America’s celebrated shop-till-you-drop consumers, who have kept the economy humming for years, seem to be finally dropping. Among other signs of what might be called Consumer Fatigue Syndrome, U.S. retail sales have waned in recent months, due to high gasoline and food prices, a housing downturn, and a soft job market. But it would be a mistake to conclude that consumer spending is similarly lethargic around the world. Indeed, in Russia and Eastern European nations such as Ukraine, Kazakhstan, and Romania, consumer spending is downright vigorous.

In terms of a passion for merchandise, consumers in Russia and Eastern Europe may be poised to give even the battle-hardened shopanistas of Beverly Hills’ Rodeo Drive a run for their dollars. The Material Girls and Boys in Russia and Eastern Europe are flush with cash, thanks to a regional economy benefiting from high oil prices, the commodities boom, double-digit annual gains in wages, and low unemployment.

One sign of rising affluence there: a new class of wealthy capitalists. Of the world’s 1,125 billionaires, for instance, 87 of them, or 8%, are from Russia, according to Forbes magazine. Russia now has more billionaires than any country besides the U.S.

Also, Russia has the largest middle class of the four fast-growing developing nations referred to in economic-speak as the BRICs (Brazil, Russia, India, and China). According to Nestle, the food-processing titan that has found a highly receptive market for its products in Russia, more than 50% of the country’s consumers are middle class, and their numbers should soar to more than 80% by 2015. They have helped to create a consumer market that, in Credit Suisse’s projections, may total $589 billion by 2010, up from $360 billion in 2005.

The economies of Russia and Eastern Europe should grow more than 5% annually in "real" (inflation-adjusted) terms from 2008 to 2012, according to The Economist. They now account for at least 10% of sales of luxury goods worldwide, estimates the Pictet & Cie financial-services firm. Our research shows that luxury-goods sales in Russia and Eastern Europe have been rising at double-digit rates annually in the past few years, as has real disposable income. And unless oil and commodity prices and the global economy slump drastically, we think those trends should remain intact over the next four years.

As we see it, Russian and Eastern European consumers, like newly affluent consumers everywhere, covet more choices in products -- especially more upscale, branded choices. And perhaps to a greater degree than consumers in other developing countries, they are presold on Western brands. For example, they are already avid buyers of Western cosmetics and perfumes; Christian Dior’s market share of cosmetics and perfumes in Russia is among the highest of any country where the company does business. And we think consumers in Russia and Eastern Europe may become avid buyers of other Western products like Guess halter dresses and Ray-Ban sunglasses as those products become increasingly accessible.

In the near term, we think consumer spending on Western brands should be particularly strong in cities with an established retail infrastructure, such as Moscow and St. Petersburg in Russia and Kiev in Ukraine. But over time, growth in consumer spending may be the most dramatic in smaller cities and towns, as retailers extend their relatively limited geographic base in the region.

Whether in cities or the hinterlands, the following nine far-flung companies in the beverage, apparel, fashion accessories, and media industries may prove especially capable of catering to Russian and Eastern European consumers’ desire for branded goods, in our judgment.

• In beverages: Central European Distribution (headquartered in Bala Cynwyd, Pennsylvania), Coca-Cola Hellenic (Athens), and Diageo (London).

Central European Distribution (market capitalization: about $2.4 billion) is a leading vodka producer and distributor of alcoholic beverages in Eastern Europe. The company recently raised its guidance on earnings per share by more than 10% for 2008. Much of the company’s growth has been through acquisition; since its founding in 1990, Central European Distribution has bought 18 beverage distributors, a wine importer, and two alcohol-production companies. Most recently it acquired Copecresto Enterprises, which distributes Parliament vodka widely in Russia and Europe.

Coca-Cola Hellenic (market capitalization: about $16 billion) is a major bottler of non-alcoholic beverages in 28 countries. More than 60% of the company’s business volume is generated in Eastern Europe and Russia, and volume there could grow at least 10% annually between now and 2012, in our estimation. That growth will likely be driven by consumers trading up to higher-priced soft drinks and non-carbonated drinks such as bottled water, juices, and tea. UBS Investment Research forecasts the company’s earnings should increase at a 16% annualized rate through 2012.

Diageo (market capitalization: about $54 billion) is the world’s largest producer of premium-priced alcoholic beverages, with brands such as Smirnoff vodka, Johnnie Walker scotch whisky, Baileys liqueur, and Tanqueray gin. The company is making a concerted marketing push into Russia, the three other BRICs, and Mexico. In our judgment, demand should be brisk for Diageo’s brands among Russian consumers who covet status and a good drink. For the Russian billionaire who has everything, for example, there’s Johnnie Walker Blue, which retails for $200 a bottle (or more to the point, 4,699.6 rubles).

• In apparel: Guess (based in Los Angeles) and Inditex (La Coruna, Spain).

Guess (market capitalization: about $3.7 billion) operates 952 stores around the world, including 579 stores overseas. Chairman Maurice Marciano says the company can help sustain its double-digit earnings growth in recent years by opening more stores in Eastern Europe, Russia, and India, where the Guess brand is well known but not widely available. In Eastern Europe and Russia, Guess plans to follow the same strategy that has worked elsewhere: expand its edgy brands of apparel and accessories, increase the number of company-owned and licensed stores (which generate above-average sales per square foot), and promote expertly.

Inditex (market capitalization: $22 billion) is a broad-based fashion retailer, selling men’s and women’s clothing under eight different store brands, including Zara (its largest chain), Pull and Bear, Massimo Dutti, and Stradivarius. The company is one of the most vertically integrated in the industry: it operates more than 3,700 stores in 68 countries and manages about 100 textile-design, manufacturing, and distribution companies that furnish merchandise to the stores. Over the past two years, about 80% of its new stores were opened in Europe and Russia. In our judgment, the company’s earnings could grow at least 15% annually during the next two years.

• In fashion accessories: Luxottica (headquartered in Agordo, Italy).

Luxottica (market capitalization: about $11 billion) is the world’s leading designer, manufacturer, and distributor of upscale prescription eyeglasses and sunglasses. Its own brands include Ray-Ban, the world’s best-selling sunglasses, and it markets licensed brands such as Polo Ralph Lauren, Donna Karan, and Prada. The company reports that its eyewear is especially popular in places like Khreshatik, a shopping thoroughfare in Kiev that’s the counterpart to New York’s Fifth Avenue. We think the company’s products should be popular wherever in Russia and Eastern Europe that consumers consider eyewear an ideal accessory for making a statement about their personality (which, in today’s image-conscious times, may be just about anywhere).

• In media: Central European Media Enterprises (based in Hamilton, Bermuda) and CTC Media (Moscow).

Russia and Eastern Europe are among the world’s fastest-growing advertising markets, and TV advertising is the fastest-growing segment of those markets. For instance, Merrill Lynch expects Russian TV-advertising revenue to soar 25% annually over the next four years. To us, the hyper-growth of the region’s TV-advertising market is not at all surprising, given the region’s flourishing economy; we’ve long noted a generally high correlation between the health of a country’s economy and its advertising market. We think Central European Media Enterprises and CTC Media are well-positioned in Russia and Eastern Europe.

Central European Media Enterprises (market capitalization: about $3.6 billion) is the leading TV broadcaster in Central and Eastern Europe, with 15 stations in the Czech Republic, Romania, the Slovak Republic, Slovenia, Ukraine, and Croatia. Those stations attract an audience of about 91 million people and annual advertising revenue of more than $1 billion. Central European Media Enterprises is one of the most profitable media companies, with margins exceeding 30%.

CTC Media (market capitalization: about $4 billion) is the leading Russian private TV broadcaster. The company is a cash-flow machine, with an estimated $284 million of cash on its balance sheet currently. Its programming mix of foreign and local movies, American TV series, and local shows such as Born Not Pretty (patterned after the hit show Ugly Betty in the U.S.) draws an audience that appeals to advertisers: viewers ages six to 54 and women ages 25 to 60. CTC Media recently acquired a stake in a TV station in Kazakhstan and launched a joint broadcasting venture in Uzbekistan.

The views expressed represent the opinions of Turner Investment Partners as of the date indicated and may change. They are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. Opinions about individual securities mentioned may change, and there can be no guarantee that Turner will select and hold any particular security for its client portfolios. Earnings growth may not result in an increase in share price. Past performance is no guarantee of future results.

Turner Investment Partners, founded in 1990 and based in Berwyn, Pennsylvania, is an investment firm that manages more than $25 billion in stocks in separately managed accounts and mutual funds for institutions and individuals, as of March 31, 2008.

As of March 31, 2008, Turner held in client accounts 849,220 shares of Central European Distribution, 3,260 shares of Diageo, 4.9 million shares of Guess, 299,842 shares of Central European Media Enterprises, and 355,780 shares of CTC Media. Turner held no shares of Coca-Cola Hellenic, Inditex, and Luxottica.