With the market shouldering what appears to be an excess of optimism, investors who don't want to see their portfolios crumble may want to consider a long-term defensive game plan. Consumer-staples companies are a classic choice here. But instead of heading straight for company metrics, why not start our search by delving into fundamentals on the sector's bread and butter -- the actual consumer?

Deeper pockets abroad
We'll be doing some globetrotting in this analysis, but it makes sense to start at home. Now, for all the distressing stats on the U.S. consumer, some U.S.-focused consumer names have been doing just fine recently. Witness the most recent quarterly results of packaged-foods provider J.M. Smucker, for instance. Other companies, however, have suffered meaningful volume declines as Joe and Jane Six-Pack run leaner pantries or look to save a buck with cheaper store brands.

Will these penny-pinching habits persist? Hmm, let's see. The tediously titled statistic known as "U.S. household debt service payments as a percent of disposable personal income" may be improving recently, but the figure remains near multidecade highs. Meanwhile, as of May, there were nearly six unemployed workers per available job -- oh, and Deutsche Bank sees almost half of U.S. mortgages falling underwater by 2011.

In short, yeah, U.S. consumers might remain tightfisted for quite some time. And if trying to pick the companies that will actually be able to grow in the U.S. feels too stressful, then it's time to go global.

Starting with the developed world, European consumers seem in somewhat better shape. As of year-end 2008, gross household debt in the EU area stood at 94% of gross disposable income, compared to a much larger 130% for the U.S. And unlike U.S. consumer sentiment, Eurozone confidence hasn't fallen off its 2009 highs in the past months. Still, I wouldn't necessarily assume that Europeans will outspend their U.S. counterparts, or even that sales will decline less severely. After all, Europeans' more sensible habits arguably held down their household debt in the first place.

But don't fret. Emerging markets still look promising. Brookings Institution researcher Homi Kharas sees the world's middle class expanding to 52% of the total population by 2020, up from roughly 30% now. And the near-term outlook isn't bad, either: The International Monetary Fund sees emerging markets growing 1.5% this year and 4.7% the following. That beats the pants off expected U.S. growth.

With these facts in mind, I put together the following table, which includes two popular consumer names that might not be so familiar to U.S. investors. None of these companies are formal recommendations, but they're a good place to start researching.


Product Categories

Market Cap

Dividend Yield

% ex-North America Sales

% Emerging Markets Sales


Packaged food & water, nutrition, pet care, pharma

$143.0 B



Not available


Fresh dairy, bottled water, nutrition

$35.2 B



> 40%


Home & personal care, packaged food

$75.8 B


< 33%



Home & personal care, pet nutrition

$35.8 B


Approx. 75%

Not available

Procter & Gamble

Home & personal care, paper products, pet nutrition

$154.8 B





Packaged foods & beverages

$41.4 B




General Mills

Packaged foods

$19.3 B



Not available

Data from Yahoo! Finance and Forbes.com on Sept. 1 in addition to company filings and investor documents.
* Calculated on a non-GAAP basis by excluding business units that do not provide a North American sales breakdown. These units represent roughly 16% of net sales.
** Calculated on a non-GAAP basis by adding joint venture sales to FY09 net sales.

Digging in
The second largest of the seven companies listed above, Nestle will kick us off. If you were like me, you grew up looking forward to those rare times when Mom let you indulge in a cold glass of Nesquik chocolate milk. Nice memories, for sure, but this company's got a lot more going on besides that floppy-eared bunny. Spread across several product categories, its brands include Nestea, Carnation, Stouffer's, Edy's, Gerber, and Purina.

The company doesn't report its emerging-market exposure, which is a darn shame. But with Asia, Oceania, and Africa alone representing about 16% of net sales, there's a good chance that it's significant. Also, the company's 2008 notables included a debt reduction of more than $6 billion and a share buyback exceeding $8 billion. And that's on top of a 15% dividend increase!

Two other consumer gems
I tend to quickly find something to read when Jamie Lee Curtis pops up on my TV as the Activia Lady, but Danone -- better known in the U.S. as Dannon -- deserves investors' consideration. On a global basis, the company is No. 1 in fresh dairy products and No. 2 in bottled water and baby foods. It's also tops in Europe in medical nutrition. An investment here is a great way to diversify out of North America, and the company's emerging-market exposure is mighty tasty as well. However, for those who prefer a heaping helping of diversity with their consumer-staples investment, I'll warn that Danone derived a pasture-sized 57% of net sales from its dairy business in 2008.

Unilever looks like your third and final best bet for a combination of blue-chip stability and emerging-markets growth. Because its ADR shares are traded on a major exchange, U.S. investors are likely more familiar with the company. I was moderately upbeat about its most recent quarter, and the company is a Motley Fool Global Gains pick, too. You'll certainly collect a nice dividend with Unilever shares, and with 400 brands in the portfolio, any investment is diversified across a broad spectrum of consumer wants and needs.

Keep in mind that dollar-based results may be weak for these companies for some time to come. But if you believe that the U.S. will steadily fade as a driver of global GDP, now may be the perfect time to start shopping on that conviction. Better yet, you'll get potential upside in the euro and other global currencies to boot.

Related Foolishness:

Procter & Gamble and Unilever are Motley Fool Income Investor selections. Unilever is a Global Gains recommendation. JM Smucker is an Inside Value recommendation. The Fool owns shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Mike Pienciak does not own shares of any company mentioned. The Fool's disclosure policy is considering branching out into emerging markets.