When I was volunteering at Maya Pedal in Guatemala there was a sign on the wall that said “Que Caro Es Ser Pobre”. It means “How expensive it is to be poor.” As I travel through many of the world’s “poor” countries, I am writing a series of articles about how expensive it is to be poor. I don’t think many people in “rich” countries understand how difficult it is to climb out of poverty. I am all about positivity and I am having the time of my life right now. But I would be doing a disservice to the amazing people I’ve met if I didn’t share their story of what life is like dealing with poverty.
When I was in business school, we talked a lot about the Bottom of the Pyramid. Basically, there are literally billions of people at the bottom of the economic pyramid who, collectively, represent a giant neglected market. Often people talk about those making less than $2 per day as being the bottom of the pyramid.
At business school we talked a lot about opportunities that exist at the bottom of the pyramid. I remember in one class someone from India talking about how large companies there started catering to the under-served bottom of the pyramid market via smaller packaging. At the time, it sounded like a very innovative and excellent idea to me. These companies created a new market for themselves and enabled less affluent people to buy their products.
Fast forward two years and now I am on the ground living among those at the bottom of the pyramid. I now find everything I just said disgusting.
I will illustrate this using a simple commodity everyone reading this post uses: shampoo. Many people here in Central America cannot afford to buy a whole bottle of shampoo at once. It might be equivalent to a whole day’s worth of income. Buying a whole bottle would be cheaper in the long-run, but it’s just too expensive. Imagine yourself not eating for a whole day because you decided to stock up on shampoo instead. Hard to justify, no? Especially if you have kids..
So enter the savior – Proctor and Gamble, the company behind dozens of brands you are already familiar with. In this case, I’ll talk about Pantene and Head & Shoulders.
In Honduras, you can buy a 10ml/0.33floz sachet of Pantene or Head & Shoulders shampoo. Each sachet costs 3 Lempira/$0.16. This is relatively affordable among the less affluent here, though by no means is it cheap. My daily cup of coffee costs 5 Lempira/$0.26 by comparison. My breakfast baleada (hand-made tortilla filled with beans, cheese, and eggs) costs 10 Lempira/$0.52.
Thus, a single-use sachet of shampoo costs 1/3 the price of my baleada breakfast at a restaurant. If you ate your breakfast in a restaurant this morning, I’m guessing your shampoo was maybe 1/100th the cost of your breakfast or less.
Now, some more numbers. Sorry, I’m an engineer. I can’t help it. When I ran some sample numbers in my head I immediately put out the call to my family to give me some actual prices from the US. My awesome cousin sent me these two pictures. I think you will be surprised..
|H & S||H & S||Pantene||Pantene|
|Cost per 10ml||$0.13||$0.16||$0.09||$0.16|
|Cost for 420ml||$5.49||$6.72||$6.99||$12.00|
Head & Shoulders and Pantene cost 22% more and 72% more respectively for the equivalent volume. This is hard to justify given the purchasing power and cost of life here. It also illustrates my point…
Poverty is often a cycle that is hard to break out of. When a Honduran making $5 per day is paying more for shampoo than a comparatively “rich” American, how can you expect the Honduran to ever catch up – or break the cycle?
Shampoo is not the best example to illustrate my point. One can live just fine without shampoo, though your hair may not bounce and sparkle like TV commercials show. But you can extrapolate this example across numerous daily expenditures such as cell phone service, food, medicine, cigarettes, internet access, and probably tons of other things I haven’t noticed or realized.
There is savings in having the purchasing power to buy in larger quantities/bulk. It prevents you from having to dedicate an even higher percentage of your meager income to daily necessities. Think about that the next time you buy a bottle of shampoo, though you’ll probably forget since that probably only happens a couple times a year.