Market Sizing Methodology for Emerging Markets: A 5-Step Bottom-Up Approach

Market sizing in Caribbean and Central American emerging markets is a primary research exercise, not a database lookup. Euromonitor does not cover Belize or Suriname. There is no IRI panel data for Jamaica or Guyana. The Haitian government does not publish category-level consumer expenditure breakdowns. If you need to know the total addressable market for your product in a Caribbean or Central American market, you must build the estimate from primary data and first-principles modelling. This guide walks through HRG's 5-step bottom-up approach to Caribbean market sizing.

Why Top-Down Fails in Caribbean Contexts

Top-down market sizing takes a large aggregate market figure and multiplies it by a share or penetration rate to arrive at a sub-market estimate. For example: Caribbean total population is 44 million, average per capita spending on personal care is X, therefore the Caribbean personal care market is 44 million times X. This approach fails in Caribbean contexts for three compounding reasons. First, the aggregate figures themselves are unreliable: Caribbean per capita spending data is a weighted average of very different markets, mixing Puerto Rico's US-comparable consumer economy with Haiti's subsistence-level household budgets. Second, the penetration rates applied are typically derived from global or Latin American regional data and do not reflect Caribbean-specific consumer behaviour. Third, top-down approaches aggregate away exactly the between-market variation that matters most for investment and entry decisions.

Bottom-up approaches build from the specific market being sized rather than from regional aggregates. This requires more primary data investment but produces estimates that are both more accurate and more defensible in the context of a business case or investor presentation, because every number in the model traces back to a specific data source that can be examined and challenged.

Step 1: Define the Market Precisely

Before any data collection begins, the market definition must be specified precisely enough that you can determine whether a given consumer purchase or outlet sale falls inside or outside the market being sized. Ambiguous market definitions produce ambiguous market size estimates. The market definition should specify the product category scope (what products are included and excluded), the geographic scope (which islands, parishes, or districts are included), the consumer segment scope (all adults, or a specific demographic or income segment), and the channel scope (retail only, or including on-trade and institutional channels).

For example, a market sizing exercise for a premium rum brand in the English-speaking Caribbean might define the market as: premium spirits (spirits retailing above TTD 150 per 750ml bottle in Trinidad or equivalent price point in other markets) sold through licensed on-trade and off-trade outlets in the CARICOM English-speaking markets to adult consumers aged 25 to 54. This definition immediately excludes low-priced rum, home-made bush rum, institutional/duty-free channels, and non-CARICOM markets, and makes clear that a consumer survey needs to focus on the 25-54 adult segment and that a retail audit needs to cover both supermarkets and licensed bars.

Steps 2 and 3: Consumer Survey and Trade Data

Step 2 is the demand-side consumer survey. A survey of the target consumer segment in each market collects category usage incidence (what percentage of the target segment uses the product category at all), purchase frequency (how many times per month or year does a user buy), average spend per occasion, and channel mix. Multiplying these components across the population estimate for the target segment produces a demand-side market size estimate. HRG designs these surveys to collect the minimum data needed for the market size model, typically 15 to 20 questions, and samples at n=200 to 400 per market depending on the required precision of the segment-level estimates.

Step 3 is supply-side trade data triangulation. Import customs data from each country's revenue authority provides volume and value of imports for the product category, usually at the HS code level. HRG researchers access these databases directly in markets where data is publicly available, or obtain it through CARICOM trade data aggregates. Local manufacturer production data, if obtainable through industry contacts or company reporting, adds to the supply-side picture. Distributor sell-in data, collected through a short structured interview with the 2 to 4 dominant distributors in each market, provides the most current and granular supply-side estimate. The sum of imports plus local production minus re-exports, adjusted for inventory change, gives a supply-side estimate of total category consumption.

Steps 4 and 5: Triangulation and Scenario Modelling

Step 4 is triangulation. When the demand-side and supply-side estimates diverge by more than 20% to 30%, the divergence must be investigated and explained before the model can be finalised. Common explanations include informal imports not captured in official customs data (particularly relevant for spirits, food staples, and pharmaceutical products in markets with significant parallel importing), consumer survey underreporting of sensitive product usage (relevant for alcohol and tobacco categories where social desirability suppresses reported consumption), or wholesale/hospitality channels that are large in the supply-side data but excluded from the consumer retail definition.

Step 5 is scenario modelling. HRG does not deliver Caribbean market size estimates as single point figures. We deliver three scenarios, a low estimate based on conservative assumptions about penetration and frequency, a central estimate based on the best available evidence, and a high estimate based on optimistic assumptions. Sensitivity analysis identifies which model inputs drive the range most, and the output is a narrative explaining what each scenario implies for the commercial opportunity. This format is more useful for investment decisions than a single point estimate, because it forces explicit acknowledgment of the uncertainty inherent in emerging market sizing and directs attention to the variables that matter most.

Case Example: Sizing a Beverage Category in 4 Caribbean Markets

To illustrate the approach, consider a market sizing exercise for a premium non-alcoholic functional beverage brand evaluating entry into Jamaica, Barbados, Trinidad and Tobago, and the Dominican Republic. The consumer survey across 4 markets (n=400 each) establishes category awareness, usage incidence, purchase frequency, and average spend per purchase for functional beverages. The supply-side exercise retrieves customs import data under relevant HS codes from each country's revenue authority and supplements it with interviews with 2 to 3 established beverage distributors per market.

The triangulation phase reveals that Jamaica's demand-side estimate significantly exceeds the import data-based supply estimate, which investigation traces to significant informal importation of energy drinks and functional beverages through parallel channels that bypass standard distributor networks. The Dominican Republic supply estimate is adjusted upward by approximately 30% once informal import channels are accounted for. The final scenario model delivers market size ranges for each country and a four-country combined TAM estimate, with the central scenario providing the primary basis for the brand's market entry business case and the low/high range informing the sensitivity analysis in the investment case.