THE BASE OF THE PYRAMID - WHERE BUSINESS GROWTH AND THE NEEDS OF THE POOR CONVERGE

IBLF believes that by finding innovative ways to penetrate low-income markets and respond to the needs of the poor, companies can unlock new business opportunities, and contribute to social and economic development.

There are four billion people living in relative poverty at the base of the economic pyramid - but combined, these people have a purchasing power representing a US$5 trillion market.

The World Resources Institute, working with the International Finance Corporation, has released a study that estimates the 'Base of the Pyramid' (BOP) consumer market - which includes four billion people worldwide with incomes below US$3,000 in local purchasing power - is worth US$5 trillion.

Following a recent consultation that IBLF held with support from McKinsey & Co and Unilever, IBLF has produced a set of guidelines and a series of case studies showing how companies can develop successful base of the pyramid products and services.

Read the guidelines at www.iblf.org

How companies have developed successful base of the pyramid products and services

BP
BP and its partners have developed a pioneering combined appliance integrating a liquefied petroleum gas (LPG) and biomass burner. The stove provides customers in India with sustainable energy for cooking, and reduces emissions of smoke by 90% – in part through a process of re-burning initial emissions.
It costs around US$15 and, to make it affordable, BP arranges a process of micro-finance so that families can repay the cost over an extended period of time.
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CEMEX
Since 1998, CEMEX’s Patrimonio Hoy initiative has been organising low-income families into self-financing cells that facilitate and expedite the typical home-building process. CEMEX and its network provide the products needed but also the technical assistance, including an architect who helps design homes to optimize space and reduce waste.
To date, more than 70,000 Mexican families have realized their dreams of home ownership.
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ICICI Bank
ICICI Bank is expanding financial services to rural communities in India. In collaboration with a network of 200 local microfinance institutions, the company provides credit, investment and insurance services to rural Indian households.
It has set up a network of rural kiosks and mobile, low-cost ATMs across the country, and distributes ‘smart’ banking cards that use biometric technology to enable customers to make small-value purchases.
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SAB Miller
SAB Miller has produced a low cost, good quality lager made from locally sourced sorghum in various African countries – most recently in Zambia. As many people could not afford other ‘branded’ lagers, people would make their own crude, unrefined alcohol, with severe health implications.
Eagle lager is taxed at a lower rate than other brands, therefore bringing a revenue to the government which the home brewed alcohols did not.  It is also made using locally harvested sorghum, thus creating employment for local farmers. Eagle lager can now claim around 15% of the Zambian market.
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Tetra-Pak
Tetra Pak runs a ‘School Feeding Programme’, aimed at primary school children, using Tetra Pak packaging to distribute milk or other fortified nutritional drinks in various developing countries. School feeding programmes can have tremendous impact on the agricultural and food sectors due to the increase in demand.
Many jobs have been created in the production, processing and distribution parts of the value chain. Additionally, 47 million children get milk or other drinks in Tetra Pak packaging in school - of which 16 million live in developing countries.
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Unilever
Unilever pioneered a programme to fortify salt with iodine in an attempt to tackle the symptoms, particularly in mental health, that are caused by iodine deficiency.
In Ghana, Unilever managed to get the cost of a small packet of fortified salt down to 500 Ghanaian cedis (six US cents), so that people living on less than $1 per day (much of the population) could afford it. In 2002, around 50% of the population were regularly using fortified salt, in comparison to 28% 4 years prior.
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