Latin America: Low-Income Millennials Present Big Market Opportunities
Monday, August 10, 2015
Hardly a day passes without a new article on how businesses are analyzing the needs, wants and spending trends of millennials. In the US alone, millennials (or Generation Y), those born between 1980 and 2000, represent 30 percent of the population. By 2025 they will be 75 percent of the workforce.The impact that millennials are starting to have on the global economy, the environment, and politics is enormous.
But “millennial mania” is dominated by studies, research and marketing efforts that focus on affluent individuals. Meanwhile, in Latin America and the Caribbean a market of 77 million low-income millennials goes almost unnoticed.
Latin American GenYers who live on less than US$10 a day (the base of the economic pyramid, or BoP) will shape the demands of the future middle class in this region in the coming decades. The people in this segment – roughly 20 percent of a Latin American BoP market of 405 million people, worth $759 billion per year – are more connected, more educated, and have more disposable income than ever before.
Their economic appeal is undeniable. Any company or financial institution interested in running profitable businesses that serve the low-income segment must consider BoP millennials in their business plans and growth strategies.
As these millennials reach adulthood, they start having families, deciding what’s consumed at home, how to save, what to eat, how to access the internet, and how important health is. This has big implications for markets, ways of doing business, and the BoP consumer profile.
Business opportunities abound: data collected by the Inter-American Development Bank (IDB) in Peru, for example, shows that 50 percent of millennials between the ages of 18 and 35 have money left at the end of the month. Eighty-nine percent of them save it, and only 18 percent put it in a savings account.