Africa: Tapping into the Untapped Africa: Tapping into the Untapped Growing Consumer Demand Driving Mega Growth Opportunities Growing Consumer Demand Driving Mega Growth Opportunities 20 20-21 March 2012 21 March 2012 Surfactants HPC, Dubai Surfactants HPC, Dubai
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Africa: Tapping into the UntappedAfrica: Tapping into the Untapped
Growing Consumer Demand Driving Mega Growth OpportunitiesGrowing Consumer Demand Driving Mega Growth Opportunities
2020--21 March 201221 March 2012
Surfactants HPC, DubaiSurfactants HPC, Dubai
Agenda
1. Frost & Sullivan - Introduction
2. Mega Trends - How do we define it and why does it really matter?
3. Mega Trends in Africa and its Impact on Various Sectors
4. 4W - What, When, Where and Why of the Mega Trends on Key Sectors
– Home and Personal care – Home and Personal care
– Future outlook
– Demand and supply projections
5. Conclusions - Is Africa the Next Frontier ?
2
`̀
The Frost & Sullivan Story
3
Pioneered Emerging Market & Technology Research
• Global Footprint Begins
• Country Economic Research
• Market & Technical Research
• Best Practice Career Training
• MindXChange Events
Partnership Relationship with Clients
• Growth Partnership Services
• GIL Global Events
• GIL University
• Growth Team Membership™
• Growth Consulting
Visionary Innovation
• Mega Trends Research
• CEO 360 Visionary Perspective
• GIL Think Tanks
• GIL Global Community
• Communities of Practice
Our Industry Coverage
Automotive
&
Transportation
Aerospace & Defense Measurement &Instrumentation
Information &Communication Technologies
ConsumerTechnologies
4
HealthcareEnvironment & BuildingTechnologies
Energy & PowerSystems
Chemicals, Materials& Food
Electronics &Security
Industrial Automation& Process Control
AutomotiveTransportation & Logistics
Minerals & Mining
Our Services
Growth Partnership GIL University
GIL Global Community
5
Growth PartnershipServices
Growth Consulting
GIL University
Events
Our Global Footprint 40+ OfficesScanning the Globe for Opportunities and Innovation
6
2. Mega Trends - How do we define it and why does it really matter?
7
What is a Mega Trend?
• Mega trends are global, sustained, and macro economic forces of development that impact business, economy, society, cultures, and personal lives, thereby defining our future world and its increasing pace of change.
• Mega trends have diverse meanings and impacts for different industries, companies, and individuals.Analysis of these mega trends and their implications forms an important component of a company’s future
Impact of Mega Trends on Key
Organizational Functions
Marketing
R&D Innovation
Why Do Mega Trends Matter?
Definition of a Mega TrendMega Trends - Definition
Analysis of these mega trends and their implications forms an important component of a company’s future strategy, development, and innovation process, and impacts product and technology planning.
• The following document sets the stage for visionary thinking by identifying the most important African mega trends, potential scenarios of specific trends in 2020,and their implications in transforming society, markets, and cultures. These mega trends can be used as a basis for strategic decision-making by understanding their impact on organizational functions such as marketing, Research and Development (R&D), budget spending, product planning and development, human resource management, technology planning, and innovation scouting.
R&D Budget
Spending
Product Planning and Development
Technology Planning
Innovation Scouting
Source: Frost & Sullivan analysis.
8
Global Mega Trends Driving Growth
URBANIZATION
ENERGYSMART
FACTORY
GLOBAL MEGA
E-MOBILITY
SOCIAL
ECONOMY
TECHNOLOGY
INFRASTRUCTURE
BUSINESS
HEALTH &
WELLNESS
GLOBAL MEGA TRENDS - 2020
9
African Mega Trends
Urbanisation
Regional Integration
Renewable Energy
Innovating to Zero
The Responsible
Connecting the Unconnected
New Business Models Future Infrastructure
Source: Frost & Sullivan analysis.
The Responsible Revolution
10
Mega Trends relevant to Chemicals, Materials and Food Difference between what & why of customer wants , responding to opportunities & threats
Increasing Urbanisation
Visionary
Health & SafetySustainable Development
Infrastructure Development
Visionary
Innovation
&
Market
VanguardPublic / Private
Sector Investment to Drive Industry Development
Rebuilding War Torn Countries
11
3. Mega Trends in Africa and its Impact on Various Sectors
Key Mega Trends to Drive Home and Personal Care Sectors
African Mega TrendsMost Relevant
to Surfactants
1. Increasing urbanisation
2. Infrastructure development -
3. Rebuilding war-torn countries -
4. Public/private sector
investment to drive industry -
Increasing Urbanisation
• By 2020, 43 per cent of the people living in
Africa will live in urban areas. This presents a
growth opportunity for FMCG manufacturers
and their suppliers in the home and personal
care market, as increased usage is forecasted.
Sustainable Developmentinvestment to drive industry
development
-
5. Sustainable development
6. Health and safety
• This refers to using sustainable and
environmentally-friendly raw materials and
processes in the production of home care and
personal care products. Resources are limited.
Health and Safety
• To protect employees, consumers, and the
environment during the manufacturing and
consuming of home care and personal care
products.Urban population in Africa (millions): 205
1990
2010
400
2050
1,230
Fast Facts about Africa:
Source: Frost & Sullivan analysis.
15
Cities & Mega Regions - Not Countries Will Drive Wealth Creation In the Coming Years
Fast Forward City Facts: Did You Know?.....
• Over 60% of Worlds Population to Live in Cities by 2020
• Cities like Seoul account for 50% of the country’s GDP; Budapest (Hungary) and Brussels (Belgium) each for roughly 45%.
• Gauteng will contribute 40% of South Africa’s GDP and 12% of Africa
What are the Micro Implications ?
• High Economic Power With 85% of Scientific and Technology Innovation from These Cities from These Cities
• Hub and Spoke Business Model will evolve with Logistics, Healthcare, FMCG/Retail and many other industries
• New Mobility Solutions like bike and car sharing, EV adoption, Tolling
• The extension of transit lines to the suburbs will move businesses out of the central downtown to the suburbs
• Social Polarization: High Gap Between Rich and Poor
• A highly diverse socio-economic-cultural mix
• Techno savvy and connected citizens with high speed broadband, 4G technologies and free Wi-fi to enable connectivity 24X7.
African Cities will Increase by 25% by 2025 at an Average Growth Rate of 3.4%; 60% of Africa’s Population will be Urbanised by 2050
Population Growth Rate in Select Cities, Africa, 2010–2025
Algiers
Alexandria
Casablanca
Abidjan
Addis Ababa
Dakar
5.6 million
3.6 million
4.1 million
4.3 million
4.7 million
Urban Populations, Africa, 2025
Source: Africa Progress Report, 2010, Frost &Sullivan
Dar es Salaam
Nairobi
Accra
Abidjan
Ibadan
Douala
Cape Town
Durban
3.2 million
3.1 million
6.2 million
6.2 million
3.8 million
3.2 million
3.5 million
6.3million
Luanda8 million
Migration Urban Population, 2025City with population > 5 million, 2025
Luanda remains the most expensive city for
expatriates across Africa and globally
Johannesburg/Pretoria/Ekurhuleni8 million
17
4000
5000
6000
7000
Upper middle class
Middle class
Lower middle class
The Middle Bulge: Middle Class Will Account for 52% of Global Population in 2020. Over 65% of the Middle Class Population are from Africa, China
and India in 2020
LA
Rest of
Asia
ME
India
Africa
India
Africa
Percent of Global
Middle Class Across
Regions in 2010
Percent of Global
Middle Class Across
Regions in 2020
Break-Up of Middle Class by Race, South Africa, 2020
Po
pu
lati
on
in
Th
ou
san
ds
0
1000
2000
3000
4000
White diamonds Black Diamonds Coloured
Diamonds
Indian Diamonds
China
CEE
LA
China
CEE
LA
Rest of
Asia
ME
The Black Middle Class Called the Black Diamonds will Increase to 5,970,000 in 2020 in South Africa Alone
Po
pu
lati
on
in
Th
ou
san
ds
Note: The Middle Class in the graph are defined as people with Incomes between$6,000 and $30,000. However, this definition differs marginally from country.
18
4. 4W - What, When, Where and Why of the Mega Trends on Key Sectors
19
Unlocking the Opportunities presented by Mega Trends
Where are the
Why is Africa the next big
opportunity for home and
How can you adapt your
strategies to tap into this massive
opportunity Africa presents?
What are the key mega trends that would drive business for home and
personal care companies in
Africa ?
When can you expect to see the impact of
micro trends on the business environment?
Where are the key
opportunities that would manifest in
Africa by 2020?
home and personal care
suppliers?
Source: Frost & Sullivan analysis.
20
The Impact of Micro Trends on the Home and Personal Care Surfactant Business in Africa
Driver / Restraint Micro Trends 1-2 years 3-5 years 6-10 years
Driver
Growth of the consumer market is being spurred on by: • economic growth • retail expansion• growth of the middle-income class• high population growth• demand for commodities
DriverLimited availability of alternatives
21
Source: Frost & Sullivan analysis.
DriverLimited availability of alternatives (significant active ingredients)
RestraintLimited downstream manufacturing(reliance on importing finished products)
RestraintIncreased contract manufacturing due to increasing manufacturing costs
Restraint Environmental and health concerns
RestraintMulti-functional products and poverty(3-in-1 bar soaps for very price-sensitive consumers)
Impact: High Medium Low
Snapshot of South Africa
Supply Side Demand Side
• Two local manufacturers produce 97.5 per cent
of the anionic surfactants used in South Africa.
• Raw materials used in local manufacturing are
imported.
• Other surfactant types rely largely on imports.
• In 2010, the South African home care and
personal care markets were worth $114 million
and $28.5 million, respectively.
• Major driver for demand: growing consumer
income.
• As a result, some consumers are more willing to
22
Source: Frost & Sullivan analysis.
71.0%
20.4%4.8% 3.8%
Total Home and Personal Care Surfactants Market, South Africa, 2011
Anionic
Non-ionic
Cationic
Amphoteric
• The level of competition is moderate.
• Supplier differentiation: blending and formulation
if they do not have manufacturing capacity.
• Future market share of anionic surfactants will
decrease as non-ionic surfactants are being
preferred due to their performance and
environmental benefits.
• As a result, some consumers are more willing to
pay higher prices for quality products.
Future Outlook for Surfactants in South Africa
0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%
30.0
60.0
90.0
120.0
150.0
180.0
Re
ven
ue
Gro
wth
Ra
te (
%)
Re
ven
ue
s ($
Mil
lio
n)
Total Home and Personal Care Surfactants Market: Revenue Forecasts,