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The World’s Largest Cities Are The 


Most Unequal
BY KASPARAS ADOMAITIS (HTTP://BLOG.EUROMONITOR.COM/AUTHOR/KASPARAS-
ADOMAITIS)
March 5th, 2013

City size remains the key explanatory factor for income inequalities across the world’s urban agglomerations

(http://www.euromonitor.com/the-haves-and-have-nots-the-impact-of-the-widening-gap-between-rich-and-poor/report). The

Gini coefficient is a standard economic measure of income inequality – the larger the value of the coefficient, the higher share of

total income is concentrated in the pockets of the most affluent population. As illustrated in the chart below, the bigger the city,

the greater value of the Gini coefficient.


CITY SIZE AND INEQUALITY, 2011

(HTTP://BLOG.EUROMONITOR.COM/WP-
CONTENT/UPLOADS/2015/07/6A01310F54565D970C017D4182CDB7970C-800WI.PNG)

Source: Euromonitor International

The reasons and sources of growing inequality are widely debated. The effects of inequality, however, are well known. For

example, the research shows areas with greater disparities in income tend to be segregated, face higher crime rates, suffer lower

average life expectancy and experience acute health problems. For urban planners, this poses significant challenges in designing

policies that integrate the communities of poor inhabitants and ensure balanced development of the city. For urban marketers,

the inequality poses challenges in estimating consumer purchasing power as well as understanding the demographics and

preferences of distinct communities in the city (http://blog.euromonitor.com/2013/01/introducing-passport-cities.html).

The relationship (see chart) holds true both across the globe as well as within the boundaries of a single country. Be it the US, the

UK, China or Brazil, the most unequal distribution of income is found in the main cities of the respective countries. Thanks to the

large jobs market, megacities often lure the unqualified population from the country‘s hinterlands (or from abroad, in the case of

the most developed countries). For the skilled and talented, big cities magnify their returns to scale. The result is enormous

disparities in income.

LOS ANGELES AND NEW YORK AMONG THE US’ MOST UNEQUAL CITIES

The US is one of the wealthiest nations in the world, yet compared to countries with similar welfare levels, income inequality in

the US is strongly entrenched. Furthermore, the inequality is growing; the difference between the highest and the lowest wage

rate in the US has been increasing throughout the last couple of decades. The key metropolitan areas in the country, according to

the latest data from the American Community survey, fare even worse than the country as a whole. As measured by the Gini

coefficient, inequality of household income in New York, Los Angeles, Houston and other metropolitan areas exceeds the national

average.
The legacy of racial segregation, concentration of poor in the central urban areas, lack of skills and education are typically the

reasons behind the poverty in major US cities. Mansions in neighbourhoods of Los Angeles such as Beverly Hills and Holmby

Hills highly contrast with gang-controlled districts of the inner city, where poverty dominates. The neighbourhoods in Harlem,

the Bronx or Brooklyn in New York City earn incomes below the official poverty threshold. At the same time, New York City

boasts the largest number of millionaires in the country and the US’ best-paid jobs are located in Manhattan, just a few miles

away.

Inequality is not only about money, but also about politics, the quality of neighbourhoods, and access to public services. New

York‘s waste transfer system relies on trucks to collect the city‘s trash, and the waste is first collected into intermediary transfer

centres where it is redistributed. Manhattan generates considerable share of waste in New York, yet it had no such waste transfer

centres in 2012 (the first one was approved for construction by the city’s administration in July 2012). South Bronx has 19 of

them.

US metropolitan areas are usually comprised of several counties, in some cases as many as 10-30 of them. Research at county

level has revealed that inequality is consistently larger in the more populous territories as well. Some 34% of the US population

reside in 20% of the most unequal counties, mainly in southern and north-eastern regions of the country.

LONDON IS THE MOST AFFLUENT AND THE MOST “MISERABLE” IN THE UK

The UK, thanks to its high overall income level, escapes the inequality levels prevalent in many developing countries. The

country‘s urban centres, however, often exacerbate the disparity in incomes. London, the key metropolis in the country, is the

best example of prosperity and misery existing in close proximity in the UK. The extremes of income distribution in London are

so acute that the city rather resembles the megacities of the US than other cities in the UK or Europe.

The London metropolitan area hosts around 25% of UK‘s population (15 million out of 62.5 million total), but as many as 40% of

the most affluent British households are to be found in the city. The average disposable income for 2.7 million families in the UK,

the top 10% by income, was US$137,054 in 2011 (compared to the UK‘s average of US$55,220 per household). A

disproportionate share, 1.1 million (or 40%) out of those 2.7 million, in fact resided in London. Similarly, out of the UK‘s poorest

10% families, 29% are London-based.

Large income inequality in London considerably shapes the city life – London is also the most spatially segregated city in the UK

in terms of income differences. Centre for Cities, an independent research body of British cities, has compared districts within

cities in terms of the population that receives unemployment benefits (unemployment benefit in this case serves as a proxy of

income deprivation). The most affluent districts in London (including several neighbourhoods in Westminster) had no

population with unemployment benefits in 2010; the most deprived district in London (within Waltham Forest borough in the

east of the city) had some 28.9% of its population receiving unemployment benefits. Only Rochdale, a suburb of Manchester,

registered a greater difference between the poorest and the most affluent city districts.

The variance of income inequality is not as severe in other main agglomerations in the UK, as other cities lack the extremely rich

households. Yet large cities in the UK remain the most segregated areas, as per research by Centre for Cities. For example,

Glasgow, Birmingham, Leeds and Edinburgh all have districts with over 23% of the population on unemployment benefits,

compared to the national average of 3.9%.


INEQUALITY IN CHINA IS INCREASING, BUT THE COUNTRY IS MOST UNEQUAL IN
ITS CITIES

The exploding urban population and booming economy in China have led to the recent trend in rising income inequality. The

difference between the average income of the 10% richest and 10% poorest households in China was 13 times in 2001; the

corresponding difference in 2011 was 35 times, representing an unparalleled shift in wealth distribution even by world standards.

The population of metropolitan Shanghai has grown from 16 million in 2001 to 21 million in 2011. Most of the poor in the city are

among the five million that have arrived into Shanghai in search of a better life, but remain stripped of their rights to register in

the city, obtain legal work or own a flat. Urban immigrants in China live on the urban fringe, often work for extremely low wages,

and sleep in crowded rooms. Official calculations of income distribution, in fact, do not even include the so-called floating

population (or non-registered) population in Shanghai. In 2011, the non-registered in the city made up around seven million

people, most of them immigrants from rural hinterlands.

At the other end of the spectrum, many urban households in China are experiencing unprecedented growth of their real incomes.

The jobs in previously non-existent service industries in megacities offer a large scale of activities and increasing rewards. The

rising incomes positively impact consumer spending as increasingly well-off households are eager to purchase previously

unavailable property and/or durable goods.

Since 1988, China has undergone a massive privatisation programme to improve housing conditions. Rising real incomes

combined with government subsidies and incentives have resulted in home ownership rates in some areas at 80% – higher than

in the US on average (65%). As a result, consumer spending on furnishings at global retail outlets such as IKEA has rocketed. The

demand for Western brands among rich Chinese is so great, that at times, in the absence of genuine items, this demand is

satisfied by fake Apple or IKEA shops.

DISPARITIES IN BRAZIL‘S LARGEST CITIES REMAIN WIDE DESPITE FALLING


OVERALL INEQUALITY

Brazil has its own story of urban inequality. The country‘s middle class is growing and inequality is at a long-term low. The Gini

coefficient in Brazil is down from 61.5% in 1991 to 51.7% in 2011. In urban areas, however, the inequality persists. In 2011, the

difference between average income of the top 10% most affluent and 10% least affluent Brazilian households was 38 times.

Within Brazil‘s key cities, the difference was 39 times in São Paulo, 58 in Rio de Janeiro, and 67 in Salvador.

Favelas, or “the subnormal agglomerations”, as termed by Brazilian bureaucrats, are well known destinations for the poor in

Brazilian cities. More than 2.2 million in São Paulo and more than 1.7 million in Rio de Janeiro live in the “subnormal

agglomerations”, according to the census in 2010. Even though most of the households in favelas do have electricity, around 16-

18% of the households do not have electricity meters installed. This often means that electricity suppliers do not visit to fix

outages and going several days without electricity is commonplace. Household rubbish is regularly collected at only 60% of

favelas in Rio de Janeiro and 80% of favelas in São Paulo. For the rest of the households, the city service companies collect it “at

times”, and in the meantime household rubbish accumulates around the property, is thrown directly into lakes or rivers, or

sometimes is simply burnt or buried in the ground.


The current efforts by Rio de Janeiro’s municipality, due to the upcoming 2016 Olympics and 2014 FIFA World Cup, may change

what appeared unchangeable a few years ago. The omnipotent drug gangs are being pushed out of the favelas with some success,

but many remain cautious about the eventual results of the progress.

Brazilian cities also easily accommodate the affluent. Barra da Tijuca is a coastal land in Rio de Janeiro that recently has

undergone a wave of new construction. The district is characterised by high rise apartments, wide alleys and sprawling shopping

centres. The life in Barra is a place where Rio unveils its magnificent physical beauty and at the same time the crowded

downtown and the city‘s favelas remain further away.

LARGE MEANS INEQUALITY

There is one single consistent trend across the world’s cities: Large means inequality. Despite the strong economic growth in

China and Brazil, income inequality is persistent in the largest cities in both countries. Similarly, high overall income levels fail to

prevent inequality in New York or London, the world’s richest cities.

In many cases, the dynamics of inequality development in cities differs from income inequality trends

(http://www.euromonitor.com/the-haves-and-have-nots-the-impact-of-the-widening-gap-between-rich-and-poor/report) in

their respective countries. The result is relatively different characteristics of consumer markets; consumer segmentation in terms

of income levels may be considerably different at city and at country level.

Population growth, which is anticipated for a considerable majority of the analysed cities, will further entrench the current

inequalities in the world’s megacities. The fast-growing populations (http://www.euromonitor.com/future-demographic-global-

population-forecasts-to-2030/book) of the world’s megacities will grow their mega-rich as well as their extremely poor

communities.

Have a question or a thought to add? Leave us a comment below.

TAGGED: CITIES (HTTP://BLOG.EUROMONITOR.COM/TAG/CITIES), ECONOMIC


(HTTP://BLOG.EUROMONITOR.COM/TAG/ECONOMIC), GINI COEFFICIENT INDEX
(HTTP://BLOG.EUROMONITOR.COM/TAG/GINI-COEFFICIENT-INDEX), INCOME INEQUALITY
(HTTP://BLOG.EUROMONITOR.COM/TAG/INCOME-INEQUALITY), LONDON
(HTTP://BLOG.EUROMONITOR.COM/TAG/LONDON), LOS ANGELES
(HTTP://BLOG.EUROMONITOR.COM/TAG/LOS-ANGELES), MEGACITIES
(HTTP://BLOG.EUROMONITOR.COM/TAG/MEGACITIES), NEW YORK
(HTTP://BLOG.EUROMONITOR.COM/TAG/NEW-YORK) , POPULATION
(HTTP://BLOG.EUROMONITOR.COM/TAG/POPULATION)

Kasparas Adomaitis
As a Cities manager at Euromonitor International Kasparas Adomaitis is overseeing the development of
Passport: Cities database that covers data on 1,000+ cities worldwide. With four years in researching, analysing
and reporting on cities Kasparas is an expert of urbanisation trends in various regions of the world.
Archive (http://blog.euromonitor.com/author/kasparas-adomaitis) |
linkedin (https://twitter.com/kasperadomaitis)

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Cities on the Forefront of Economic Change in Sub-Saharan Africa


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African Cities Help to Boost Economy in the Region


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Juice in 2013: Building a Better Beverage


BY MICHAEL SCHAEFER (HTTP://BLOG.EUROMONITOR.COM/AUTHOR/MICHAEL-
SCHAEFER)
March 5th, 2013
Long viewed as a ray of light for an industry dogged by persistent health concerns, prospects for the juice category

(http://www.euromonitor.com/soft-drinks-global-briefings/global-briefing-subscription) have grown murkier in recent years,

particularly in developed markets where scepticism of sugary beverages of any kind continues to grow. What’s more, the path to

growth in key emerging markets remains far from certain, given bruising competition from both unpackaged juices in tropical

markets like Brazil and Indonesia, as well as increasingly-sophisticated powdered and liquid drink mix products. As in other

categories, finding the right value equation remains vital to achieving durable growth. In more developed markets, functionality

offers real potential (http://www.euromonitor.com/passport-functional-drinks-global/passport-subscription), as consumers

continue to gravitate towards the latest tropical “superfruits” and flavours, while stevia-based products could drive further

expansion among consumers looking to control sugar intake. Among emerging market consumers, meanwhile, effective

localisation is paramount, with products able to accurately reproduce the flavours and textures of local unpackaged favourites

likely to see continued growth.

A TALL ORDER

While global sales volumes expanded by 2% in 2012, this represents a slowdown from the 3% annual average seen over the last

five years. In three of the world’s top ten markets, volume sales actually fell in 2012, including the United States, the global

number two, where volumes dropped nearly 5%. High prices have led many developed-market consumers to cut back on juice

purchases, with per-capita volume consumption down nearly across the board in the major markets of Europe, North America,

and Japan. Strong competition from energy drinks and other beverages offering well-defined functionality has cut into juices’

share of wallet in many developed markets, while growing concerns about general sugar consumption have blunted the

traditional marketing message of juice as a uniquely healthy soft drink.

In emerging markets, the growth picture is more positive, yet the road to growth remains a bumpy one. Per-capita consumption

in key markets like Brazil, Egypt, the Philippines, and Indonesia remains remarkably low—average annual consumption in

Indonesia remains under one litre per person, to use one example—thanks in large part to the ready availability of fresh juices.

Egypt, for instance, is home to thousands of juice bars, small, informal shops where one can enjoy a wide array of freshly-

squeezed juice drinks for just a few cents, sharply limiting the appeal of packaged juices for much of the population. Powdered

beverages such as Tang are also enormously popular in many markets, with their low prices, wide variety of flavour choices, and

added features such as nutrient fortification (often tailored to local deficiencies) proving very appealing to low-income consumers

in particular. Powders are also far easier to transport in markets where local infrastructure is limited, retail shops remain small,

and car ownership is limited.

JUICE REDEFINED?

So should juice manufacturers despair, given this rather-gloomy summary? Certainly not—on a global level, growth opportunities

abound, yet getting there requires a certain amount of flexibility. Every market is different, and the most successful brands will be

those which serve a very distinct set of needs, which can differ from market to market. In a world of ever-expanding choices,

consumers are not exactly clamouring for juice per se—instead, they have a portfolio of desires which are applied across a wide

range of categories, and which juice manufacturers are quite capable of serving, given the right products.

China provides an excellent example of this. Already the world’s largest juice market by volume

(http://www.euromonitor.com/fruit-vegetable-juice-in-china/report), this US$18.5 billion is expected to average 5% annual

value expansion over the next five years. The vast majority of this expansion is expected to come from juice drinks containing up
to 24% juice, with both nectars and 100% juice products projected to remain high-priced niche categories. Leading the way is

Coca-Cola’s Minute Maid Pulpy brand, the company’s first US$1 billion brand to emerge from China. Combining a thicker texture

reminiscent of freshly squeezed juices (the drink’s large pieces of pulp have inspired the tagline, “shake, drink, chew” in some

markets) with an affordable price point, the product offers just the right combination of convenience, familiarity, and value to

drive repeat purchasing, creating a powerful new force in East Asia.

The brilliance of Minute Maid Pulpy comes less in its intrinsic qualities than its design, in many ways a new beverage designed

from the ground up to appeal to the specific needs of Chinese consumers (http://www.euromonitor.com/consumer-lifestyles-in-

china/report), much like any other soft drink. Looking further afield, one can see many of the world’s highest-impact product

introductions of 2011 and 2012 developing along similar lines. In the US, for instance, Tropicana’s blockbuster Trop50 product,

which uses stevia to offer a lower-sugar, reduced calorie beverage with the taste and vitamins of pure orange juice, recently

cleared US$150 million in annual sales, marking it as one of the most successful new product introductions in the juice category

for some time. Here again is a case of a more tailored, more “engineered” juice product, marrying the very real selling points of

orange juice with the specific needs of the modern consumer.

BUILDING A BETTER JUICE

Going forward, these types of products will account for an ever-larger portion of sales among consumers unwilling to

compromise on price, sugar content, or flavour. The 100%, not-from-concentrate category will remain important in higher-

income markets, but will further evolve into a super-premium, high-end niche. Consumer concerns about sugar can be overcome,

but this will come in the form of more-exotic products like coconut water, tropical “superfruits” like acerola or cupuaçu or juices

prepared through high-pressure-pasteurisation, like Starbucks’ Evolution Fresh line, which can offer a truly different taste/health

benefit equation. The unpackaged juice culture of markets like Brazil, Egypt, and Indonesia will serve as an on-going

inspiration/innovation pipeline for markets in North America and Europe, particularly among upper-income consumers looking

to make high-end juices part of their lifestyle.

At the same time, juice will become less of a stand-alone product and more of a complement to RTD teas, sparkling waters, and

even energy drinks as consumers look to transition away from full-flavour carbonated. New fruits and flavours can be expected

to often serve less as stand-alone products and more as the building blocks for the next Minute Maid Pulpy. This is especially true

in fast-growing emerging markets, where there is strong demand for convenient, affordable soft drinks for in-home consumption,

reminiscent of the local flavours one can often find on every other street corner. While juices will retain distinct advantages, they

will also in a very real sense become just another soft drink, serving the same laundry list of needs as any other.

Have a question or a thought to add? Leave us a comment below.

TAGGED: EMERGING MARKET JUICE CONSUMPTION


(HTTP://BLOG.EUROMONITOR.COM/TAG/EMERGING-MARKET-JUICE-CONSUMPTION), JUICE
(HTTP://BLOG.EUROMONITOR.COM/TAG/JUICE), JUICE TRENDS IN 2013
(HTTP://BLOG.EUROMONITOR.COM/TAG/JUICE-TRENDS-IN-2013), MARKET TRENDS IN JUICE
(HTTP://BLOG.EUROMONITOR.COM/TAG/MARKET-TRENDS-IN-JUICE), MARKET TRENDS IN SOFT
DRINKS (HTTP://BLOG.EUROMONITOR.COM/TAG/MARKET-TRENDS-IN-SOFT-DRINKS), MICHAEL
SCHAEFER (HTTP://BLOG.EUROMONITOR.COM/TAG/MICHAEL-SCHAEFER)
Michael Schaefer
Michael Schaefer is Head of Beverages and Foodservice Research at Euromonitor International. He and his
team track consumer trends, product innovations, and market evolution across the drinks and restaurant
industries. Michael holds an M.A. in Russian and East European Studies from Stanford University and has been
at Euromonitor since 2005.

Archive (http://blog.euromonitor.com/author/michael-schaefer) |
Twitter (https://twitter.com/mschaefer84) |
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“Global Toy News” Backs Our Industry Coverage


BY UTKU TANSEL (HTTP://BLOG.EUROMONITOR.COM/AUTHOR/UTKU-TANSEL)
March 5th, 2013

Richard Gottlieb, one of the most influential and well-known names in the global toy industry, highlighted the importance of

covering both traditional and video games (http://www.globaltoynews.com/2013/02/the-toy-industry-is-

dead.html#more) when analysing the global toy industry, or rather, the global play industry. If play is not considered a sector by

toy industry players, Gottlieb points out, “…the lack of true competitive information will continue to have a negative impact on

toy industry decision making.”

Concluding his post, “The toy industry is dead. Long live the play industry”, Gottlieb emphasizes “…toy companies are just one

part of the greater play industry which consists of those who create video games, develop apps, manufacture tablets and create

immersive digital worlds”.

However, tracking both traditional toys and games and video games may not be sufficient to make sound strategic decision

making. In order to make an accurate assessment of the entire play industry, it is fundamental to analyse other key parameters

affecting the industry. Trends in population, income, retailing and consumer electronics have a profound effect on toys and

games sales. These trends shape the

industry as a whole, and it’s necessary to analyse them to get a more complete picture of the market.

We’ve put together a complimentary presentation demonstrating this point.

Download Now: Trends Affecting the Play Industry (http://blog.euromonitor.com/wp-content/uploads/2015/09/play-industry-

findings-by-euromonitor-international.pdf)

Have a question or a thought to add? Leave us a comment below.

TAGGED: GLOBAL TOYS AND GAMES MARKET RESEARCH


(HTTP://BLOG.EUROMONITOR.COM/TAG/GLOBAL-TOYS-AND-GAMES-MARKET-RESEARCH),
RICHARD GOTTLIEB (HTTP://BLOG.EUROMONITOR.COM/TAG/RICHARD-GOTTLIEB), TOY INDUSTRY
ANALYSIS (HTTP://BLOG.EUROMONITOR.COM/TAG/TOY-INDUSTRY-ANALYSIS), TOYS
(HTTP://BLOG.EUROMONITOR.COM/TAG/TOYS)

Utku Tansel
Utku Tansel leads Licensing at Euromonitor International. After completing his Law Degree in Istanbul and MBA
in London, Utku joined Euromonitor in 2004. Over the past 12 years, he has been responsible managing diverse
research projects covering 32 countries worldwide and for the strategic development of several industry
verticals.

Archive (http://blog.euromonitor.com/author/utku-tansel) |
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