The new billionaires

The European “middle classes” are feeling the full force of the economic crisis. High unemployment, reduced purchasing power, sluggish growth…the difficulties encountered by these classes are a major challenge for political powers in the zone. Some even go so far as to suggest they could disappear as a consequence of globalisation that has either lifted them into the upper classes, or on the contrary, pushed them back among the working classes (1).

This local reality masks a global reality that is quite different. Indeed, on a global scale, the number of individuals making up the middle classes is likely to increase by more than one billion by 2020 and more than three billion by 2030. This outstanding prospective growth is a major theme for your investments.

According to a study by the Institute for Securities Studies (2), major demographic upheaval is expected over the next 20 years. While we already know that the Indian population, with more than 1.5 billion citizens, is set to exceed the Chinese population by 130m individuals in 2030, the very structure of the global population is to undergo a genuine revolution. A widespread increase in the standard of living is set to be spectacular in Asia where the study announces a boom in the middle classes to 3.2 billion people. In Africa and the Middle-East, growth rates (lower than those in Asia) are set to be the envy of European leaders and within just two decades, the middle classes in South America could represent more than 300 million people, as much as North America in its entirety.

The much-disparaged globalisation of our lands is a blessing for populations in the emerging world. Better access to education and knowledge should notably help reduce the illiterate portion of the population (10% in 2030 vs 27% in 1990). Access to information via the generalisation of the internet (one in two people around the global connected in 20 years time) is obviously set to be an important driver behind this development.

So how should we make the most of momentum in this new population? A recent article in French daily, Le Figaro (3), highlights consumer companies that serve more than one billion customers throughout the world. Over time, L’OREAL, PROCTER & GAMBLE, NESTLE and COCA-COLA have developed a range of products that can be rolled out both locally and globally. No doubt, these super leaders are ready to make the most of momentum in these middle classes.

Speeding up the story are the new tools that are now available in order to reach these billions of new customers even faster than before. Facebook, created just eight years ago, already boasts one billion users and is a means for product brands to get one step closer to their customers: COCA-COLA has 41 million fans on its page, while Danette (DANONE) has 1.2 million amateurs…

It is no coincidence that these companies with global and billionaire potential are among the investment choices of your funds and especially Echiquier Global! At a time when the theme of stimulating low growth is returning to the limelight in Europe, note that these companies decided to go and find new clients throughout the world some time ago. The world is growing and this should not be forgotten!

With the participation of Olivier de BERRANGER

(1) Fractures françaises – Christophe Guilluy
(2) Global Trends 2030 – Citizens in an Interconnected and Polycentric World – March 2012
(3) Le Figaro 25/04/2012 Ces sociétés qui comptent plus d’un milliard de clients