Nutella®, an Italian hazelnut spread that is particularly tasty on toast, has five million fans on Facebook. Kraft Foods is helping consumers find recipes, build shopping lists and locate stores—using an iPhone. Unilever is empowering women in India's small villages to act as direct-to-consumer distributors, providing micro-credit and sales training in the process.

What does all this mean? It means the landscape of the consumer products market has radically changed. This seismic shift creates tremendous opportunities around the world for innovative CP companies, but is also a world that is increasingly unpredictable and unfamiliar. The IBM Institute for Business Value (IBV) offers some guidance about how to navigate this new territory and the capabilites companies will need to succeed.

You're selling, but who is buying?
The world's population is growing—from 6.8 billion at end of 2008 to 9 billion by 2050—but not evenly. In 1975, only Tokyo, New York and Mexico City had populations in excess of 10 million. By 2020, 16 cities will have populations in excess of 20 million.

By combining population growth, consumption power and urbanization dimensions the IBV has defined four broad population groups: the Cosmopolitan Elite, Growing Middle Class, Affluent Potentials and Rural Poor. Together, these four form a diamond. Historically, consumer products companies have focused their efforts on growing sales within the top two facets of this diamond. But it may be the Affluent Potentials and Rural Poor who truly offer the greatest revenue and profit growth opportunities.

Largely underserved in the past, this mass of individuals and consumption power is positioned to drive sweeping economic, social and political changes across all facets of the diamond and regions of the globe.

The Affluent Potentials are already dynamic consumers of food and beverage products, with US$3.5 trillion of consumption power and are more likely to grow their incomes over their lifetimes. They represent the next middle class. Innovative CP companies will recognize this and target their efforts at this segment, which will form the next generation of consumers for their products.

The Rural Poor will constitute US$1.3 trillion in purchasing power by 2020, and represent one of the fastest growing facets in some key markets. Between 2006 and 2008, for example, the rural market for fast-moving consumer goods (FMCG) in India doubled, to US$4 billion, and now comprises 17% of the total FMCG market. Continued on page 2