performed? LONDON OLYMPICS TO Athens 2004 supported Greek real GDP growth
Total medals won per million inhabitants host year
among the world’s 10-largest economies GDP Medals
3
of 4.4%. However, in 2003 the Greek economy
7 4
Australia 2000
frequently outperforms given its small population. It has PROVIDE MINOR BOOST TO saw real GDP growth of 5.9%. In 2000, the year
in 2004… been in the Top-10 for the last four Summer Games.
6 9 2
of the Sydney Olympics, Australia saw growth of
in 2000… UK ECONOMY 3.1%, while in 1999 Australian growth stood at
7 9 Greece 2004
UK 2012 China 2008 4.1%, suggesting that the economic impact of the
1 Although China won a
forecast
in 1996…
6 17
USA 1996
Spain 1992
South Korea 1988
substantial number of
medals at the Beijing
Hilary Walsh and An Hodgson, Games is usually in the build-up to the event.
in 1992… 0 Olympics, in relation to Countries and Consumers Analysts, According to the Olympic Delivery Authority
Total GDP in PPP terms in Olympics year
8 12 0% 5%
GDP Per Capita in PPP terms,
10% 15% its population size,
being home to 19.8% of Euromonitor International (ODA) an estimated £7 billion worth of investment
4 yr CAGR leading up to host year the world’s population, was created by the development of Stratford, the
T
it underperformed
But Perhaps Most Important is the Host Nation Advantage… winning 10.4% of the he timing of the 2012 Olympic Games has area hosting the event in London and the Olympic
medals or 0.1 medals
Comparing the GDP per Capita and Medals Won of the Most Recent Hosts
per million inhabitants. divided the UK. As the economy slipped Village. The British Hospitality Association esti-
Total Medals Won
120
back into recession in the first quarter of mates an additional 294,000 tourists will enter
2012 and with an estimated public cost of £9.3 the UK for the Games alongside an estimated
billion, some are questioning the value of hosting 587,000 UK residents expected to visit London for
100
2008 BEIJING
USA
1996 ATL ANTA
the Olympic Games. the event. Consumer spending in London is set to
China Since 1988 the USA is the The government has hailed the Olympics as an iincrease by 0.9% between 2011 and 2012, in US
only country that hasn’t
80 outperformed itself while
hosting the Olympics
50,000
UK Real GDP Growth: %, quarter-on-quarter (q-o-q)
UK
2012 LONDON Euromonitor International
60 predicts that although in
2000 SYDNEY
recession in 2012 the UK
Australia will increase its total
medal count. Based on a
40
combination of total GDP,
South 1988 SEOUL population size and host
65
Korea nation advantage the UK
total medal count will be
1992 BARCELONA
20
Spain
Source: Euromonitor
2004 ATHENS
0
Greece
International from the
0 10,000
GDP per capita, US$ (purchasing power parity)
20,000 30,000 40,000
Office of National Statistics,
Eurostat, OECD, IMF
Sources: Euromonitor International, www.sports-reference.com
Note: (1) Data is seasonally adjusted. (2)
© 2012 Euromonitor International Figures for March 2012-Dec 2012 are
forecasts.
Euromonitor International 4 Euromonitor International 5
dollar terms, almost double the country average by displacement of traditional holidaymakers, put The Olympics is expected to provide minor dis- while an additional 11,000 homes are to be built
thanks in part to a boost from the Olympics. off by the games. traction to a faltering British economy, dragged in the surrounding Olympic Park area.
The most likely sectors to benefit in the down by Eurozone woes and austerity. Consumer • Given the size of Britain’s economy there
Implications UK will be retailing and tourism. Euromonitor expenditure, for example, in the UK overall is is unlikely to be any major impact on aggregated
International estimates an additional 13,000 hotel expected to decline by 1.9% in real terms per figures. The impact of the Olympics is expected
The Olympic Games have historically had a rooms were built to support the influx of tour- capita between 2011 and 2012. to be minimal on nationwide, long-term problems
variable impact on the host country’s economy. In ists, while Heathrow Airport is expecting a 45% such as unemployment and falling construction,
November 2004, the Greek embassy in the USA increase in passenger numbers per day over the Prospects with London feeling the greatest positive impact
estimated that the Athens Olympics cost US$11.2 course of the games. through a boost in tourism and retail sales.
billion. The Department for Culture, Media and Output from construction in the UK declined in • Britain fell back into recession at the end • The Games coincide with a period of major
Sport’s budget for the games, which covers the 2011 by 0.8% in real terms due to the weak hous- of Q1 2012, contracting by 0.3% in real, season- uncertainty in the world’s economic outlook.
building of the stadium and policing the games, ing market while unemployment is expected to ally adjusted terms. Real GDP growth is forecast to Crisis in the Eurozone with danger of a Greek exit
alone is US$14.8 billion (£9.3 billion); but the esti- increase to 8.6% in Q3 2012. These figures suggest recover in Q2 2012, followed by a peak in growth from the single currency and a faltering banking
mated overall cost is much higher. Based on his- that any extra jobs or investment in construction in Q3, the period of the games. Real GDP growth sector in Spain pose major risks to the UK. If the
torical analysis of the Olympics in Greece in 2004, off the back of the Olympics have already taken is expected to rise to 0.4% in Q3 then fall once crisis worsens, these factors will be remembered
growth was most conspicuous in the public sector, effect. Increases in tourism into the capital will again in Q4. Overall real GDP growth for 2012 is more for their impact on the UK economy than the
thanks to significant spending on public adminis- support London’s local economy. Olympic proj- expected to be just 0.1%. Olympics will.
trations such as police forces, at the expense of ects have helped mitigate some of the impact of • According to the London Legacy
education and health. Wholesale and retail trade the UK’s construction slowdown on east London. Development Corporation, an estimated £12.5 LONDON 2012 OLYMPICS TO
appears to have been supported by the Olympics According to the Department for Culture, Media billion of private and public funding was invested HAVE A LIMITED IMPACT ON UK’S
given its slump in 2005, but hotels and restaurants and Sport, 30,000 people were employed during in the Stratford region of London, where the INFRASTRUCTURE
grew little during the Olympic year, recovering the construction of the Olympic Park. Olympic grounds are situated. This major devel-
more strongly in 2005. This may have been caused opment is set to support services and retail in the With only a small proportion of the £9.3 billion
area over the longer term, which is already home Olympic budget designated for infrastructure,
Gross Value Added Growth for Greece in Real Terms: 2003-2005 Source: Euromonitor to the largest urban shopping centre in Europe, the impact of the London 2012 Olympic Games
International from
national statistics Public Non-Housing Construction Output and Annual Real Growth in Gross Value Added (GVA)
from Construction in the UK: 2006-2011
Note: Education and Health
includes: Education, Health,
Social Work and Other
Community, Social, Personal
Service Activities. Public
Administration includes: Public
Administration and Defence;
Compulsory Social Security.
Financial Intermediation
includes: Financial
Intermediation, Real Estate,
Renting and Business Activities.
Wholesale and Retail Trade
includes: Wholesale and Retail Source: Euromonitor
Trade; Repair of Motor Vehicles, International from
Motorcycles and Personal and
Household Goods. Other Sectors national statistics
includes: Agriculture, Hunting, Note: Public non-housing construction
Forestry and Fishing, Mining output does not include infrastructure
and Quarrying, Manufacturing, construction output; Output data are
Electricity, Gas and Water seasonally adjusted and in constant
Supply, Transport, Storage and prices.
Communications, Activities of
households.
Euromonitor International 6 Euromonitor International 7
on infrastructure was limited and mainly local. branded as having an impact on the whole UK, the The value of the Olympics is Prospects
Although construction associated with the Games infrastructure benefits will be felt mostly locally: questionable
provided some respite to the ailing construction Despite the additional 13,000 hotel rooms The UK’s construction industry will receive a fur-
industry, this was temporary and could not make built to support the influx of tourists. the value While investments associated with the Olympics ther boost when the London 2012 Olympics finish,
up for the losses in residential building. of this extra capacity after the Olympic Games is will help reduce inequalities within the capital, as work will begin converting the Olympic site
The UK spent £9.3 billion of public funds on the questionable, as tourism suffered as a result of regional disparities will persist. In 2011, the total into a business and residential area. According
2012 Olympics, out of which £1.7 billion was used the global slowdown in 2008-2009. According to annual expenditure of an average London house- to plans by the London Legacy Development
for regeneration and infrastructure. An additional national statistics, the number of overnight visits hold was 23.5% higher than that of an average UK Corporation, this next phase of construction will
£6.5 billion was spent outside of the Olympics’ to London stood at an estimated 15.2 million in household. take up to nearly two decades, until 2030.
budget on London’s transport infrastructure, but 2011, compared to 15.6 million in 2006. The cost of the Olympics to the public has A much more ambitious project, unrelated to
these upgrades were planned prior to the Games One of the biggest promises of the project was grown significantly from the initial £4.0 billion bid the Olympics, is the Crossrail, a new railway link
and were only accelerated. the re-generation of deprived East London. The made in 2005, partly due a drop in private sector for London and the South-East. Its construction
The sporting venues – including the scaled- London boroughs of Tower Hamlets, Newham funding from the anticipated £738 million to just will last between 2010 and 2018 and cost £16 bil-
down Olympics Stadium, the Aquatics Centre, the and Hackney, hosting a majority of the Olympic £165 million, according to the National Audit lion. The construction phase alone is expected to
VeloPark and the Olympic Park – will be the main events, were the most deprived local areas in Office. The bill will be passed on to consumers generate 14,000 jobs. The work related to it has
legacy of the Games in terms of infrastructure. In all of England in 2010, according to the Index of nationwide through higher transport costs, coun- already made 2011 a record year for infrastructure
terms of transport, the javelin train will continue Multiple Deprivation which measures deprivation cil tax increases and cuts in other areas of public output since 1980. This is needed, as the housing
to provide a fast connection between London’s St across seven different aspects including income, spending. This is at a time when annual dispos- market will unlikely see much activity in 2012, and
Pancras International and Stratford after the 2012 employment and housing. able income per capita fell by 3.3% in real terms the UK’s real GDP growth is expected to remain
Olympics. According to the London Legacy Development between 2006 and 2011. subdued at 0.1% year-on-year.
Corporation, an estimated £12.5 billion of private
Implications and public funding was invested in the Stratford
region of London in the run-up to the Games.
VIDEO
The London 2012 Olympics provided a tempo- This includes the opening in September 2011 Although the sheer number of tourists arriving in London for the Olympics will boost sales in
areas like retailing and apparel, will it have any significant impact on the economy?
rary but much-needed boost to the UK’s construc- of Europe’s largest shopping centre, Westfield
tion industry at a time when the housing market Stratford, estimated to have created 10,000 new Featuring Daniel Tarling-Hunter, Economist at Euromonitor
stagnated due to the global slowdown. jobs. This will boost consumer incomes and
The Olympic Games induced strong growth in spending in the area.
public non-housing construction output, provid- Large sporting events often result in ‘white ele-
ing some respite to the ailing construction indus- phants’ – large and expensive structures with little
try. In 2011, the construction industry accounted use afterwards – located in expensive and scarce
for 5.4% of the UK’s GDP and 8.5% of total urban areas. However, many London Olympic
employment. venues are intended as temporary, and after
However, this boost to the construction indus- decommission or deconstruction, the Olympic
try was only temporary, as most construction work quarter will be converted into a business and
for the Olympics was completed by July 2011. residential area. Following the Olympic Games,
It was also insufficient to make up for the losses 40,000 homes will be built in the vicinity of the
associated with the falling residential housing Olympic Park, relieving some pressures on local
completions. housing and providing further jobs to the area.
Although the London 2012 Games were
Euromonitor International 8 Euromonitor International 9
Countries and Background
Datagraphic Consumers On July the 27th, the Games will open in
Does BMI Have an Impact on a Country’s Performance?
London. Over 17 days, thousands of elite athletes
from around the world will compete for medals in
DATAG R A PH I C CO U N T R I E S A N D CO N SU M ER S Marketing the 2012 a host of events ranging from athletics to shoot-
2012 Olympics: Does BMI Have an Impact on a Country’s Performance? ing. They will be looking to reap the reward of
2008 Performance: GDP per Capita vs Mean BMI vs Total Medals Won Olympics: Who do years of training, discipline and sacrifice. At the
How Different Regions of the World Compare same time, many brands will be seeking to exe-
Mean BMI (kg/sq m)
30
Belarus
While ranking high in Olympic medals,
Consumers Think is cute Olympic marketing strategies they hope will
Belarus punches above its weight in BMI. (after a fashion) also win gold.
This is “mainly caused by poor nutrition
supported by such factors as sedentary
USA Going for Gold?
lifestyles and lack of sport activities.”¹ A ‘heavy’ reliance on social
Among the reasons for increasing obesity in
Daphne kasriel-alexander, networking
28
Mexico Latin America “are greater availability of consumers editor, Euromonitor
Chile
Venezuela
fat-saturated food, and a shift away from
traditional diets…[and] the move towards International While social media was a factor in marketing
rising urban populations has contributed
UK related to the Beijing Olympics four years ago, it
T
towards a less active population.”²
Dominican Republic
he Olympic Games (aka “the greatest show is set to be much more visible this time around.
26
Colombia on earth”) are upon us. Just like the athletes In an interview with the Wall Street Journal, Marc
Brazil who will be the stars of the show, market- Pritchard, head of marketing at Procter & Gamble
Argentina
ers have been preparing for this event for years (P&G), said: “You’ll see some very heavy-duty
Italy
Ecuador and are bombarding consumers with Olympic- digital activity for our Olympics programme…
France and Italy, among the world’s largest
France
economies and Olympic powerhouses have
themed campaigns, many of which are embrac- We have more than 30 brands doing Olympics
24 low BMIs compared to other G7 countries. ing innovative strategies. activities and 150 athletes. All those brands have
China Although declining in popularity their
healthy Mediterranean diets contribute, as Facebook pages, and all those athletes have
do government campaigns with “particular
attention paid to child obesity.”³,4 Commercial opportunities Facebook pages. Then we go out, create an event,
Japan
talk about it and push it out through broadcast
22
• Many Olympic athletes are youthful, suc- and digital. Then we have community managers
20,000 30,000 40,000 50,000 60,000
India
cessful, attractive and widely admired - brands who are amplifying the discussion, engaging on
Euromonitor International’s Total Medals Won Quote Sources can benefit greatly by being associated with them Facebook, YouTube and Twitter.”
Regional Classifications Countries and Consumers Reports
1 Consumer Lifestyles in Belarus
• The Olympics is unique in its combina-
Asia Pacific
2 Regional Focus:
Australasia 110 medals
Rising Obesity Rates in Latin America
tion of ancient tradition and modernity, giving it
20 Eastern Europe
0 10,000
3 Consumer Lifestyles in France
4 Consumer Lifestyles in Italy
a universal appeal that is unmatched by any other
Latin America
GDP per Capita (US$ in PPP) Middle East and Africa 1 medal sporting or cultural event
North America
Western Europe
• Overkill is an ever-present risk with
Olympic marketing, which could leave consumers
jaded and cynical
Sources: Euromonitor International, www.sports-reference.com
© 2012 Euromonitor International
Euromonitor International 10 Euromonitor International 11
Adapting old media to new the airline opened an airline-themed pop-up after it was revealed that ATMs at Olympic venues businesses that are not official sponsors are pro-
times venue called “Flight BA2012” in the trendy were to be replaced by ones that would only hibited from using certain words or phrases that
London suburb of Shoreditch that celebrated “the accept Visa cards. might relate to the Games.
P&G is combining increased investment in best in British talent.” Writing in the London-based Observer news- For example, they cannot place a sign outside
online marketing with more traditional chan- The three-in-one venue featured an art gal- paper, journalist Heather Stewart bemoaned their premises using the phrase “London 2012”
nels like television. For example, it is running a lery, cinema and dining room, where diners were “wall-to-wall Olympics marketing guff, plastered and are restricted in their use of such words as
TV ad featuring the mothers of some well-known able to sample a “bold British menu” created by over hours of telly advertising, acres of billboards, summer, medals, sponsor, silver, gold and bronze.
Olympic athletes (such as Jennifer Bolt, the Michelin-star chef Simon Hulstone. According to and even the labels on milk bottles… the Olympic This “proscribed” language is available only to
mother of Jamaican sprinter Usain Bolt) entitled one blogger, “Maybe it’s because I am a serious dream has little to do with rippling athleticism or official sponsors, such as Samsung, Coca-Cola,
“Best Job.” It claims that the spot “honours every- foodie, or maybe it’s just the envy that most of us heroic sporting endeavour, and everything to do Procter & Gamble and Visa.
thing that all moms do to help their children suc- feel when turning right instead of left when enter- with flogging washing powder and sausage-and- During summer 2012, the British media have
ceed by showcasing the amazing moms behind ing an aircraft, but this looks genius to me.” egg McMuffins.” carried a significant number of stories about
Olympic athletes.” Meanwhile, to mark the Olympics, the British According to one online poster, “The Olympics small businesses celebrating the Olympics being
As well as airing on TV networks around the Fashion Council paired nine top fashion design- … is just a money making binge for corporate threatened with legal action. According to one
world, it has proven very popular on YouTube, ers with nine artists in a project entitled Britain sponsors.” Another commented: “The never online forum poster, “Sports are a sideshow. It’s all
attracting 4.6 million hits by late June 2012. It Creates 2012: Fashion + Art Collusion. The result- ending waves of branding and sponsor advertis- about marketing,” while another said: “This whole
clearly touched an emotional chord with many ing artworks, showcasing British originality, will be ing are overwhelming and depressing.” However, thing has become very ugly… Time to refocus on
viewers. According to one poster on the site: “This exhibited at London’s Victoria & Albert Museum a third said: “People enjoy the spectacle of the the sport itself.”
touched my heart in a wonderful way.” Another in July. Olympic Games. If they didn’t, then they would
said: “When the video ended, I went to my Mom not watch... The commercial sponsorships make Outlook
and said ‘thanks for everything’ and just cried.” A But “Dove” aircraft get a the games possible.”
third said: “Is this really an advertisement? If so, it’s mixed reception In spite of these difficulties, consumer senti-
a great one.” The “brand police” get heavy ment towards the Olympic Games remains over-
Regardless of the medium, making an emo- In April, British artist Tracey Emin unveiled the whelmingly favourable, making it a magnet for
tional connection tends to be facilitated by a con- first of a set of special Olympics-inspired plane Thanks to legislation passed by the British gov- global brands. As well as being a celebration of
nection with the Olympics, where medal winners designs for BA. The outside artwork of the nine ernment after London was awarded the event, youthful vigour and athletic prowess, if it is man-
(as well as some of those who fail to make the “Dove” aircraft was designed by Brighton-based aged adroitly, London 2012 will also be a show-
podium) are often known to shed tears. Moreover, artist Pascal Anson, a protégé of Emin. However, UK Adspend by Media Type: 2012 case for sponsors that will deepen brand recog-
US$ billions (constant 2011 prices)
in the era of Tivo and time-lapse TV viewing, it many posters on the Daily Mail’s internet site were nition and loyalty and
highlights how consumers find some Olympic unimpressed: According to one, “Yuck! I don’t ultimately boost profits.
messages significant enough to seek out online. get the Olympic connection?” “Looks hideous,”
another lamented.
BA et al strive to tap
patriotic spirit Tread carefully
June 2012 saw the celebration of Queen Allegations of cynicism and overkill are fre-
Elizabeth II’s Diamond Jubilee and British Airways quently made against Olympic-related marketing.
(BA) is attempting to tap into the patriotic spirit This risk is highlighted by stories of brands being
this engendered in the UK in its Olympic market- heavy handed about exclusivity. For example,
ing campaign. For a fortnight during April 2012, credit card company Visa was heavily criticised
Euromonitor International 12 Euromonitor International 13
TRAVEL & TOURISM Recession, next stop
Datagraphic – depression?
How Different Economic Groups Compare
IMPACT OF THE LONDON The pace of economic deterioration in the
Eurozone has picked up speed in 2012, hijacking
DATAG R A PH I C CO U N T R I E S A N D CO N SU M ER S
2012 OLYMPICS ON UK growth prospects around the world from the US
2012 Olympics: How Different Economic Groups Compare and China to the UK. The Eurozone could soon
TOURISM face a break-up of its existing structure - a Greece
Olympic Performance Has Not Kept Pace with Economic Growth For All 1988–2008
exit or the break-up of the Economic Monetary
Comparing the GDP per Capita and Medals Won, Olympic years
Total Medals
G7 Union, so-called “Eurogeddon”.
The USA remains in a class of its own with its high medal
120 count and high GDP per capita. In the 1980s, Germany
competed with the USA both in GDP per capita and
Caroline Bremner, Global Head The UK entered a double-dip as it contends
China medals. However, since competing as a unified team in of Travel and Tourism Research, with the worst recession since the 1930s. The
Russia
USA High
Count
1992, Germany has failed to keep pace in GDP per capita
growth while it won half as many medals in 2008 as it had Euromonitor International country is weighed down by front-loaded auster-
in 1988 (as West Germany). But in fielding its smallest team ity measures, with income inequality and unem-
Germany (1992–2008) since 1990, Germany’s slide may continue in 2012.
ployment rising, further exacerbated by weak
T
BRIC
The BRIC countries are the least concentrated. China and he final countdown to the 2012 London European demand for UK exports. The troubles
Russia enjoy low to moderate GDP per capita as they
Moderate consistently win high medal counts. However India and
Olympic and Paralympic Games has being faced by its European neighbours are not
Count Brazil, with their similar economic positions remain mired begun. Euromonitor International investi- good news either for travel and tourism, seeing as
near the low end of the medal spectrum—though Brazil has
seen recent improvement in its medal count. gates the impact and legacy that the Games will European countries accounted for 73% of interna-
Low
Future-7 have on London, already a leading global desti- tional arrivals in 2011.
Count
0 As a set of emerging markets, the Future-7 has a lot of
catching up to do in both GDP per capita and Olympic
nation, and the UK overall. The event will reach a London is a mature destination and welcomed
0 GDP per Capita (US$ in PPP) 50,000
Low Moderate High
performance. Turkey and Argentina stand out for 4.5 billion global audience, which will help raise a record 15 million visitors in 2011, ranking it
improvements in both GDP per capita and medal counts.
Vietnam is not charted because of only two total medals awareness, boost intention to travel and encour- among the top three cities in the world after Hong
won (2000 and 2008).
G7 in Detail 1988–2008 (excl. USA) age visits from both old and new visitors. Kong and Singapore, according to Euromonitor
Moderate Medal Counts and High GDP per Capita
United Kingdom France Germany Italy Japan Canada International’s Top City Destination Ranking.
60 60 60 60 60 60
Destination London: Visitor Numbers 2011
0 0 0 0 0 0
10,000 40,000 10,000 40,000 10,000 40,000 10,000 40,000 10,000 40,000 10,000 40,000
Future-7 in Detail 1988–2008 (excl. Vietnam)
Low Medal Counts and Moderate GDP per Capita
Turkey Argentina Indonesia Mexico Egypt (2004–08) S. Africa (1992–2008)
10 10 10 10 10 10
Source: Euromonitor
International
0 0 0 0 0 0
0 20,000 0 20,000 0 20,000 0 20,000 0 20,000 0 20,000
Sources: Euromonitor International, www.sports-reference.com
© 2012 Euromonitor International
Euromonitor International 14 Euromonitor International 15
Three reasons to be the Netherlands, which also benefit from strong
cheerful air, rail and sea links. Strong growth is forecast
UK Arrivals: Top 10 Source Markets 2011/2012
from the US and Australia - both enjoying favour-
Despite on-going austerity, the UK has much to able exchange rates to the pound - driven by
celebrate. VisitBritain, the national tourism board, friends, relatives and avid sports fans. However, in
distilled the essence of Brand Britain into three many cases, cultural and business tourists will be
words - “timeless, genuine, dynamic” - to reflect put off from travelling to the UK this year due to
the country’s history, heritage and multi-cultural rising prices.
society. Armed with a marketing budget of £100 China and India are earmarked as priority target
million over four years thanks to its partnership countries by the national tourism board. However,
with the travel and tourism industry, VisitBritain Euromonitor International’s findings suggest Source: Euromonitor
aims to generate £1 billion worth of PR to bring these nations are not big Olympic fans, and will International
in four million additional visitors over 2011-2015. prefer to travel to London and the UK outside the
Games. In 2012, 430,000 Indians and 130,000
Poisoned chalice or Holy Chinese are expected to visit the UK. Despite
Grail Brazil hosting the 2014 Olympics, Brazilian travel
to the UK will be minimal in 2012, at 120,000 trips.
The Olympic Games is regarded as one of the
pinnacles of the “Golden Decade of Sport” which Domestic visitors to save the
kicked off in 2010. However, the Olympic Games day
are also regarded as highly controversial, with
many industry stakeholders divided about the Euromonitor International expects 330,000
benefits and threats of holding such a high-profile international visitors to attend the Olympic
mega event. Inbound operators, represented by Games. Domestic visitors account for 68% of the
the European Tour Operators Association (ETOA) eight million Olympic tickets sold, and hence will
London vs UK Domestic Tourism Performance 2011-2016
and UKinbound, have been vocal regarding the dominate visitor numbers. For 2012 as a whole,
negative impact witnessed by their members Euromonitor International predicts that domestic
affected by the displacement factor, which occurs tourism growth to the capital will be 8%, topping
when traditional source markets steer clear of the 12 million domestic trips.
host city for fear of exorbitant prices, travel chaos, Fortunately, the Games extend beyond
security threats and punitive booking terms. London’s boundaries, with football taking place in
Glasgow, Newcastle, Manchester and Coventry,
Baton for growth sailing in Weymouth and cycling on the South
Downs. Euromonitor International predicts that Source: Euromonitor
Our expectations are positive for 2012 as a the feel-good factor will boost domestic tourism International
whole, with an anticipated increase of 2% in inter- nationwide, with a 5% uplift expected for the UK
national arrivals to the UK, accounting for a dis- overall in 2012. Growth will subside following the
placement factor of 15%. The majority of growth event, although with recessionary pressures on
is likely to derive from European neighbours with household budgets still apparent, the domestic
a passion for sports, such as France, Germany and market will remain positive over the mid-term.
Euromonitor International 16 Euromonitor International 17
First “Social Media” Games per available room, rebounding quickly after the Corinthia Hotel, 45 Park Lane and the St Pancras to some last-minute discounting as the booking
global economic crisis. PWC forecasts occupancy Renaissance Hotel. window shrinks.
London 2012 claims to be the first “social in London could reach as high as 83.4% in 2012, The luxury wave of openings continues apace,
media” Games, seeing as Beijing 2008 was before with an average daily room rate of £135 leading including hard-hitting luxury brands like Bulgari Threats and challenges go
social media was fully integrated into the market- to a RevPAR of £114. The Olympics take place (2012), ME London by Melia Hotels (2012), hand in hand
ing activities of companies and national tourism during London’s peak season, so the capital’s Shangri-La (2013) and Edition (2013) amongst
boards. With such a large PR budget and a host of hoteliers are poised for a busy summer. others. The luxury segment also received a wel- Mega events all come with associated threats
new technologies at its disposal, from gamifica- Securing hotel rooms was an integral part of the come boost from the refurbishment of its “grande and challenges, from infrastructure and transport
tion to apps and super-bloggers, there is a vast bid to win the Olympics, and over the past year the dame” hotels, such as The Savoy. The focus of to security. One of the main threats facing London
opportunity for London & Partners to maximise London Organising Committee of the Olympic luxury development, however, remains Central 2012 is the risk of travel chaos at the UK’s main
the global television audience, with sources put- and Paralympic Games (LOCOG) released further London. hub, Heathrow Airport, already operating near
ting the amount at 4.5 billion people. rooms back to the market, easing the pressure on The budget chains also took up the expan- capacity and dealing with 68 million passengers a
If the media response to the Royal Wedding pricing. Pipeline development has been strong sion challenge, with Travelodge (15 outlets to year. From excessive queues to baggage delays,
and the Queen’s Diamond Jubilee on Twitter and will reach its peak in 2013 with demand and date) and Premier Inn (22 outlets) battling it out the airport is expected to see demand rise by
is anything to go by, then the Olympics should supply diverging in 2013, as the former subsides for dominance. Budget chains ventured close over 40% on key travel dates. This could well be
have the desired effect of generating global pub- and the latter continues to expand. The post-event to the Olympic Park, but only a few new outlets the Achilles’ heel of the Games.
licity. Brandwatch reported the Jubilee gener- slump will be a major challenge to overcome and were opened, such as London Stratford Premier A potential terrorist attack is concern for secu-
ated 1.2 million mentions compared to the Royal will weigh down average daily room rates. Inn, opposite the new Westfield Stratford City rity services. Much publicity was made of the
Wedding’s 900,000, recorded over their respec- London being a mature market has benefited shopping centre. IHG also opened its mid-priced ground to air missiles installed on local residents’
tive 4-day periods. from the increased investment in its hotel supply, Holiday Inn brand within Westfield, along with its accommodation to act as a deterrent to terrorism.
with the major chains refreshing and diversifying extended stay brand (4-star), Staybridge Suites. A flare up of the August 2011 riots may happen in
New lease of life for their brands, leading to greater consumer choice. As of June 2012, there still remains capacity flash areas but is unlikely to spread.
London hotels A major coup for the city was the launch of the in the market. Thomas Cook, the official travel In terms of revenues generated by visitors,
luxury lifestyle brand W Hotel from Starwood in retailer of the Games, reported that 25% of its a weak euro following the on-going Eurozone
London is the envy of the rest of the UK, with Leicester Square. Other luxury launches of note Olympic packages (tickets, hotel and transport) crisis will undermine demand from key European
its high occupancy rates and RevPAR, or revenue included the InterContinental Westminster, the were unsold with six weeks to go. This may lead source markets such as the Netherlands, France
Leading London Airports: 2011
London Hotel Outlets by Star Rating 2011
Source: Euromonitor Source: Euromonitor
International International
Euromonitor International 18 Euromonitor International 19and Germany. However, this will mostly affect last- and attraction in the form of the Olympic Park Podcast
minute visitors, whereas most sports fans booked itself. When the park reopens in 2013, it will be
in advance to secure accommodation at a more called the Queen Elizabeth Park and is expected
R
reasonable price. to receive 9 million visitors per year. It will also be egardless of the final numbers for the
the home of 5 world-class sports stadia, which will London 2012 Games, it will be important
Tourism legacy for the UK boost London’s mega-event host credentials. for the tourism industry to leave a posi-
Amongst the winners are London’s hoteliers tive image of the UK in visitor’s minds for poten-
Regardless of the final numbers for the London in the short term as they gear up for enhanced tial future trips.
2012 Games or full 2012, the most important tour- demand in their peak season, having witnessed a Caroline Bremner, global head of travel
ism legacy for Britain is raising brand awareness in long overdue refresh of hotel brand supply. and tourism research, states that the real win-
a positive way, boosting potential visitors’ desire The transportation network will benefit from ners in the tourism industry could be the small
to travel to the UK and ultimately visitor numbers. the investment to date and improved interna- boroughs. As international tourists arrive to
The target of four million additional visitors over tional connections from St Pancras, with Deutsche Stratford International station, it’s up to busi-
four years is ambitious, especially in the face of Bahn set to launch London-Frankfurt in 2013. The nesses and hoteliers to keep investing in that
a fracturing Eurozone and appreciating sterling. government has also backed ground-breaking area so that they can help put East London on
Nevertheless, keeping the momentum going plans for developing the national high speed the map.
will be critical to ensuring the tourism legacy is rail network, with the first stage of High Speed 2
achieved. VisitScotland, for example, has high- (HS2) from London to Birmingham due to start in
lighted nine major events including the Glasgow 2015. The country’s airport policy is also back on
2014 Commonwealth Games to ensure the the agenda, with a possible U-turn by the govern-
opportunity presented by the Olympics endures. ment on a third runway at Heathrow after the next
Euromonitor International estimates the rate election.
of inbound tourism growth will slow post-event, The local London boroughs and their com-
recording a CAGR of 1.4%, which amounts to an munities will be the ultimate winners, seeing as
increment of 1.6 million over 2011-2015. This sce- regeneration was at the heart of the original bid.
nario is the best case, and the impact on inbound The Olympic Park Legacy Company points to the
tourism following the worst case scenario of an creation of 12,000 jobs after the Games and 3,000
EMU break-up would require this assessment to homes including affordable housing. The legacy
be revised downwards significantly. has a wide range of targets from sports partici-
pation, biodiversity, and waste management to
So how will 2012 be healthy living.
remembered? With international connections, it is up to busi-
nesses, hoteliers and travel operators to keep
Most events are remembered for putting on investing in the area so that they can put East
a big show, for example, Beijing’s opening cer- London on the map, offering visitors the chance
emony in the Bird’s nest or Sydney’s “Millennium” to experience the real “East End” for themselves.
Games; or negatively for failure to meet construc-
tion deadlines such as Athens. It remains to be
seen how impactful Danny Boyle’s opening cere-
mony will be for London 2012, but it will announce
to the world that London has a new destination
Euromonitor International 20 Euromonitor International 21SOFT DRINKS with the Olympics since 1928, when the beverage attendees. branding in a developing nation as a large reason
company’s freighter transported the US Olympic The London 2012 games will also bear Coca- that Coca-Cola witnessed its off-trade volume
team to Amsterdam, along with 1,000 cases of Cola’s unique imprint. TCCC’s campaign centres share increase from 15.1% in 2007 to 15.8% in
COCA COLA’S Coca-Cola. The company has agreed to partner on the theme of “Move to the Beat” and features 2008 to an all-time high of 16.3% in 2009. But
with the games through 2020; a deal that extends “an urban artwork painted by a collective of inter- unlike China, the United Kingdom represents a
SPONSORSHIP SHOWS TCCC’s support of the games to 92 straight years. nationally acclaimed young artists “to create “The mature market, well versed in the various offer-
While the company has been present at all the Beat Wall”. The artwork lies in the shadow of the ings of Coca-Cola. Increased branding exposure
GLOBAL VISION, summer and winter games held between 1928 Olympic Stadium in London and the campaign through television, radio, print, and social media
and 2012, Coca-Cola has truly left its mark on the has launched in 11 countries across Europe, sup- marketing may do little to improve market share
UNDERSCORES BRAND Olympic “experience” starting in 1996 when the ported by television, radio, internet, and social when nothing new is truly being showcased to
games were hosted in Atlanta. media advertising. The overall theme of the cam- consumers. As such, TCCC has already seen their
DOMINANCE In Atlanta, Coca-Cola was a key sponsor as the paign is designed to “bring teens closer to the shares grow stagnant in the United Kingdom,
company welcomed the world to its “hometown”. Olympic Games and to the sport in general by with 20.5% of off-trade volume share in 2010 and
Jonas Feliciano, Beverages Analyst, In an effort to enhance the experience for all visi- engaging them through a fusion of two global 20.4% share in 2011.
Euromonitor International tors, TCCC created venues such as Coca-Cola teen passions - sport and music.” The culmination This is not to say that Coca-Cola’s campaign is
Olympic City theme park, Coca-Cola Refreshment of the campaign is the global launch of a theme without merit. In fact, many applaud TCCC for its
A
s Coca Cola prepares to place their dis- Plaza, the Coca-Cola Olympic Salute to Folk Art song featuring producer Mark Ronson and singer continued focus on global community rather than
tinctive stamp on another Olympic expe- Exhibit, and the Coca-Cola Official Olympic Games Katy B, and using sounds from five international explicit beverage marketing during the games.
rience, the beverage giant misses an Pin Trading Centres. Since these games, TCCC athletes participating in their sport as part of the But, if the company has taken great pains to craft
opportunity to unveil new products to the world. has made it a habit to sponsor public venues in beat. The “Move the Beat” campaign is just one a campaign that targets global youth and features
For 84 years, The Coca-Cola Company (TCCC) Olympic cities. For the 2000 Sydney games, Coca- of many initiatives undertaken by TCCC (others the drawing power of English celebrities, the
has been involved with the Olympics in some Cola hosted simultaneous live big-screen presen- including traditional pin trading sites and spon- launch of a new product or even rebranding of an
capacity. The 2012 London games present yet tations of the opening ceremonies across Sydney, sorship of the torch relay), but it also represents old one would do well to seize upon the excite-
another venue where Coke will be highly vis- Melbourne, Brisbane, Adelaide and Perth. In 2004, Coca-Cola’s ambition to combine various media ment surrounding the Olympics. Furthermore, the
ible as the event’s exclusive non-alcoholic drink TCCC invited Greek youths in Athens to partake to create a unifying blend of music and sport that company’s exclusive beverage rights provides it
vendor, as well as present a platform for the com- in daily television and radio programming shar- targets the key youth demographic. But one thing with an ideal chance to test a new sports drink
pany demonstrating its commitment toward social ing their experiences about the games. And for sorely lacking from Coca-Cola’s plans is how such or coconut water blend by a diverse and captive
responsibility and environmental sustainability. the 2008 Beijing games, Coca-Cola hosted vari- a campaign promotes its beverages outside of consumer base seeking hydration. Regardless, in
However, with a captive audience, exclusive bev- ous special events for fans in Beijing and co-host showcasing its signature logo on everything it a market where its brand is already #1 and is easily
erage rights, and the world tuned in, the company cities, with two special Coca-Cola “Shuang Zones” touches. recognised locally and internationally, Coca-Cola
seems focused on reinforcing the brand’s global where consumers could partake in local concerts, has missed on an opportunity to revitalise its
dominance rather than positioning its participa- telecasts of the games, pin collecting, interactive Olympic Games as an oppor- brand; and instead just reminds consumers of its
tion with the event to have an immediate and games, and nightly parties featuring local art- tunity to grow brand share ubiquity.
measurable impact on sales. ists. While all these events held similar themes by launching new products
of showcasing local culture, fostering global
Coca Cola creates a unique communication, and providing diversion for the When Coca-Cola sponsored the 2008 Beijing
experience at the Olympic thousands of fans in attendance, Coca-Cola ben- games, it participated in a yearlong campaign
Games efited not only from pervasive branding across all featuring Chinese athletes with inspirational
venues, but from exclusive rights as the only non- messages of Chinese tradition, heritage and
The Coca Cola Company has been involved alcoholic beverage provider for all athletes and good sportsmanship. Many attribute such strong
Euromonitor International 22 Euromonitor International 23VIDEO HEALTH & High-tech sports beverages
Will Coca-Cola’s Olympics campaign “Move to the Beat” gain the interest of youth culture
worldwide? WELLNESS Sports drinks are the first, and most obvious
category on which the London Olympics will have
Featuring Jonas Feliciano, Beverages Industry Research Analyst at
a major impact. These products already enjoy
Euromonitor
THE 2012 OLYMPICS: worldwide mass-market popularity, particularly
among young men. Euromonitor International’s
FOCUS ON PERFORMANCE soft drinks statistics show that global off-trade
volumes rose by 28% over the 2006-2011 period
HYDRATION to exceed 15 billion litres in 2011. In per capita
consumption terms, the US led with 21.1 litres, fol-
lowed by Denmark with 14.9 litres and Japan with
By Ewa Hudson, Global Head of 13.6 litres. The UK, host of the 2012 Olympics,
Health and Wellness, Euromonitor registered just 9.8 litres in 2011, demonstrating
International that there remains plenty of growth potential.
Coca-Cola is an official sponsor of the Games.
T
he London Olympic Games are about to Therefore, its Powerade sports drinks brand,
kick off. All eyes are on the world’s top-class the event’s official sports drink, is set to benefit
sportsmen and women, whose steeled hugely. The company has recruited a stable of
bodies will be performing to their peak ability, not high-profile athletes as ambassadors, includ-
only because of incessant training but also owing ing Sheffield-born Jessica Ennis, the current
to the athletes’ customised dietary regimes. European Heptathlon Champion and Spaniard
Optimum hydration is a major cornerstone, Javier Gómez Noya, winner of the 2008 and 2010
particularly for endurance athletes, and the days World Triathlon Championship titles.
when everyday healthy drinks such as water and Coca-Cola advocates the stance that anyone
orange juice were deemed sufficient are long exercising at high intensity for more than 30 min-
gone. Sports science has established that the utes, or for more than 60 minutes at any intensity,
mere replacement of lost fluid is not sufficient and is at risk of performance-stifling dehydration. This
that carbohydrates and minerals are also needed would also apply, for instance, to anyone involved
to maintain performance levels. in school sports as well as occasional gym goers.
Medal-laden athletes are an inspiration to the Water, as the company points out, has substan-
world. Their consumption habits have a well- dard rehydration properties for three reasons - it
known knock-on effect on average consumers does not contain adequate levels of minerals and
who may only be sporadically active but who carbohydrates, it shuts down the thirst receptors
choose to consume sports-oriented products on and it does not possess the performance benefits
aspirational grounds and/or because they are of a sports drink.
fashionable. Powerade is the world’s second-ranking
sports drinks brand, commanding a 14% off-
trade volume share in 2011 behind Gatorade’s
(PepsiCo) leading 46%. In the UK, Powerade also
Euromonitor International 24 Euromonitor International 25ranks second with a 14% share, trailing behind One of the most exciting types of superfruit Both big and small fish is UK-based TORQ Ltd which prides itself on its
GlaxoSmithKline’s Lucozade with its impressive juice to emerge in recent years is coconut water, stand to benefit exclusively British-made, high-quality ingredient
56% volume share. long a staple juice item in Brazil where it accounts products, sold via the Internet and independent
As the London Olympics’ official sports drink, for 69% of the 100% juice category in off-trade Besides boosting the fortunes of major sports retailers. To keep its products – including TORQ
Powerade is likely to enjoy a boost to both its volume terms. Coconut water is now rapidly drinks brands and pushing newcomers like coco- Energy and TORQ Recovery sports drinks – afford-
sales and its share. However, the sports drinks gaining popularity in other geographies, a trend nut water into the mass-market spotlight, an able, the company chooses powdered formats.
category as a whole stands to benefit, especially amplified by major players’ increasing focus on Olympic event can also serve the smaller players. Unlike mass-market brands, for which major
as it now also has regulatory endorsement on its the newcomer. The Olympic Games are viewed by millions of sporting events like the Olympics are likely to
side. After a lengthy assessment process, in May Coconut water, extracted from unripe (green) youth, including those that aspire to become the bring an instant surge in sales, promising niche
2012 the European Food Safety Authority (EFSA) coconuts, is packed full of electrolytes such as elite athletes of the future. Eventually, many seri- companies’ revenues grow much more slowly.
finally published its full list of 222 permitted potassium, magnesium, calcium and phospho- ous sportsmen and women will find themselves The most successful brands have the potential to
health claims for food and beverage products in rus, affording it a naturally isotonic composition. drawn to look beyond mass-market brands, opting develop into big brands, buoyed by the coming
the Official Journal of the European Union. Presenting a natural antithesis to conventional instead for products made by niche companies of age of each new sporting generation.
Sports drinks can now make the legal and offi- sports drinks, which are often perceived to be founded and run by individuals who are passion-
cial claim that “carbohydrate-electrolyte solutions “chemically” formulated – an image augmented ate sportspeople themselves. One such example
enhance the absorption of water during physi- by their often lurid colours – coconut water drinks
cal exercise” and also that they “contribute to the have the potential to pull in a whole new audi-
maintenance of endurance performance during ence, including health-conscious women who
prolonged endurance exercise”. may previously have spurned sports drinks and
instead relied on water and juice for their rehy-
Moving on to…natural dration needs. Podcast
hydration! Examples of sports drink-positioned coconut
water products include Zico, marketed with the
M
One of the most pervasive health and wellness tagline “Nature’s Sports Drink”, ONE Active and ass market consumers will no doubt
trends globally is consumers’ enduring quest to Jinga Sport (Transworld Beverages Inc). Coca- be inspired by watching physically
seek out naturally healthy products. Euromonitor Cola acquired a majority stake in Californian- fit athletes at the top of their game,
International’s health and wellness data shows that based Zico Beverages in April 2012 while PepsiCo and the health and wellness industry must take
in 2010 40% of health and wellness-positioned holds a majority stake in ONE Natural Experience, advantage of this. Ewa Hudson, head of health
products were marketed as naturally healthy in another Californian-based enterprise. and wellness research at Euromonitor, states that
the 32 markets where Euromonitor carries out The 2012 Olympics provide a perfect platform the games are a perfect opportunity for health
health and wellness research. For comparison, for showcasing coconut water beverages, and and wellness companies to advertise products,
organic products accounted for just under a 5% coconut water makers have already garnered the in spite of the fact that the largest Olympic spon-
share, and the fortified/functional category, which support of star athletes. US Olympic gold med- sors are sugary soft drinks and greasy fast food.
includes sports drinks, 32%. allist sprinter LaShawn Merritt became a ONE
Naturally healthy fruit/vegetable juice claimed Coconut Water spokesperson in May 2012 to pro-
one quarter of naturally healthy beverage sales. mote the drink’s health and nutritional benefits in
This includes the superfruit juice category, which advertising campaigns and social media.
registered a dynamic 62% increase in value over
the 2005-2010 period to reach retail value sales
of almost US$3 billion in 2010.
Euromonitor International 26 Euromonitor International 27You can also read
