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European companies missing a major growth opportunity

Chemical companies
By Paul Hodges on 06-Oct-2014

YouTube Oct14We all know that the European economy is in a bad way.   Sales and incomes are under pressure, and political risk is rising, whilst unemployment remains at high levels.  Its very easy to get depressed about the outlook.

We are also unlikely to get much help from policymakers.  They remain in their world of mathematical models.  These supposedly ‘prove’ that money-printing and low interest rates will eventually bring recovery.  But as iconic US baseball legend Yogi Berra once said:

In theory, there is no difference between theory and practice. In practice there is.”

But companies and investors should not just give up.  Instead, as in the past, they need to develop their own strategies for success.  And in particular, they need to start looking hard at the opportunity to develop new products and services for the fastest-growing generation of all time, the New Old 55+ generation.

The other great advantage of this new market is that very few companies are yet aware it exists.  They still imagine anyone over the age of 55 simply needs a wheelchair and a large supply of pills.  So there is very little competition for those who do even a half-decent job.

New Old Top 10 Apr14As the chart shows, the New Old’s numbers are growing from just 200m worldwide in 1950 to an estimated 1.1bn by 2030.  And these are not the retirees of the past.  Instead they have a decade or more of active life ahead of them.

Of course, the New Old do not have as much money as when they were younger.  So affordability is a key criteria for any new product.  Companies need to adopt a ‘design to cost’ philosophy, rather than focusing on trying to ‘add value’.

The New Old are also no longer so bothered about mere ‘wants’ any more.  They already own most of what they need, so they are a replacement society.  And their incomes are declining as they enter retirement, so their focus is on real needs such as food, water, health, mobility and shelter.

This is the background to the blog’s latest short video interview with ICIS Chemical Business deputy editor, Will Beacham.  Please click here to access it.


The blog’s weekly round-up of Benchmark price movements since January 2014 is below, with ICIS pricing comments:
Naphtha Europe, down 16%. “Prices declined in line with Brent crude oil to hit their lowest level since June 2012”
Brent crude oil, down 14%
PTA China, down 10%. ”Activity was subdued because of the on-going Golden Week holiday”
Benzene Europe, down 8%. “Downstream demand looks bearish between now and the end of the year”
US$: yen, up 5%
S&P 500 stock market index, up 7%
HDPE US export, up 13%. “There is so little product for export that producers are not going to lower prices, although US export values are not really sellable at this point”