The developing world’s 4.5 billion low-income people already a $5 trillion market

The roughly 4.5 billion low-income people in developing countries collectively spend more than $5 trillion a year. Indeed, the lower consumption segments spend more than the middle and higher consumption segments combined. They spend $2.3 trillion a year on food and beverages alone.

People are value-conscious consumers. They seek out goods and services that can improve their lives. What they are willing to pay for—not what they “need”—shapes business opportunities.

Consumption data suggest the scale of markets in low-income communities. The market for food and beverages in the lower consumption segments is significantly larger than the market in the middle and higher segments combined. The same is true for energy. In most other sectors—clothing and footwear, housing, education, health, water—people in the lower consumption segments collectively spend roughly as much as those in the higher segments. Only in transport, financial services, and information and communication technology (ICT) do the two higher segments combined outspend the lower segments.

Spending patterns—the shares of spending people allocate to different items—are remarkably similar across consumption segments. The most notable differences are in food and beverages, whose share decreases as total spending goes up, and in transport, whose share increases the most as spending rises.

Analyzing market size and consumption patterns can reveal existing and latent demand and show what consumers are willing to pay. This analysis is particularly important for the lower segments, which have traditionally been less well understood. The Global Consumption Database points to large untapped business opportunities in developing countries. More information is available here IFC brochure.