A couple of months ago on this blog, I announced the new GAIN Business Model Research (BMR) Project. Part of a larger programme supported by the Netherlands Ministry of Foreign Affairs, this project seeks to identify promising features of business models that support reaching consumers on lower incomes with nutritious foods - that is, approaches that can enable a company to capture value (and thus be profitable) while still providing nutritious food that meets a customer’s needs at a price they are willing to pay. There is a huge need for this: worldwide, many people are not eating diets that are sufficiently diverse and rich in nutritious foods (like fruits, vegetables, whole grains, legumes, and fish) and it is estimated that 3 billion people worldwide are unable to afford a healthy diet.
But what, exactly, are people on low incomes looking for in food products?
Food choice is complex. It involves psychological factors (like mood and preferences), sociocultural ones (like traditions and taboos), sensory appeal (like taste), health perceptions, ethical concerns (like animal welfare), social interactions (like peer influences), and socio-demographic aspects (like education). Such factors operate across demographic groups, such that people on low incomes do not seek foods with characteristics wholly different to those sought by people on higher incomes; 'lower income' also covers a very large and diverse population, about which it is hard to generalise.
However, a literature review conducted for the BMR project has highlighted some key ways in which food consumers on lower incomes tend to differ from those on higher incomes. First, and most obvious, is that affordability represents a more serious constraint: while consumers on higher incomes may want to obtain 'good value' when purchasing food, people on lower incomes face absolute limits on what they can spend. These constraints tend to lead them to place greater weight on foods that will be satiating and provide high value for money – taking into consideration how long food will last; whether a package contains more than is required; and whether additional complementary ingredients are needed to prepare it.
Worldwide, many people are not eating diets that are sufficiently diverse and rich in nutritious foods and it is estimated that 3 billion people worldwide are unable to afford a healthy diet. © Unsplash/Thomas Park
Shoppers on lower incomes also tend to be risk-averse, as they have little margin for error within their budgets: while food may be a low-stakes purchase for those on a higher incomes, for households on lower incomes, every purchase may be seen as important and subject to consideration. For food in particular, this includes being highly sensitive to the risk of food wastage - due to spoilage, to not aligning to household preferences, or to being poor quality - since that waste represents lost value.
Variability of income is also important for lower-income households, particularly those dependent on seasonal occupations, casual labour, daily wages, or tips. Unpredictability (variability but with the added challenge of not knowing what that variation will be) is particularly acute for casual labourers, those with uncertain employment, and those working in mining, fishing, and other jobs dependent on a daily 'catch'. Exposure to income shocks (e.g., health issues) also results in unpredictability of money available for food, particularly in the absence of functioning insurance systems and other social safety nets. High variability in income can lead to high variability in consumption.
Besides facing income poverty, consumers on lower incomes (particularly women) also often face time poverty – having too many things to do relative to the time in which to do them. This can lead to placing added weight on convenience of food. A distinction between the 'relatively poor' and the 'extremely poor' is the ability to buy in bulk: those with both sufficient cash on hand and sufficient storage space (protected from pests or theft and refrigerated if needed) can purchase in bulk and save on per-unit price, as well as shopping time, whereas poorer households without adequate infrastructure cannot and are more dependent on regular, smaller purchases.
In addition, 'aspirational consumption' has been widely documented among lower-income populations, driven by a desire to match upper-class lifestyles, increase well-being, and achieve social status. This aspirational aspect can be particularly strong with foods for children: parents often want to give their children the best, which some may proxy by 'what the rich eat'. Some consumers on lower incomes may avoid products that are seen as marketed ‘for the poor,’ sold at cheap prices, or given away for free, both because they are not aspirational and because they assume the food must be low quality. Since consumers on lower incomes may be willing to pay a premium for preferred brands - both due to aspirational consumption and confidence that the branded product will deliver (and not be wasted). However, others may prefer a lower-quality or off-brand product at a cheaper price to a higher-quality or premium-brand one that they cannot (or can rarely) afford: premium aspirational food brands can be ten times as expensive as traditional, basic, or local-branded food.
In addition to influencing choices of specific foods and brands, socioeconomic status can influence the choice of food shop or market. Shoppers may avoid upscale-looking retail outlets, assuming the products will be expensive, or that they will be unwelcome to shop there. Some also choose to purchase food from outlets where they can bargain for prices or use credit (e.g., traditional markets as opposed to supermarkets), which may influence the foods available to them. Some consumers on lower incomes also have lower levels of education or media access, which may influence their choices, including by making them more dependent on information from local sources (like retailers) and personal contacts.
Consumers on lower incomes thus face a unique set of drivers and challenges, which shape their choice of foods, brands, and shopping outlets. They also often bring considerable agency and ingenuity to their interactions with the food system, finding ways to meet their needs even amid budget constraints. In the long term, reducing poverty and enshrining the right to (nutritious and safe) food through stronger social protection systems can help to close this gap. In the short term, to deliver nutritious foods that will meet consumers’ needs, food producers and sellers will first need to understand these motivators - and innovatively adapt their offerings to meet them.
In the next blogs in the BMR Project series, we will showcase some of the ways they have sought to do so.