To find out more, I spoke to Renato Meirelles, one of Brazil's top experts on this group. Meirelles is one of the directors of Data Popular, a company that studies the new middle class. Read the interview in English and Portuguese below.
What does it mean to be part of the C class in Brazil?
I think the C class doesn't have the slightest idea that it's the C class. Because it's a term used in the world of marketing and research. It's not a day-to-day term that people use. What we've seen is that it's a growing middle class, a lower middle class that's growing, people who are improving their lives and are living a reality that's better than that of their parents.
What's the average person from the C class like?
They're families that have an average income of $1,191 per month. Fifty-two percent are black. They're young and have an average age of 33. They're people who are proud of their origins, proud of their history, and value work and education.
The Brazilian government says that the average income per capita of the new middle class ranges from R$291 to R$1,091 ($138 to $485 per month). For a family with an average per capita income of $138, isn't that very little?
Well, it depends what you compare it with. If you compare it to North American standards, it is little. But the average North American salary is higher than that of 94 percent of the world's population. When you compare the government's range of R$291 to R$1,019 per person with the rest of the world, the Brazilian middle class is richer than 54 percent of the global population. In other words, compared to the rest of the world, the Brazilian middle class is an upper middle class. And this middle class moves R$1 trillion ($476.4 billion) a year. It's a lot of money.
An interesting fact is that if the Brazilian middle class were a country, it would be the 12th largest country in the world by population and the 18th largest country in terms of consumption. It would be in the G20 of global consumption.
Your company did a study about upper class and traditional middle class attitudes toward the new middle class. What did you find?
What we saw is that the elite is bothered by the ascension of the C class. The elite thinks there should be products for the rich and products for the poor. The elite that wants exclusivity is annoyed by the C class on airplanes. The elite thinks that the big malls should have separate elevators for bosses and employees, and this has to do with the democratization of consumption in Brazil. The elite that has always spent its money in exclusivity is bothered by the consumption of the C class.
Why are they bothered?
The C class is learning to consume; traveling in airplanes, for example. Members of the C class don't know what check-in is, so they cause confusion in the airport lines. Members of this class don't understand they have to pass through a metal detector before they travel. When any human does anything for the first time, he has a lot of questions. This behavior annoys the A class (the wealthiest social class) that for years has consumed with exclusivity. The C class put an end to the exclusivity of the A class in that the new middle class began to consume products and services that it didn't buy before.
Are there other examples of members of the new middle class adapting to consumption?
There's the example I gave when I went on the Programa do Jô about a woman who thought that the "please clean the room" sign at her hotel meant that the hotel was asking her to clean her own room, so she did. In the area of insurance, there are difficulties with some of the contract terms. For example, some people don't understand that "premium" is the payment they have to make each month; they think premium (which is the same word as "prize" in Portuguese) is something they receive from the insurance company! We see examples of people that don't understand the financial bureaucracy involved in opening their own business.
What are some of the risk factors for the middle class?
What we've seen is that maintaining employment levels is fundamental for sustaining the middle class. But what guarantees the sustainability of the middle class is the democratization of education and the universalization of the internet, since connected people expand their network and their possibilities--not only to study but to maintain professional contacts.
Are there differences between the new middle class in the Northeast (a traditionally poorer region) and in the Southeast (a traditionally wealthier region)?
Yes. The Northeastern middle class is a more recent middle class than that of the Southeast and South. So the Northeastern middle class is growing more than the national average and therefore, for the first time, they're consuming a huge group of products and services. Incidents like those on airplanes tend to happen more in the Northeast than in the South and Southeast. The C class in the Southeast is already consolidated.
What does the C class mean for Brazil's big companies?
It's not just for Brazil but also the multinationals. The new middle class is a source of growth in Brazil. The A and B class markets are saturated. So the C class acts as a springboard for sustainable growth in Brazil.
During a period of the international economic crisis when it's more difficult to export, the Brazilian middle class guarantees Brazil's internal market, consuming more than R$1 trillion. As I mentioned, if the Brazilian middle class was a country it would be in the G20 of global consumption and this internal market guarantees the sustainable growth of the Brazilian economy.
What's the role of credit in terms of the growth of the middle class?
Credit is essential for driving consumption. What is credit? It's what you pay to consume now what you only have money to buy tomorrow. So it's important because it anticipates job creation and improves the quality of people's lives. So if a woman joins the labor market, she isn't able to continue washing clothes in the sink, so she has to buy a washing machine, for example. On the other hand, people that are acquiring credit for the first time have difficulty in long-term financial planning, to schedule their expenses and debt payments. Brazil is far from a credit bubble like the one that happened in the United States and Europe. Indebtedness in Brazil is still very low. But now it's necessary to have policies that teach people how to use credit in their favor and to ensure that credit doesn't become a boomerang that works against them.
What's the most important product or service for the new middle class?
What's growing the most in terms of products is basically technology like computers, cell phones, and tablets. Buying a computer is seen as an investment. Cars are growing a lot too.
From the perspective of services, it's tourism. This is happening because in Brazil, vacations are paid [workers receive 30 days of paid vacation]. Along with the paid month of vacation, a worker also receives a third of his salary which is often used for travel. You see a growth in beauty services like beauty salons and plastic surgery, which are largely driven by women joining the labor market. There's also growth in the education sector, driven by youth who are looking for professional opportunities to get better jobs.
Are women important to the new middle class?
Women are fundamental for the new middle class. Women make up 38 percent of the income of the Brazilian middle class. As women join the labor market, there's an additional source of income for their families. In the Brazilian middle class, women now get more education than men.
Learn more about Meirelles and his take on the new middle class in his appearance on Globo's Programa do Jô.
Leia a entrevista em português abaixo.
