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Shifting Market Frontiers: Africa Rising

March 2018

Shifting Market Frontiers: Africa Rising explores developments in Africa, a diverse frontier market and the opportunities for investment across industries and differing consumer income levels.

USD 1,325
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African population, increased urbanisation and expenditure presents opportunities

Africa is world's second most populous continent. Its growing young population is expected to command nearly 20% of the world’s population by 2025. Equally, rapid urbanisation and fast-growing consumer expenditure provides long-term opportunities.

Consumers are diverse and a “one size fits all” approach will not work

Africa’s 55 independents states are home to a diverse population of different income groups, religions, races, customs and languages. This diversity requires a more granular and regional approach for a successful and sustained market entry.

A flexible long-term strategy is required to succeed in the continent

Despite signs of growing GDP and consumer expenditure, the challenges of the continent, such as lack of infrastructure, paucity of skills and political instability, require a flexible and long-term approach.

Local companies offer strong competition

Local companies are seasoned experts with a wealth of knowledge, which give these companies an advantage against global competitors. Lessons can be learnt from their approach to business, or partnerships should be considered.

Growing technology in the region provides new ways of reaching consumers

Africans are increasingly connected, with high mobile penetration - reaching one billion in 2017. This offers opportunities in various consumer industries, which include finance, apparel, food and drink, and beauty and personal care.

Modernisation of retail alongside informal retailing

Modern retail outlets are increasing at a rapid place. However, a large proportion of retailing still takes place in traditional stores, open-air markets, street kiosks, and even at the side of the road. Understanding how these markets operate and why consumers choose these channels is important.

Introduction

Megatrend analysis
“Shifting Market Frontiers” is one of our eight focus megatrends
Africa Rising: the next key trend in “Shifting Market Frontiers” after Asia
Scope
Key findings
Challenges and opportunities

Socioeconomic Significance of Africa Rising

Africa Rising: key milestones
Africa’s growing contribution to the world economy
Consumer expenditure in Africa expected to grow
Africa’s population to be the fastest growing globally
Africa* to post the fastest disposable income growth
Mid-income group to grow fastest in Africa*

African Consumer: BOP and South Africa

20% of population is BOP, increasing to 30% for Sub-Saharan Africa
Nigeria and South Africa largest number of BOP households
Food and beverages offer great potential
Mondelez International Inc
Fan Milk
Unilever & Nestlé
South Africa: unique due to strong middle class and developed infrastructure
Best ways to reach different consumer segments in South Africa
South African consumer types: Online survey

African Retailing Environment

Traditional and informal retailers dominate
Well-developed modern retail in South Africa compared to rest of continent
South Africa’s developed retailing provides greater brand diversity
Expansion to suit changing African consumer demographics
Spaza shops/kiosks/ dukas are still formidable across the continent
Shoprite Holdings

Digital Africa

Banked population continues to be low across the continent
Growing economic importance of internet usage in Africa
User-friendly mobile channels enhance online behaviour
M- Pesa
SnapSca

Consumer Industries in Africa

Top African industries and companies
Packaged food sales led by Egypt, then South Africa
Leading companies in African packaged food
Dairy largest category in Africa and still growing
Private label in Africa
Dufil Prima Foods
Demand for soft drinks is set to continue to increase in Africa
Water and carbonates drive soft drinks consumption
Bos Brands
Beauty and personal care sales led by South Africa, then Nigeria
Beauty and personal care market leaders and prospects
Dark and Lovely Au Naturale range by L’Oréal
Home care in Africa
Home care sales led by South Africa

Conclusion

Africa Rising: what to focus on
Leverage the power of megatrends to shape your strategy today
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