Potential of the ‘Bottom Billions’

The world’s poor are upwardly mobile and valuable consumers.

This article was first published in the latest issue of Moneyweb Investor. To read the magazine click here.

Once upon a time retailers and marketers shunned the poor because it was believed that they had no purchasing power. However companies like Shoprite, Mr Price, MTN and Capitec have shown convincingly that there is plenty of profit in servicing the so-called “bottom of the pyramid”. 

Firms have typically looked at the spending power of these individuals and found it wanting. The “Bottom Billions” earn R14.50 to R140/day ($1 to $10/day), yet collectively they have $5 trillion in purchasing power and $7.4 trillion in wealth.

Harnessed correctly, this group represents the world’s next big growth engine, says Bank of America Merrill Lynch in a recent report called the Bottom Billions. This is because changing population dynamics – such as urbanisation and better access to education – means that a healthy segment of this population could be uplifted to the lower-middle class, that so-called economic sweet spot where significant numbers of people are earning more than R140/day ($10/day).

Demographic forces will drive these changes over the next 15 to 20 years.


Powerful demographics




60% <30 years


+180k new city residents/day


2bn EM Internet users


+/- 12 years of schooling

Population growth

90% of growth to 2050 will be in emerging markets


Firms and investors would be wise to pay attention to these changes: those at the bottom of the pyramid are the largest socio-economic group in the world.

People are living longer, more children are going to school and more people have access to clean water and basic sanitation. The digital revolution is connecting people across societies and countries. This progress goes hand in hand with increasing incomes, leading to the highest standards of living in history.

These demographics coupled with long term GDP growth in emerging markets will see an additional three billion people join the 4.9 billion-strong global middle class by about 2030. “It’s the biggest growth story since the post-WW2 boom,” says Sarbjit Nahal, head of thematic investing at Bank of America Merrill Lynch (BoAML). 

This is not to suggest that uplifting these “Bottom Billions” is easy or is a short-term story. In 2015, 14% of people still lived in extreme poverty (<R18.20/day).

In addition, unemployment levels in emerging markets are rising and will continue to rise in 2016. This largely reflects the worsening labour market outlook in many emerging economies.

That said, emerging markets (EMs) are growing faster than developed markets (DMs). BofAML global economics teams’ forecast for 2016 is 4.2% economic growth for EMs, compared to 1.7% for DMs and 3.2% globally. The bank adds that over 70% of global growth will come from EMs between now and 2020.

Of course not all EM’s are created equally. While China, India, the Philippines and Pakistan are growing at above 5%, Nigeria, Mexico and Chile are growing at about 2%; South Africa is just positive, Russia is flat and Brazil’s economy is in decline.

However, as the “Bottom Billions” inch up the economic ladder, the report suggests that middle-class spending could increase to $56 trillion by 2030 and $84 trillion by 2050 (vs $21 trillion in 2009).

The four areas that will benefit most from this increased spend are: consumer products and services; information & communication technologies; financials and healthcare.

BoAML has selected 250 companies with exposure to the theme. Although it is difficult to accurately gauge the link between such exposure and share price performance, the bank believes the list of companies with “Bottom Billions” exposure is an important long-term growth driver and a useful starting point for investors wanting to track the macro-theme.

Of the companies listed below, all have medium to high exposure to the market described.










Facebook, Microsoft, Nokia, Alphabet (Google)



China Mobile, Telefonica Brazil, Turkcell, Telekom Malaysia,

Mobile payments


Bharti, MTN, Vodacom, Telkom SA, Orange, Tata, Reliance, Vodafone



Lenovo, LG, Samsung, ZTE Corp




Financial inclusion


Bank of Baroda, Bank of India



Alpahbet, Amazon, Alibaba, Paypal, Visa

Retail banking


Capitec, Barclays Africa, Firstrand, Nedbank, Standard Bank, Bancolombia



Credito Real (Mexico), BBRI (Indo), STFC (India),






Diageo, Guinness Nigeria, Heineken, Thai Beverage

Consumer appliances


Daikin, Electrolux, LG Electronics, Whirlpool



Mr Price, Naspers, Rocket Internet, Alibaba, Tencent,

Entertainment & Media


Dish TV (India), Zee (India), Astro Malaysia, JCDecaux (France), Televisa (Mexico)

Fast food


Domino’s, McDonald’s, Yum Brands,



Unilever, Reckitt , Kimberly-Clark, Colgate India

Food, snacks & bev


Oceana, Pioneer, Tiger Brands, AVI, Nampak, Nestle, UAC (Nigeria)

Soft drinks


Coca Cola, PepsiCo, Cultiba (Mexico)






Clicks, Cipla, Lupin Ltd, Hengrui Medicine, Sino Biopharm



Much of the “bottom of the pyramid”-related economic growth in EMs will come off the back of “leapfrogging”, in particular with the use of information and communication technologies.

Impacts of improved internet access in Ems

 Deloitte estimates that increasing emerging market internet access levels to those of developed markets can boost growth rates. In India, GDP growth rates have the potential to double, in Africa +92%, and SE Asia +72%. ICT could raise living standards by up to $600 per person a year, thus lifting 160 million out of extreme poverty.  

 What they are spending on

 The 4.5 billion-strong “Bottom Billions” collectively spend more than $5 trillion a year, with East Asia accounting for the largest market, followed by South Asia and Sub-Saharan Africa.

Unsurprisingly the bulk of spending is on food and beverages (US$2.3 trillion), followed by housing (US$508 billion), clothing, footwear and personal care (US$405 billion), energy (US$307 billion), health (US$243 billion), ICT (US$206 billion), education (US$193 billion) and water (US$32 billion), according to the International Finance Corporation.

Don’t under-estimate the scale

The “Bottom Billions” are driving demand with low-income markets as big or bigger than higher-income segments. The market for food and beverages and energy in the lower-consumption segments is significantly larger than in the middle and higher segments combined.

 spending chart


spending graph


Changing demand with increasing prosperity

As countries develop from low to middle income – and EM consumers benefit from increasing purchasing power – consumption patterns are expected to move away from basic products and services, Nahal says. This should drive growth in discretionary industries such as branded apparel, culture, education, healthcare, ICT, insurance, personal care, recreation, restaurants, services, transport, tourism, white goods, among many others.

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