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This pillar considers the phenomenal growth of both middle- and high-income demographics globally and their resultant impact on driving the growth of consumption trends. The largest potential in for middle class growth lies in emerging Asia where the majority of economies are experiencing rapid economic growth coupled with a significant proportion of the population rising from a low income base. As estimated by the World Bank, the global middle class is likely to grow from 430 million in 2000 to 1.2 billion in 2030; with the bulk of this expansion attributable to just two countries – China and India.1 By 2020, the total income of households with a disposable income of USD 5,000-15,000 in emerging Asia will account for 4.9% of global annual disposable income, up from 0.8% in 2000. Thus, the rising middle class presents immense opportunities for global consumer markets as they will be characterised with higher discretionary incomes to buy more sophisticated higher-end consumer products.
The growth of the luxury goods market is another aspect to consider, and which is being driven by the increase in both high-earning households and High Net Worth Individuals (HNWIs). While the US remains the largest market for luxury goods, contributing over 33% of the global market for these goods, emerging and developing market economies such as Brazil, China and India are growing in importance. For example, over the period 2005-2010 the Indian luxury goods markets has increased by 306% in real terms; and is currently valued at USD 1.65 billion.2 The overall luxury products markets has recovered from the global financial crisis, and is set to grow by 10% in 2011 to EUR 168 billion, driven by a strong pickup in demand in the United States and China.3 Product categories of interest include luxury apparel, jewellery and timepieces, premium beauty and personal care items, premium automotives and luxury electronic gadgets, among others.
However, the practicalities of identifying companies involved in the provision of ‘Aspirational Products’ is problematic from a sustainability point of view. Unlike other solutions identified, Aspirational Products do not offer a sustainable solution to demography-related challenges and associated problems, but rather provides an offer that only answers the immediate consumption demands of more affluent consumers. Furthermore, this can be considered to fuel the unnecessary overconsumption of already limited resources.
1 Middle class earners are defined as those making USD 10-20 day
2 Euromonitor, December 2010, ‘India: spotlight on key market trends in luxury goods’; and January 2011, ‘Luxury Industry Review’
3 Bain & Company, October 2010, ‘Bain & Company projects 10% surge in worldwide luxury goods sales in 2010, erasing recessionary declines’