In 2006 a company called Solae began selling soy protein powder in the slums of Mumbai. Solae, a subsidiary of DuPont, saw an opportunity to gain a toehold in the Indian consumer market while addressing malnutrition—a classic case of “doing well by doing good.” It expected the product to be a big success. Yet by 2008 the venture had failed. The soy protein, which cost 30 cents a packet, couldn’t compete on price with lentils, the staple protein in many Mumbaikars’ diets, which cost less than half as much for an equivalent serving.
Solae is not the only company to make this kind of miscalculation. In 2000 Procter & Gamble introduced PUR, a line of water filtration sachets for low-income, developing-country households, and in 2006 Grameen Danone began selling packaged yogurt in rural Bangladesh. Neither product gained traction in those markets. All three firms were misled by a common fallacy: that poor people in emerging markets pay a “poverty premium” on everyday goods and that multinationals can develop products to close the price gaps.