SAO PAULO, BRAZIL--(Marketwired - Jul 4, 2013) -  While the previous decade in Brazil was marked by the ascent of millions of households out of poverty, the rest of this decade will be characterized by a massive shift into the middle class and consistent growth in consumption of everything from higher-end consumer items to financial services. But to successfully penetrate this important market, companies will need to acquire a new understanding of Brazil's middle class. These are among the findings of a new report by The Boston Consulting Group (BCG).

The new report, titled "Redefining Brazil's Emerging Middle Class: How to Prepare for the Next Wave of Consumption Growth," is being released today. The findings are based on a proprietary new methodology developed by BCG's Center for Consumer and Customer Insight to segment Brazilian consumers based on major shifts in household spending. The authors analyzed "consumption curves," which compare consumption with household income for more than 200 product categories in Brazil.

"We believe that defining Brazil's middle class based on step changes in their consumption can lead to more effective strategies for penetrating one of the world's most important growth markets," said Olavo Cunha, a BCG partner and coauthor of the report. "Companies can better anticipate when and where sales of their goods and services could take off -- and when it will be necessary to adjust product portfolios as households trade up to higher-value goods and services."

BCG projects that by 2020 some 5.3 million Brazilian families will join the "emergent" middle class ($15,000 to $30,000 annually), an income segment that tends to trade up to high-value products. For example, consumers will opt for prepaid rather than postpaid mobile plans and will move from buying beverage concentrates to purchasing ready-to-drink juices. Millions more families will join the "established" class ($30,000 to $45,000 a year), at which point they are likely to sharply increase spending on new product categories such as mutual funds, private education, health care, and air travel.

Altogether, middle-class and affluent families (above $45,000 annually) are projected to account for 37 percent of Brazil's 60 million households by 2020, compared with 29 percent now and just 24 percent a decade ago. They will also account for some 85 percent of incremental spending in a consumer market that is projected to reach $1.6 trillion by the end of this decade.

Analysis of consumption curves and demographic trends can help companies targeting these income segments gain a strategic edge in Brazil. "Until now, many companies have been focusing on low-cost products for budget-conscious buyers," explained BCG partner Simon Cheng, another coauthor. "But with more households making the leap out of poverty, it may now be time to emphasize premium brands and to position products to appeal to a more affluent lifestyle."

Companies should also reassess their geographic footprints in Brazil. Currently, most companies concentrate on the relatively prosperous southeastern and southern regions of Brazil. But the fastest growth in middle-class and affluent households in the years ahead will be in the less-developed north and northeast as well as in the country's interior. What's more, cities with less than 500,000 people will account for around two-thirds of incremental consumption in Brazil by 2020.

"This means that companies will require a strong presence in many more Brazilian cities than in the past to reach the same portion of middle-class and affluent households," explained Rim Abida, a principal in Brazil and coauthor of the study. Companies will need to have operations in 405 cities to reach 75 percent of Brazil's middle-class and affluent households in 2020, she noted, compared with 345 today. And because consumer behavior can vary from region to region among households with similar incomes, "companies will need a full range of on-the-ground capabilities in order to tailor go-to-market strategies to local differences.

A copy of "Redefining Brazil's Emerging Middle Class: How to Prepare for the Next Wave of Consumption Growth" can be downloaded at

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or

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About BCG's Center for Consumer and Customer Insight
The Boston Consulting Group's Center for Consumer and Customer Insight (CCCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG's various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCCI is sponsored by BCG's Marketing & Sales and Global Advantage practices. For more information, please visit

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