Start segmenting into high-priced luxury goods and low-priced bargain goods.

Morgan Stanley: These Corporations Will Be The Winners If The Middle Class Dies

Morgan Stanley has put out an exhaustive report on inequality, in which the investment bank muses about the possibility of the middle class slowly going extinct.

Growing inequality “can disrupt business models, fuel political discontent and trigger policy missteps,” the bank warns.

“It pre-determines individuals' positioning along the income and wealth distribution independently of their efforts…. Therefore, it undermines incentives to work hard and invest in further education and improve skills.”

But, being an investment bank, Morgan Stanley also sees an upside to inequality — especially for the businesses best positioned to take advantage of the disappearance of the middle class.
inequality chart
Portugal is most unequal: Morgan Stanley published this chart ranking the world's wealthy countries by degree of inequality. It shows that southern Europe and the U.S. have the highest degrees of inequality in the developed world, while Scandinavia has the least.

So if you’re a business and your middle class customers are disappearing, what do you do? You get rid of your mid-priced items and start segmenting into high-priced luxury goods and low-priced bargain goods.

In Morgan Stanley’s view, businesses that don’t do this, and continue to target middle earners with mid-priced items, are in trouble. Those that will thrive will be those that move up the income ladder, or down the income ladder, or both.

Below are the companies that Morgan Stanley says will win in a world where the middle class is an endangered species. To see the complete list, check out the full Morgan Stanley report.