Fourth quarter (December 2010) results from Nielsen's Global Online Consumer Survey show that the Australian consumer has slightly lost their confidence, as a conservative drop of three points takes the Consumer Confidence Index score to 112 points (this compared to September's high of 115 (Chart 1)). But the latest score is still a good five points higher than the one recorded this time last year (107), and is still a positive result for Australia.

However, of the major concerns consumers have facing them in the next six months, rising utility costs retains its number one position, with 36 percent of consumers concerned one of highest scores globally second only to Poland, with a score of 43 percent.

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According to the Consumer Confidence Index, of those consumers who had changed their spending to save on household expenses over the past year, a staggering 70 percent said they had actively taken action to reduce utility expenditure in this quarter. This was closely followed by consumers switching to cheaper grocery brands which recorded the greatest percentage point increase for this quarter (up 10% to 61%) as the second most popular action for reducing expenditure during the past year.

Cutting down or buying cheaper brands of alcohol also featured as a form of expenditure reduction (a gain of 6 percentage points on the last quarter), with 28 percent of consumers claiming to have taken this step in the past 12 months. And when economic conditions eventually improve, 62 percent said that they would continue to save on utility costs, with a further 41 percent maintaining their brand switching momentum by choosing the cheaper grocery option.

"Consumers' increasing propensity to switch to cheaper grocery and alcohol brands is reflected in the growing popularity of private label. Consumers now see this phenomenon as a credible and value for money alternative to the more traditional, wellknown name brands. Nielsen's 2010 State of the Nation Report published in December stated that during the economic downturn, half of all Australian consumers said that they had purchased more private label products, and that 92 percent of them would continue to do so in an improving economy," commented Chris Percy, Managing Director - Pacific, Nielsen Consumer Group.

The subsequent impact of private label brands on the total value of the grocery category (excluding tobacco) is distinct, and has caused a noticeable decline in the category's value growth. Latest MAT growth figures to 2 January 2011 are hovering around the two percent mark. Heavy retailer discounting through price reductions and deep promotions is also a leading contributor to the decline in value growth.

"The flooding across the eastern seaboard of Australia will also have far reaching impacts. For some areas it will be about a disruption to consumer confidence, for others a retail dislocation, and for many parts of Australia, it will be about the reallocation of national infrastructure and resources - with all the resulting changes for employment, wages and inflation," Percy added.

The Nielsen Consumer Confidence Index shows that Australians continue to be very much a nation of savers, with just under half (44%) of all consumers directing their spare cash into savings, which is on par with the global average of 45 percent, but below the region's average of 59 %). However, total personal debt (credit cards and loans) reduction took a back seat this quarter, with 34 percent of consumers saying they would pay down debt, compared to 40 percent at the end of September 2010.

While Australia appeared to be a nation of savers this quarter, consumers' intentions to invest were lower, with only 11 percent stating that they would invest in shares of stock or mutual funds in this period. This would seem to suggest a more cautious and conservative Australian consumer, who is tentatively responding to an uncertain economic environment. Contrast this with Hong Kong, where 56 percent (the highest score globally) of consumers said they would direct their spare into investments. Similar findings were seen in China, with 51 percent of consumers channeling their spare cash into investments. These results align with the latest Reserve Bank of Australia's reporting, which confirms the strength of the Chinese economy, although the pace of growth has eased to a more sustainable one compared to recent quarterly indicators.

"China was one of the first economies to emerge strongly out of the global recession 18 months ago and although consumer confidence declined during the second half of 2010, confidence levels still remain relatively high and in accordance with the country's overall economic growth and progress," commented Mitch Barns, President, Greater China, The Nielsen Company.