Insights into the profile and spending habits of high income earners can help businesses plan strategically, because this is the consumer group with high purchasing power that can drive consumer expenditure in many categories including travel, financial services and luxury goods. Euromonitor International forecasts that by 2020, the USA – with 33.9 million high income earners (up from 17.9 million in 2012) – will continue to lead the world in the total number of people with an annual gross income over US$150,000 (in purchasing power parity terms). However, countries with fast growing populations of high earners such as Kazakhstan, Nigeria, Saudi Arabia, Qatar and Vietnam will present the greatest opportunities for businesses offering premium goods and services.
Source: Euromonitor International from national statistics
Note: PPP – purchasing power parity is a method of measuring the relative purchasing power of different countries’ currencies over the same types ofgoods and services. Because goods and services may cost more in one country than in another, PPP allows us to make more accurate comparisons of standards of living across countries.
Note: Data for 2020 are forecasts.
- The USA is by far the world leader with the highest number of people with an annual gross income over US$150,000 (PPP). There were 17.9 million people in this top income bracket in the USA in 2012, compared to 10.6 million high-income earners in the whole of Western Europe and 7.6 million in Asia Pacific in the same year;
- After the USA, but still significantly behind, come China (with 3.4 million people with an annual gross income over US$150,000 in PPP terms in 2012), Japan (2.6 million), Germany (2.0 million) and India (1.6 million).
Typically an older group of experienced professionals and business leaders
- In the USA, older people – typically those in their 50s – tend to make up the largest share in the population with a gross income over US$150,000 (PPP), or the highest income bracket. In 2012, the 50-59 accounted for 29.1% of total population with a gross income over US$150,000 (PPP);
- In some other countries such as Japan and China, people in their 40s typically make up the largest proportion of high-income earners. As in the USA, they are typically people at the height of their careers and experienced leaders.
One key characteristic of high income earners is the prioritisation of premium quality
They tend to choose products and services of high quality that can often also be a sound investment:
- Whilst luxury items such as fashion, jewelry, vehicles and yachts can be markers of status and success, purchases of art, antiques, fine wines, and other collectibles can also be a sound investment. Although the USA is currently the world’s largest luxury market, countries with fast-growing populations of high income earners will offer the greatest potential for luxury goods
and services. During 2007-2012, the luxury goods markets in India and China recorded real growths of 270% and 129% respectively;
- Real estate and equity market will also benefit from high income earners as properties are frequently the investment choice of high income earners whilst they also buy better and more residences. In the USA, for example, a fifth of consumer expenditure on housing comes from the top 10% of richest households (decile 10 households) thanks to their higher spend on
primary dwellings and secondary residences;
- High income earners all over the world also tend to have high uptake financial services such as funds and private wealth management as they seek to build and protect their investments and assets. In both the USA and China, for example, decile 10 households account for about a third of consumer expenditure on miscellaneous goods and services, which include financial services.
Over the 2013-2020 period, the top 5 countries with the fastest growing population with a gross income over US$150,000 (in PPP terms) will be Kazakhstan (172%), Nigeria (148%), Saudi Arabia (140%), Qatar (139%) and Vietnam (130%). These will be the markets that offer the greatest opportunities for companies offering premium quality goods and services.