better meet their needs, increase their productivity and incomes, and Four billion low-income consumers, a majority of the world’s population, constitute the base of the economic pyramid (BOP). New empirical measures of their aggregate purchasing power and their behavior as consumers suggest significant opportunities for market-based approaches to: better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. Four billion low-income consumers, a majority of the world’s population, constitute the base of the economic pyramid (BOP). New empirical measures of their aggregate purchasing power and their behavior as consumers suggest significant opportunities for market-based approaches to: better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy.

The Food Market The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid http://www.wri.org/thenext4billion Graphics from Hammond, Allen L., William J. Kramer, Robert S. Katz, Julia T. Tran, and Courtland Walker. 2007. “Chapter 8: The Food Market.” The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. (Washington, DC: World Resources Institute and International Finance Corporation) Notes: International dollars (purchasing power parity exchange rates) are used throughout this report unless otherwise specified. Market figures and household income and expenditure measured by household surveys are given in 2005 international dollars. Current US dollars means 2005 dollars. For convenience, however, BOP income figures used to describe BOP income segments or the BOP and mid-market income cut-offs are measured in 2002 international dollars (purchasing power parity dollars or PPP), since 2002 is the reference year to which the surveys used in this analysis were normalized. The BOP population segment is defined as those with annual incomes up to and including $3,000 per capita per year (2002 PPP). The mid-market population segment is defined as those with annual incomes above $3,000 and up to and including $20,000 PPP. The high income segment includes annual incomes above $20,000 PPP. The report tables use annual income increments of $500 PPP within the BOP to distinguish six BOP income segments, denoted as BOP500, BOP1000, BOP1500, etc.

Base of the Pyramid (BOP) spending on food: $2,894 billion Regional spending: Africa: $215 billion Asia: $2,236 billion Eastern Europe: $244 billion Latin America: $199 billion Each square represents approximately $5 billion (page 89 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid) Putting enough food on the table is a constant struggle for many BOP households. Purchasing food takes more than half of BOP household budgets in many countries, especially in Africa and Asia. In Nigeria, food accounts for 52 percent of BOP household spending – in rural Pakistan, 55 percent. As incomes rise, the share of household spending on food declines. Food nevertheless represents the largest share of BOP household spending and the largest BOP market.

In 17 countries in Africa and Asia, the bottom three BOP income segments account for more than 50% of measured national food spending. In 17 countries in Africa and Asia, the bottom three BOP income segments account for more than 50% of measured national food spending.

Nigeria total food spending by income segment. (page 90 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Indonesia total food spending by income segment (page 90 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Colombia total food spending by income segment (page 90 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

FYR Macedonia total food spending by income segment (page 90 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

South Africa Profile of total food spending and household spending by income segment Average household spending on food: $2,548 (page 91 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Uzbekistan Profile of total food spending and household spending by income segment Average household spending on food: $3,744 (page 91 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Cameroon share of household spending on food (page 91 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Peru share of household spending on food (page 91 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

The large size of rural food markets underscores the importance of distribution strategies that can efficiently reach rural BOP households. The large size of rural food markets underscores the importance of distribution strategies that can efficiently reach rural BOP households.

India total BOP food spending by income segment (Urban-26 percent; Rural-74 percent) (page 93 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Mexico total BOP food spending by income segment (Urban-72 percent; Rural-28 percent) (page 93 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

Brazil share of household spending on food (page 94 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)

The ratio of household food spending between the mid-market segment and the BOP1000 segment is consistent with the finding that the share of food in household spending steadily declines as incomes rise – and does so in all income segments. The ratio of household food spending between the mid-market segment and the BOP1000 segment is consistent with the finding that the share of food in household spending steadily declines as incomes rise – and does so in all income segments.