Despite COVID-19, the global consumer class—those who are middle class or rich—is rising fast. In an earlier post, we showed that we are experiencing a truly secular shift in the size of this global consumer class. COVID-19 is a transitory setback of one or two years in this long-term shift. Since 2000, the global consumer class grew by more than 4 percent each year, reaching a new milestone of 4 billion people—for the first time—in 2020 or 2021. At the beginning of this century, the middle class was mostly a Western phenomenon. Consumer companies were selling their goods in OECD countries, especially the USA and Europe. Today, the consumer class is global and increasingly Asian. Spending by the Asian middle class exceeds that in Europe and North America combined.
We define the global consumer class as anyone living in a household spending at least $11 per day per person, of which the global middle class ($11-$110 per day) represents the lion’s share with 3.75 billion people. It is very important to define the global consumer class correctly and allow for comparability across countries and over time. Incorrect definitions could cost companies billions, as Nestle experienced painfully in Africa. The company based its decision to expand on announcements of a rapid rise of Africa’s middle class. While Africa’s middle class has indeed been rising rapidly, the threshold of $3 per day in consumer spending was too low to gain traction with products that are enjoyed by American or European consumers. Cornel Krummenacher, then chief executive for Nestle’s equatorial Africa region, noted that “we thought this would be the next Asia, but we have realized the middle class here in the region is extremely small.” Even today, Africa’s consumer class is only 283 million people strong according to projections by World Data Lab, growing at 4.1 percent per year. However, there is an untapped potential in Africa below the middle-class threshold. If companies want to benefit from Africa’s growth in this decade, a focus closer to the bottom of the pyramid would yield more success.
Under current projections, Asia will represent half of the world’s consumer spending by 2032.
By contrast, Asia’s consumer class is advancing strongly. Since 2016, half of the global consumer class has been Asian. Today, out of the 4 billion global middle-class consumers, 2.2 billion live in Asia. However, while Asia has more than half of the world’s consumers, they only represent approximately 41 percent of consumer spending ($26 trillion out of $63 trillion in 2011 purchasing power parity, see Table 1). Under current projections, Asia will represent half of the world’s consumer spending by 2032.
Table 1. Asia’s consumer class power
|Asia||Rest of the world||TOTAL||Asia’s share|
|Consumer class (billion)||2.2||1.8||4.0||55%|
|Spending of the consumer class (trillion $)||26||37||63||41%|
Source: World Data Lab’s MarketPro; 2021 projections.
Today, there are 13 Asian economies in the top 30. The composition of these top 30 countries will not change until 2030. However, there are big shifts within the top 30: Only 7 countries are expected to keep their position; 14 countries will lose position while 9 countries gain positions (see Figure 1). To assess which countries will move up in the consumer class tally, we used our unique modeling capacity to project the change of the consumer class between 2020 and 2030.
Figure 1. The top 30 consumer markets of this decade
Daily spending of more than $11 (2011 PPP)
Source: World Data Lab’s MarketPro.
Everyone is familiar with consumer class growth in China and India. In Europe and North America, the numbers in the consumer class will stagnate and growth will come about only because households will become richer.
But there are other countries, too, growing under the radar, which are forecast to have very large increases, in the tens of millions, in the numbers in the consumer class in 2030.
Here is an overview of the five top movers:
- Bangladesh (+17 positions), from place 28 to 11; future consumer class: 85 million (+50 million)
Global share of consumer class: 0.8 percent (2020), 1.6 percent (2030). Bangladesh’s consumer class is projected to more than double by 2030: Today, 35 million people in Bangladesh spend more than $11 a day. By 2030, it will be 85 million!
- Pakistan (+8 positions), from place 15 to 7; future consumer class: 121 million (+56 million)
Global share of consumer class: 6 percent (2020), 2.3 percent (2030). Pakistan will add 56 million new consumers by 2030, for a total of 121 million. This means that in 2030, for the first time, every other Pakistani will be able to spend more than $11 per day.
- Vietnam (+7 positions), from place 26 to 19; future consumer class: 56 million (+21 million)
Global share of consumer class: 9 percent (2020), 1.1 percent (2030). Vietnam’s consumer class will grow from 35 million to 56 million within this decade, which is a success story particularly of the middle-aged generation: Consumers between 45 and 65 years of age will contribute nearly 25 percent of Vietnam’s spending, as opposed to 20 percent today.
- Philippines (+6 positions), from place 20 to 14; future consumer class: 79 million (+38 million)
Global share of consumer class: 1 percent (2020), 1.5 percent (2030). The Filipino consumer class is projected to grow steadily, from 41 million today to 79 million in 2030. By then, more than two-thirds of the Filipino population will spend more than $11 per day.
- Indonesia (+2 positions), from place 6 to 4; future consumer class: 199 million (+76 million)
Global share of consumer class: 2 percent (2020), 3.8 percent (2030). While Indonesia is only moving up two places, it is experiencing a large gain of consumer class growth. Starting from an already large base of 123 million, Indonesia will have almost 200 million consumers in 2030, making it the fourth-largest consumer market in the world.
The big message of this analysis is that the consumer class is spreading across the world, and that many emerging markets will have large consumer markets where supply-chain-scale economies, digital platforms, and local preferences will need to be better understood and developed.