More than 400 million people make up a market with enormous potential
According to an Inter-American Development Bank (IDB) report released today, the base of the pyramid is a $759 billion market offering promising business opportunities to the private sector.
The report presents information about the size of the base of the pyramid (BOP) market, its socio-economic characteristics, spending patterns and demand-related factors, with statistics about BOP consumer preferences.
Based on household income and spending national surveys, the report estimates that the market of people living on less than $10 per day has grown 22 percent in a decade, going from $623 billion in 2000 to $759 billion in 2010.
Today, two out of three Latin Americans are part of this growing market of 405 million people.
Based on market information in sectors such as health, education, food, information technologies and housing, the report shows that BOP consumers in Latin America and the Caribbean are more urban, more connected, more educated, and that they have more disposable income for discretional expenses.
According to the report, the region’s economic growth between 2000 and 2010 had a positive impact on the BOP population, such that discretional expenditure increased by 33 percent, representing 18 percent of total household expenses.
Among the sectors to which the BOP population assigns the largest shares of their budget are food ($209 billion annually), housing ($184 billion annually) and transportation ($82 billion annually). Together, these sectors account for 63 percent of the global consumption of the BOP. While information technologies and communications only represent 3.3 percent of the BOP’s total spending, this market grew by 4 percent every year between 2000 and 2010.
Lourdes Gallardo, a Senior Specialist in the IDB Opportunities for the Majority Sector and co-author of the report said, “This is a practical tool for business, financial institutions, investment funds and entrepreneurs interested in the existing market opportunities in the base of the pyramid segment."
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
- John Ferriter