Latin America’s Expanding Middle Class
Latin America’s middle class is steadily growing, while the poorest class is diminishing. The story of Peru’s largest apparel maker, Topitop, perfectly illustrates this trend. The success of this family-owned business in an area with evolving demographics is a great example of why we look at opportunities across the globe and have spent significant time in — and thinking about — Latin America.
Over the past decade, as Peru transformed into one of the world’s fastest growing economies, upwardly mobile consumers began snapping up Topitop polo shirts and cargo pants made of high-quality fabrics and marketed under exotic sounding labels. With stores strategically located in long-ignored barrios and provincial towns, Topitop’s sales have expanded six-fold since 2001, earning it the nickname “the Andean Zara.”
Topitop has prospered by targeting an emerging middle class that is bringing vast economic and social changes to Latin America, a region that has historically had a handful of rich people, many poor ones, and relatively few in between.
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Millions of Latin Americans — construction workers, cooks, secretaries and micro-entrepreneurs — have punched their ticket into the consumer class over the past decade. Some eight million Brazilians took their first plane ride during the past 12 months, according to Sao Paulo’s Data Popular market research firm. In Mexico, the number of credit cards in circulation has quadrupled to 24 million over the past decade. In downtown Lima, middle-class consumers have turned a chaotic 40-block stretch of shops in the Gamarra district into a retail powerhouse, with an estimated $1.5 billion in annual revenues, says Peruvian consultant Juan Infante.