Reaching lower-income consumers with nutritious foods: the allure and the challenge

Geneva, 25 July 2022 - 

Is it possible to leverage entrepreneurs and businesses to help tackle the poor diets of hundreds of millions of low-income people, and if so, how? And what evidence do we have to show it works? A new five-year GAIN programme, part of a larger initiative aiming to improve the diets of low-income African consumers, aims to help answers to these questions.

Current gaps in diets and access to nutritious food

Nutrition plays a foundational role in achieving optimal health and wellbeing, and thus in meeting numerous other goals for social development (1). In turn, the foundation of good nutrition is consuming a healthy diet. Unfortunately, poor diets are common throughout the world, particularly in low- and middle-income countries (LMICs). For example, about 70% of children in sub-Saharan Africa and South Asia do not consume a diet that meets minimum standards for diverse foods, while about 30% of adolescents in these regions eat vegetables less than once a day (3). Within these countries, diet quality and nutrition outcomes vary widely across socioeconomic groups, with the burden of undernutrition (though not overweight/obesity) tending to be highest among lower-income groups (4). To improve the quality of their diets, these lower-income consumers must have access to safe, nutritious foods in desirable forms and at affordable prices. This is currently a major challenge: an estimated 3 billion people worldwide are unable to afford a healthy diet (5). Typically, poor diets are heavy on staples and lack fruits, vegetables, pulses, and animal source foods such as meat, fish and eggs.

Private-sector companies play a key role in increasing food availability and affordability. Even for low-income households in rural areas, more than 40% of food is purchased from markets, shops, and other vendors, while for those in urban areas, this is close to 90%. For some of these people, sometimes referred to as the "extreme poor", purchasing more nutritious foods is truly out of reach: their incomes do not allow them to afford even a diet with the minimum energy (calories) they need. However, this group tends to be small, only exceeding 10% of the population in a few African countries. For the rest of the population, companies could play a role in improving diets by bringing more safe and nutritious products to market, in forms that are appealing and affordable to consumers. 

For some of these people, sometimes referred to as the "extreme poor", purchasing more nutritious foods is truly out of reach: their incomes do not allow them to afford even a diet with the minimum energy (calories) they need.

Can serving lower-income consumers benefit companies’ bottom lines?

Meeting customers’ needs could also benefit companies’ bottom lines. The "Bottom [or Base] of the Pyramid" (BoP) marketing argument, developed in the early 2000s, holds that lower-income consumers (i.e., those at the bottom of the economic "pyramid") both need access to quality goods and are an untapped market with considerable future growth potential for firms (12,13). As the BoP was estimated to include up to 4 billion people worldwide (15,16), targeting them could financially benefit private-sector firms. The argument is particularly appealing for the food sector: food represents the largest share of lower-income consumers’ spending and the largest BoP market, estimated at USD 2.9 trillion in 2007 (15). 

A mother cutting sweet potato and child observing

A new five-year GAIN programme, part of a larger initiative aiming to improve the diets of low-income African consumers, aims to help answers to these questions. © GAIN

This BoP marketing approach has, however, attracted criticism — both for its theory and for its practice (17–22). Critics argue that BoP marketing exploits lower-income consumers to maximise corporate profits, as opposed to supporting more "bottom up" entrepreneurship, income growth, and development within poor communities; this argument is particularly strong for food companies that sell non-nutritious foods (e.g., soft drinks) or other products that can crowd out healthier foods. Others criticise it for de-emphasising the role of governments in providing basic infrastructure and services, or for excluding certain groups. An overarching critique cutting across all these themes is that BoP marketing ignores the root causes of poverty and market exclusion and thus cannot help end them. On the practical side, the BoP argument has been criticised as overstating market size and not actually yielding profitable models for companies, outside a few exceptions (e.g., mobile phone services). Moreover, evidence on the specific business models that can be – and have successfully been – applied to reach lower-income consumers with nutritious foods is limited. 

Nonetheless, BoP marketing has seen considerable uptake, including by businesses (23), and has many champions – including within the nutrition community. Twenty years after the seminal article on BoP marketing was published, the time is ripe to re-examine the concept and its impact on (and potential for) improving diets in LMICs. 

Finding effective models - a new project to explore the topic 

GAIN, with support from the Netherlands Ministry of Foreign Affairs, is beginning a project to do this. The Business Model Research (BMR) project is part of a larger programme, supported by a grant of EUR 80m and focussed on six African countries (Benin, Ethiopia, Kenya, Mozambique, Nigeria, and Uganda). Through an integrated process of a systematic review, organising a set of business pitch competitions, and collecting data from consumers, BMR will seek to identify promising features of business models that support reaching lower-income consumers with nutritious foods – that is, the approaches that can enable a company to capture value (and thus be profitable) while still providing the food at a price the customer is able and willing to pay.  

We’ll be sharing initial results through a series of blogs over the coming months and look forward to engaging with the nutrition and business communities alike to advance this area of work. Watch this space! 

Sources

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