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The Fast Moving Consumer Goods market in Africa

THE hyper-competitive world of fast moving consumer goods (FMCG) —goods that are easily produced, packaged, sold, and consumed (i.e., food, beverages, snacks, toiletries, etc.) — relies on narrow profit margins, competitive branding, and global reach. Since most FMCG companies produce and ship similar products, the majority of their profit margin is driven by either branding or scope.

For many companies, the latter (scope) is one of the quickest and most viable ways to boost profit lines without significant infrastructure or marketing investments. But, as globalisation takes heed and new, fresh markets are slowly dripping away, trying to position your products to new customers can be difficult.

Understanding the African FMCG market

For an FMCG brand to thrive in a region, it must have one or more of the following key attributes.

  1. A dense population
  2. The spending power to purchase cheap goods
  3. An understanding of their brand competition
  4. Supporting infrastructure to facilitate sales

Looking at Africa as a region for FMCG investment, it’s crucial that these attributes are taken into account.

Africa’s population density and fnfrastructure

Since FMCG brands operate on a narrow profit margin, they rely on heavy consumption to turn a profit. This means that any FMCG brand is going to need to know that they are expanding to an area that’s both growing and dense enough to accommodate their products.

According to McKinsey, by 2025 Africa is expected to have over 100 cities of 1 million or more people, and by 2030 Africa’s population (currently estimated at 1.1 billion) will double, with 80 percent of that growth happening in cities. While Africa, as a whole, is still a more rural continent than North America, Latin America, and Europe, as youth move out of the countryside and into cities, many countries in Africa are becoming increasingly urbanised. This is especially the case in cities like Lagos, whose population has increased 100 times since the 1960s and is expected to become the world’s largest metro area by 2100.

From these figures it is clear that urbanisation is on the rise in Africa, and therefore zones of urban consumption are rising heavily across Africa.

Africa’s spending power

According to market research firm GeoPoll, Africa is in a prime position to dominate the FMCG market: two-thirds of Africa’s $1.4 trillion retail spending in 2016 was on FMCG goods – which dominate almost all of Africa’s household expenses. In addition, the Economist Intelligence Unit expects this FMCG spending will continue and increase in viability through 2030, and Africa is probably the single most profitable sector for FMCG spending expansion bar East Asia.

Branding competition can be extremely difficult to measure. The first, and most complicated, issue to note is the dominance of informal outlets for consumer goods in Africa. In fact, Africa’s speedy growth in the FMCG area is far higher than predicted, since most FMCG spending still occurs in informal settings, which can be extremely difficult to measure using traditional research methods. This presents both a challenge and an opportunity for FMCG brands. The challenge is that brands must overcome significant infrastructure and bureaucratic barriers to create a significant brand presence in Africa. However, if brands are able to successfully root themselves in the African market, there are opportunities to build strong brand loyalty, as competition is often thinner than in more developed markets.

One example of this is the alcoholic beverage industry in Africa, which has recently been rising. Local authorities in Nigeria have been removing many local breweries and home-grown liquor producers from the supply source of Africa over the last few years, and because of this, Nigerian Breweries and Guinness Nigeria have been able to dominate the market with a combined market capitalisation of more than $8.4 trillion. Across the continent, multinationals including SABMiller, Diageo, and Heineken have been making large investments into growing their African portfolios, and are now some of the highest valued corporations in markets such as Kenya.

FMCG research in Africa

Infrastructure and regulatory barriers, along with a lack of information on brand loyalty, product preference, and consumption through informal markets are friction points for introducing FMCG goods into the market, but when overcome brands can build strong customer bases in areas with little competition. While it has traditionally been difficult to gather up-to-date research on FMCG goods consumption and brand affinity in Africa, using GeoPoll’s mobile survey methods it is possible to gather accurate data on the FMCG market throughout the continent.


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