25 October 2018
Category: Newsletters
25 October 2018,
 0

It sounds like something you already know right? And the answer is ‘Yes’. The reason we know this, is that it’s true! And it is true that exploring and making moves into the African continent does not have to be an exercise in courage and bravery anymore.

Sometimes we need reminding that African markets are:

  1. established
  2. large
  3. growing, and
  4. they want more of what you have to offer

Mckinsey have a great, easy to read report on just this subject.

The link is here:

The overarching lesson from the report is that in fact ‘a few multinational consumer-packaged-goods (CPG) companies have managed to make important inroads in Africa. Their experience holds valuable lessons for others aspiring to capture the opportunities in one of the world’s fastest-growing consumer markets.’

Highlights of their report are:

  • Africa is Young, urban, connected
  • African consumers are young and willing to spend.
  • Major growth drivers: Rapid urbanization and the rise of mobile communications.

This concentration of consumers bodes well for CPG companies that can secure distribution in these fast-growing cities.

Ah…. but what about ‘The challenges’

Does Africa have challenges…. yes. We know them, lets name them:

  • Political instability and conflict
  • Infrastructure
  • Linguistic diversity
  • Differences in consumer behaviour
  • A fragmented retail market
  • Low data availability and quality

Nevertheless, pioneering companies have been able to make Africa a part of their success story

  • More than 400 companies generate at least $1 billion in Africa-based revenues.
  • Coca-Cola, Nestlé, and Unilever, among others, have been on the continent for decades and enjoy significant market share in their categories;
  • P&G has increased its African business more than tenfold in the past ten years.

Mckinsey further says ‘In our experience, consumer companies that win in Africa are those that heed the following four imperatives.

  • Lessons learned – Take a granular view of growth
  • Tailor the offer to local needs and preferences
  • Create a bespoke route-to-market model by geography and channel
  • Build a large, well-equipped sales force

In spite of these challenges, Mckinsey end off their report with the following comment:

Consumer companies seeking a foothold in Africa must be prepared to invest for the long haul. It will, no doubt, be a challenging and sometimes frustrating journey. But the payoff will be well worth it: African consumers reward brands they trust, and a brand that wins them over can thrive in the market for decades to come.’

Conclusion

Expansion into Africa is very lucrative; however, one needs to adhere to a few principles as laid out above and also be mindful of the challenges Africa presents. The rewards are often decades long consumer loyalty.

You may well ask: This sounds great, but how do we mitigate the risks of the challenges?

The answer is to choose Field Africa to do your field work…. of course!

  • We are African experts with over 20 years’ experience on the continent
  • We have offices in 9 countries and a footprint in 22 African countries
  • We have archives of institutional knowledge regarding Africa and multiple industries within it due to our experience
  • Where you may see a potential challenge, we may likely find it as difficult as choosing a good movie to watch i.e. Africa does not make us wary, it is our home and we thrive in it. Let your challenge be one of our routine tasks

Partner with us when you make Africa your next port of call for you and your clients.