Demand For FMCG And Foodstuff In Africa

Africa represents a huge market for Fast Moving Consumer Goods (FMCG) as a new middle class emerges with more disposable incomes

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Slowing consumer spending in Africa’s largest economy and the prospect to profit from the evolution of the consumer elsewhere on the continent have spurred South Africa’s retailers to expand into Sub Saharan Africa. Shoprite has been the leader in this regard, already having a presence in a number of Sub Sahara African countries. International retailers are also looking to expand into Africa, most notably Walmart (through its acquisition of South Africa’s Massmart) and French retailer Carrefour

Informal outlets continue to dominate food retail in most African countries, and this will be the biggest obstacle to overcome.

That consumers are starting to favour the convenience offered by supermarkets and shopping centres is not in doubt, but the supply of retail space is thin, and bureaucratic obstacles numerous. Another crucial concern is the lack of sufficient distribution channels and the difficulty of importing products.

Nigeria Market for Food

Kenya’s food retail sector is well developed in an African context. Foreign retailers are yet to break into the market with four local players – Nakumatt, Tuskys, Uchumi, and Naivas – dominating the scene. Nakumatt has the biggest market share, although Tuskys has a larger number of branches.

Stores of these companies are also very prevalent in other East African countries, especially Uganda. Rumour has it that Nakumatt is looking to buy three of Shoprite’s stores in Tanzania.

Kenyan retailers are expected to increase the range of their product offerings in order to build market share. They will also be looking to expand further in the region such as Tanzania, Rwanda, and South Sudan.

Nigeria Market for Food

The Nigerian retail scene remains dominated by informal trade, although this is quickly starting to change with the entry of supermarkets and the increase in the number of shopping centres.

The major traditional foodstuffs consumed by the majority of the population are predominantly unprocessed and/or semi-processed (including maize, sorghum, tubers, and fish). However, changes that are occurring with regard to purchasing power, demographics, lifestyles, and consumer preferences are resulting in increased demand for a wider range of products.

The most important supermarkets in Nigeria are Artee Group’s Park n Shop and Spar stores, and South Africa’s Shoprite. Artee Group is Spar’s partner in Nigeria, opening the first Spar store in the country in 2010.

Artee Group has identified a further six sites for Spar supermarkets, and will also convert Park n Shop supermarkets to the Spar brand. Meanwhile, Massmart launched a pilot food retail project in Lagos in February 2014, and depending on its success, the company may decide to open at least nine further stores in the country during the next two years.

Massmart is setting up smaller shops – in contrast to its usual style – owing to the difficulty in getting access to large tracts of land in Africa. The store sizes are around 280 square metres with five employees, around 10 per cent its usual size.

South African based food retailer Shoprite entered the Nigerian market in 2005, and was slow to increase its number of shops. At present, the retailer has seven outlets in Nigeria. A lack of available sites has reportedly slowed the retailer’s expansion plans. Shoprite is in the process of adding a further 37 stores in Nigeria, although CEO Whitey Basson believes the country “could handle 600 to 800 stores”.

Gloo.ng is Nigeria’s biggest online supermarket, and it offers “100 per cent free same day delivery” in certain areas surrounding Lagos. This is appealing as it saves the consumer time, and circumvents the problem of limited formal retail outlets in the country. E-commerce has taken off sharply in Nigeria, with Konga and Jumia also doing well.

Shoprite’s experience has shown, it is important for entrants into Nigeria’s retail industry to develop and build local supply chains and distribution networks.

Africa Foodstuff Importers Directory: Database of Foodstuff Importers in Africa

In a bid to help foodstuff suppliers find importers, wholesalers, dealers and agents in Africa, the African Business Pages has compiled a special directory that lists foodstuff importers in over 24 African countries. The Africa Foodstuff Importers Directory is now available as a a digital download at a nominal price and has played an instrumental role in promoting direct B2B contact between African foodstuff importers and foodstuff suppliers from all across the world.

The Africa Foodstuff Importers Directory has been adapted for online distribution and is now available in Excel format as an instant digital download from Africa Business Pages. The Africa Foodstuff Importers Directory has served as a useful database for those wanting to export food items to Africa and reach potential buyers in Africa. You can download the directory HERE.

Personal Care Products

This segment includes shampoo, toothpaste, soap, deodorants, and make-up. The sub-sector has great potential for expansion in Africa.
Apart from the usual reasons (favourable demographic profile and strong economic growth), an added driver for this sector is that many Africans appear willing to spend a proportionately large share of their incomes on beauty products – including both men and women.

This is at least partially driven by the entry of popular international brand names, the sharp uptake of mobile telephony, and increased internet access, which have resulted in Africans being more exposed to popular Western culture.

Kenya: Market for Personal Care Products

Unilever Kenya is the market leader in the personal care industry. The company has been present in Kenya for a long time, and has established a strong distribution network. Brand loyalty has also been entrenched by marketing and promotional campaigns, as well as the provision of good quality products at affordable prices.

As consumers’ incomes rise, they will first make a quantity shift, i.e. brush their teeth more often, and therefore buy more toothpaste, after which they will make quality and variety shifts, i.e. shifting to brands that offer more than just the basics, and buying mouthwash and floss in addition to toothpaste.

According to Dr Andrew Wetende of the Kenya Dental Association, only 5 per cent of Kenyans currently have access to quality dental care. Dr Wetende wants “Kenyans to take up brushing their teeth as a habit and stop considering it as a luxury”. This is indeed expected to happen over time as incomes rise and the proportion spent on food declines, thereby driving the strong expected growth in the oral care sector.

The main sources of Kenya’s oral care imports are India, Thailand, South Africa, and China, while the primary destinations are Uganda, Ethiopia, Somalia, Rwanda, and Tanzania.

Notably, the import duty on plastic tubes for packing of toothpaste, cosmetics and similar products was raised from 10 per cent to 25 per cent in order to protect domestic manufacturers and expand the country’s manufacturing base.

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