Profit and the Poor; Consumer-goods makers are realizing they have only one direction to go for growth: down-market.(Correction Notice)

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CORRECTION: In "Profit and the Poor," we cited an article from Foreign Policy magazine that said low-wage earners from the 18 largest developing nations take in $1.7 billion a year. The amount, in fact, is $1.7 trillion. NEWSWEEK regrets the error.

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Byline: Mac Margolis (With Stefan Theil in Berlin and Sudip Mazumdar and Sumeet Chatterjee in New Delhi)

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It wasn't exactly banner news, but May marked a watershed for the Brazilian economy. In the run-up to Mother's Day, consumers flooded stores, snapping up 1.5 million cell phones. The vast majority of these were prepagos --basic, cut-rate handsets that operate on prepaid phone cards and can be had on installment plans for as little as $3 a month. More than a shopping binge, the Mother's Day mob represented a new consumer vanguard: a battalion of buyers with shallow pockets but a keen eye for a deal. The result: Brazilians now own 53 million cellular phones, nearly 20 million more than two years ago--and 78 percent of them are prepagos. "The cellular phone is no longer an item for the elite," says Roberto Iunes, executive vice president for marketing and innovation for Vivo, Brazil's biggest mobile operator. "Companies that turn up their noses at low-income consumers are snubbing their own potential for growth."

Not so long ago, "poor consumers" sounded like an oxymoron. According to conventional wisdom, the societies of the developing world were built like great pyramids: the few phenomenally rich at the top, a thin wafer of middle class just below and, sitting on the bottom, a colossal plinth of poor folks who had nothing but their dreams. In Brazil there was even a name for it: Belinda, a tiny and prosperous Belgium surrounded by a teeming and destitute India. Companies instinctively poured their efforts into pursuing the wealthy consumers; for "India," there were only economic scraps and the dole. Even academics and policymakers tended to see the poor not as consumers but as victims. Now the wizards and the wonks are taking a second look. "The great white spot in the world economy is the lower-income market," says Laercio Cardoso, who oversees low-income markets in Brazil for the Anglo-Dutch laundry-soap manufacturer Unilever. "Reaching them isn't charity--it's business."