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Non-Alcoholic Beverages at the Bottom of the Pyramid

October 11th, 2017

At least one billion adults worldwide live at the “bottom of the pyramid”, a term used to refer to low-income consumers with few assets. While they may each have minimal spending power on their own, collectively they control a large amount of income amounting to several trillion dollars annually. As beverages constitute a basic component of their spending habits, understanding the BOP is especially important for beverage companies.

While BOP consumers exist throughout the world, about two thirds are currently living in Asia Pacific, with China and India alone home to around 600 million. As Asian economies grow, however, the number of local BOP consumers is shrinking in size. Meanwhile, population growth is increasing the size of Africa’s BOP, slowly turning it into the critical region. Not all BOP consumers live in these two regions, however, and countries such as Brazil, Mexico and Ukraine also have large numbers.

The BOP is looking for affordable products, but affordability is not everything

Because of their limited incomes, BOP consumers need inexpensive products. However, they are still looking for quality and will not always choose the least costly product. Attributes such as product safety tend to matter a great deal. Brands need to consider ways to make products cheaper without compromising on quality such as single-use portions and small pack sizes.

A profitable BOP strategy requires selling large volumes of products at low margins in environments that often lack basic infrastructure to consumers who can be difficult to reach through traditional marketing tactics. These and other issues make the BOP difficult to reach effectively.

Food and beverages is major spending priority for the BOP

Consumers on the lower end of the income ladder spend a larger share of their total incomes on food and beverages. For consumers making less than USD5,000, this usually works out to about half of total expenditure. However, this fluctuates a fair amount based on cultural spending priorities. BOP consumers in China, for example, spend much more on housing and less on food and beverages than the global average.

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Matthew Barry

Matthew Barry is a Beverages Analyst with Euromonitor International specializing in global trends in non-alcoholic beverages. He is particularly interested in how economic growth and changing demographics are affecting the global beverage industry. His insights have appeared in such publications as The Wall Street Journal, Market Watch, and Beverage Daily, and he is a regular contributor to trade and industry publications. Matthew holds a degree in International Relations from Knox College and has been with Euromonitor International since 2015.

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