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The World's Largest Cities Are The Most Unequal PDF
The World's Largest Cities Are The Most Unequal PDF
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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,
(HTTP://BLOG.EUROMONITOR.COM/WP-
CONTENT/UPLOADS/2015/07/6A01310F54565D970C017D4182CDB7970C-800WI.PNG)
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
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.
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
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,
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
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
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
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
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
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
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
Population growth, which is anticipated for a considerable majority of the analysed cities, will further entrench the current
population-forecasts-to-2030/book) of the world’s megacities will grow their mega-rich as well as their extremely poor
communities.
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.
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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
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
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
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,
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
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
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
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
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.
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BY SARA PETERSSON (HTTP://BLOG.EUROMONITOR.COM/AUTHOR/SARA-PETERSSON)
APRIL 23RD, 2016
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Richard Gottlieb, one of the most influential and well-known names in the global toy industry, highlighted the importance of
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
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
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
industry as a whole, and it’s necessary to analyse them to get a more complete picture of the market.
findings-by-euromonitor-international.pdf)
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.
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Macro Volatility and Licensing Shaped the Traditional Toys Market in 2015
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