Fast Moving Consumer Goods in Africa - KPMG

Sector Report

Fast-Moving Consumer Goods in

Africa kpmg.com/africa

The series has the following reports:

• OilandGasinAfrica

• PrivateEquityinAfrica

• ManufacturinginAfrica

• LuxuryGoodsinAfrica

• TheAfricanConsumerandRetail

• WhiteGoodsinAfrica

• InsuranceinAfrica

• AgricultureinAfrica

• PowerinAfrica

• ConstructioninAfrica

• BankinginAfrica

• HealthcareinAfrica

Contents

IntRoduCtIon And oveRvIew 1

Key dRIveRS 2

Market Size 2

Market Concentration 2

Related Industries 4

Spending Power 4

Buying Habits 5

FMCG In AFRICA 6

Food 6

Beverages 6

Personal Care Products 8

Home Care Products 8

FMCG GRowtH SPotS In AFRICA 6

Ghana 9

Kenya 10

nigeria 14

SouRCeS oF InFoRMAtIon 16

ContACt detAIlS back page

1|Fast-MovingConsumerGoodsinAfrica

Introduction & Overview

Thefast-movingconsumergoods(FMCG)sector,alsocalledtheconsumerpackagedgoods(CPG)sector,isoneofthelargestindustriesworldwide.FMCGsaregenerallycheapproductsthathaveashortshelflife,andarepurchasedbyconsumersonaregularbasis.Profitmarginsontheseproductsareusuallylowforretailers,whotrytooffsetthisbysellinglargevolumes.Someofthemostwell-knownFMCGcompaniesintheworldincludeUnilever,TheCoca-ColaCompany,andJohnson&Johnson.TheFMCGsectorcomprisesalargevarietyofproducts,withsomeofthemostimportantcategoriesbeingfood,beverages,personalcareproducts,andhomecareproducts.Withincategories,FMCGproductsareoftennear-identical,andforthisreasonpricecompetitionbetweenretailerscanbeintense.Toboostprofitability,companiesusemarketingandothertechniquestoestablishloyaltytotheproduct,whichenablesthemtochargehigherprices.

AnotherimportantcharacteristicoftheFMCGsectoristhatitgenerallydoeswellinaneconomicdownturn,withconsumersrathercuttingbackonluxuryproducts.

TheFMCGsectorinAfricahassignificantscopetoexpand.PovertylevelsinespeciallySub-SaharanAfrica(SSA)arestillquitehigh,withfoodandothernecessitiesdominatingconsumerbudgets.Forthisreason,thefoodsub-sectorofFMCGhasaverylargemarkettocaterfor,whilepenetrationratesintheothercategoriesstillhavesignificantroomtoexpand.Inthisreport,thekeydriversoftheperformanceoftheFMCGsectorareanalysed.ThereportalsopresentsthecurrentstateoftheindustryinAfricaandthelongtermgrowthoutlook.Finally,thereportidentifiestheAfricancountrieswiththebiggestpotentialforexpansionoftheirFMCGindustries,andexaminesthestructureandoutlookforFMCGinthesecountries.

Fast-MovingConsumerGoodsinAfrica|2

Key Drivers

FMCGretailersgenerallyoperateinalow-marginenvironment.Asaresult,theexistenceofalargemarketiscrucialtothesuccessofthesecompanies.DespiteAfricahavingapopulationofaroundonebillion,thecontinentremainsrelativelyunder-servedbyFMCGcompanies.Theaccompanyinggraphsshowthe10Africancountrieswiththelargestpopulationsizesin2013and2030accordingtoestimatesfromtheUnitedNations(UN)PopulationDivision.Nigeria’sestimatedpopulationsizein2013wasroughlyequaltothesumofthenexttwomostpopulatednationsonthecontinent,EthiopiaandEgypt.Movingfromthegraphontheleft(2013E)totheoneontheright(2030F)revealssomeinterestingtrends.Thetoptwocountriesremainunchanged,althoughNigeriaisforecasttowidenthegapwithEthiopiaduetotheformer’sfertilityrate,whichisprojectedtodeclineataslowerpace.Forthesamereason,theDRCisexpectedtosurpassEgypt,andTanzaniarisesaboveSouthAfrica,whichfallsfromthefifthtotheeighthposition.KenyaandUgandaalsomoveuptherankingsduetohighpopulationgrowthrates.

Thedensityofthepopulationisanotherimportantpointtoconsider.FMCGretailersneedasteadyflowofconsumerspurchasingtheirproductsonadailybasis,sotheyhavetooperateinalocalmarketwithalargeenoughsize.In2010,therewere50urbanagglomerationsinAfricawithapopulationofonemillionormore,ofwhichthreehadapopulationoffivemillionormore.By2025,theUNexpectstheretobe93agglomerationsinAfricaofatleastonemillion,ofwhich12areforecasttohaveapopulationoffivemillionormore.Nigeriaaccountsforaroundaquarterofthese(intermsofthenumberofagglomerations,notthepopulationsize).Cairowasthe18thlargesturbanagglomerationintheworldin2010(11million),whileLagos(10.8million)wasthe20thlargest.By2025,Lagosisexpectedtomoveuptothe11thpositionglobally,withCairofallingbyoneposition.

NorthAfricancountrieshavemuchhigherurbanisationratesthanmostSSAcountries.

Market Size

Market Concentration


Key Drivers

TheUNforecaststhatSSA’surbanisationratewillreach45.9%by2030and56.7%by2050fromjust36.3%in2010.Meanwhile,NorthAfrica’surbanisationratewasalready51.2%in2010andispredictedtoreach65.3%by2050.TheurbanisationrateofEastAfricaismuchlowerthantherestofSSA.In2010,EastAfrica’surbanisationratewasalmost17percentagepointslowerthanthesecond-leasturbanisedregiononthecontinent,namelytheFrancZone.EastAfrica’slowlevelofurbanisationcanbeascribedtothesubstantialimportanceofsubsistenceagricultureinmostofthesecountries.Central&WestAfricaisexpectedtohavehigherurbanisationlevelsthanNorthAfricaby2025.Thisisdrivenbythefactthattheaverageurbanisationrateispopulation-weighted,withNigeriapullingCentral&WestAfrica’saverageup,whileSudandragstheNorthAfricanmeandown.(ExcludingSudan,NorthAfrica’surbanisationrateremainsabovethatofCentral&WestAfricauntiltheendoftheforecastperiodin2050.)

The15mostdenselypopulatedcountriesinAfrica(forecastfor2020)areshownintheaccompanyinggraph.Lookingatthenationallevelmighthoweverbeabitmisleading,withEgyptbeingagoodcaseinpoint.Vastportionsofthecountryaredesolate,whilethebulkofthepopulationishighlyconcentratedalongthebanksoftheNile.Infact,morethan95%ofthepopulationliveon5%oftheland.IfthefiveEgyptiangovernoratesthatmakeupmostofthedesertareaareexcluded,thenwhatremainsisoneofthemostdenselypopulatedregionsintheworld.Giventhisexceptionallyhighconcentrationofpeople,retailopportunitiesalongtheNileareimmense.

Withtherapidpaceofurbanisation,itiscrucialthatthequalityofinfrastructureinurbanareasimprovesinordertocaterfortheinfluxofpeople.Itisalsoimportantthatthereissufficientjobcreation,otherwisepercapitaspendingpowerwillsuffer.Keyissuestoconsiderwithregardtoinfrastructureinclude:

• Thecapacityandwillingnessofthegovernmenttoinvestininfrastructure;

• Thewillingnessofthegovernmenttoallowprivatesectorparticipationintheprovisionofinfrastructure;and

• Opennesstoforeigninvestment,andwhetherthereareincentivesforforeignfirmstoimprovethecountry’sinfrastructure.


Key Drivers

Spending Power

Related IndustriesTheagriculturalandmanufacturingsectorsarekeyforacountry’sFMCGsector,asitisimportanttohaveapredictableandtrustworthydistributionchannel.Thisisalsowhymanyretailersoptforverticalintegration,andthisisparticularlyrelevantforAfricancountries,wheredistributionchannels

aregenerallyweak.Thestrengthoflocalagricultureandmanufacturing,thequalityoftransportinfrastructure,andthescopeandextentoftariffsonimportedgoodsarecrucialissuesthatFMCGretailersneedtoconsiderbeforeenteringanewmarket.

SinceFMCGretailersgenerallysellproductsthatcanbeclassifiedasnecessities,incomeperpersonisalessimportantconsiderationthanforretailersofluxuryordurableproducts.ThetrendinincomelevelsishoweverstillimportantinordertoestablishwhattypesofFMCGproductscanbeofferedtoaspecificmarket.Inaddition,overtime,retailers

wouldwanttobenefitfromshiftsinconsumerspendingpatternsastheymoveuptheincomechain,soahighgrowthmarketisstillpreferable.AccordingtotheAfricanDevelopmentBank(AfDB),184.8millionAfricanshaddailypercapitaexpenditureofbetweenUS$2andUS$4in2010,while77.9millionspentbetweenUS$4andUS$10.


Key Drivers

SinceFMCGsaregenerallysimilarwithincategories,retailershavetocompeteonthebasisofprice.Inamarketwithfiercecompetition,marginsaresqueezedtotheirminimumlevelsandtheleastefficientcompaniesarepushedoutofbusiness.However,companiesthatcanconvinceconsumerstopurchasetheirbrandnameratherthanthatofacompetitorcanmaintainmarketsharewithoutnecessarilyhavingtoofferlowerprices.Keystrategiesinthisregardareloyaltyprogrammes,enhancingtheshoppingexperience,advertising,

promotions,offeringproductsinsmallerpackagestomakethemmoreaffordable,andadaptingtolocalneeds.Convincingaconsumerthatyourproductissomehowsuperiortothatofacompetitorofferingasimilarproductiscrucialinensuringlong-termsuccessinagivenmarket.Awell-knownexampleisCoca-Colavs.PepsiCosoftdrinks:theproductstastesimilarandfulfilthesameneed,butconsumersgenerallyhaveaveryclearpreferenceforoneortheother.

Buying Habits


Beer -Africahasbecomeanincreasinglyattractivefinalfrontierfortheglobalbeerindustry,aslargepopulations,positivedemographicdevelopments,increasingurbanisationandhigherdisposableincomesimprovethemarketpotentialinalargelyunderdevelopedindustry.Thisisfurthersupportedbythesaturationofbeermarketsinmostdevelopedandemergingeconomies.Governmentsacrossthecontinentaremakingaconcertedefforttoclampdownontheconsumptionofillegal,unregulatedalcoholbecauseofthehealthrisksaswellasthe

foregonetaxrevenue.Aswealthincreases,legalbeerconsumptiongenerallyincreasesandinAfrica,thereisahugeopportunitytotradeconsumersupfromtheinformalsegmentorhomebrews,intothebrandedsector.LargemultinationalcompaniessuchasSABMiller,Diageo,Heineken,andCastelhavealreadyacquiredsignificantinterestsinAfricanbrewers,helpingtoconsolidatetheindustryandimprovecorporategovernanceandoperatingefficiency.BeercompaniesareamongthelargestlistedcompaniesinmanyAfricancountries.

Currently,fooddominatesAfricanconsumers’spending,butthiswillgraduallychangeasincomesrise.TheAfricanpopulationpresentlyremainsheavilydependentoncheapstaplefoods,whiletheincreasedinclusionofmeatinthediethasbarelybegun.ForthelargemajorityoftheAfricanpopulation,thenutritionaltransitionisstillfocusedonquantityincreasesratherthanqualityincreases.Forthesereasons,theFMCGsectoronthecontinentpresentsretailerswithlucrativeopportunities,withawiderangeofproductsexpectedtoseeasharpincreaseindemandoverthenextfewdecadesasAfricanconsumerscontinuetomoveupthe‘foodcurve’.Oncebasicneedshavebeenmet,consumerswillstartfocusingonqualityimprovements,e.g.includingmoremeatinone’sdiet,orbuyingahigher-qualitybrandofthesameproduct.ItisimportantforFMCGretailerstoestablishafootprintinacountryatanearlystagesothattheycanbenefitfrombothquantityandqualityshiftsinconsumers’spendingbehaviour.

SlowingconsumerspendinginAfrica’slargesteconomyandtheprospecttoprofitfromtheevolutionoftheconsumerelsewhereonthecontinenthavespurredSouthAfrica’sretailerstoexpandintoSSA.Shopritehasbeentheleaderinthisregard,alreadyhavinganotablepresenceinanumberofSSAcountries.InternationalretailersarealsolookingtoexpandintoAfrica,mostnotablyWalmart(throughitsacquisitionofSouthAfrica’sMassmart)andFrenchretailerCarrefour.InformaloutletscontinuetodominatefoodretailinmostAfricancountries,andthiswillbethebiggestobstacletoovercome.Thatconsumersarestartingtofavourtheconvenienceofferedbysupermarketsandshoppingcentresisnotindoubt,butthesupplyofretailspaceisthin,andbureaucraticobstaclesnumerous.Anothercrucialconcernisthelackofsufficientdistributionchannelsandthedifficultyofimportingproducts.

FMCG in Africa

Food

Beverages


InNigeria,NigerianBreweriesandGuinnessNigeriahaveamarketcapitalisationofaroundUS$6.7billionandUS$1.7billion,respectively.Thatisequivalenttoaround11%oftheentireNigerianStockExchange’stotalmarketcapitalisation.InKenya,EastAfricanBreweriesLimited,asubsidiaryofDiageo,isthesecondlargestlistedcompanywithamarketcapitalisationofUS$2.4billion,or10.5%oftheNairobiStockExchange’stotalmarketcapitalisation.Furthermore,GuinnessGhanaisoneofGhana’slargestcompanies,andaccountsforaround10.5%oftheentireGhanaStockExchange’svalue.Finally,ontheDaresSalaamStockExchange,TanzaniaBrewerieshasthelargestmarketcapitalisationofaroundUS$1.5billion,oraround40%ofthetotal.

ManyAfricancountriesareproducersofthecropsthatcanbeusedasrawingredientsforbeer,suchassorghum,barley,cassava,andmaize.AccordingtoSABMiller,thepricesofsorghum-basedbeershavetofallto80%ofthatofthemainstreambrandsinordertogettherequiredboostindemandtojustifytheinvestment.Attheendof2012,GuinnessGhanaBreweriesLimitedintroducedthecountry’sfirstcassava-basedbeer,RuutExtraBeer,ontotheGhanaianmarket.Thebeercontains51%locallysourcedcassava.InMarch2013,SABMillerfollowedsuitbyintroducingEagleLager,thecompany’sfirstcassava-basedbeerinGhana.Thesebeershavebeensuccessfulduetotaxincentives,andhaveprovidedanopportunitytoturnlocallygrowncassavaintocashcrops.

Soft drinks-Softdrinksareneitheranecessitynoraluxuryproduct.Itspriceisgenerallysufficientlycheapsothatitcanbeboughtbyeventhelowestincomeearners.Itishowevernotanecessity,sointoughtimestheremightbesharpcutsinspendingonsoftdrinks,and/orincreaseddifferentiationbyconsumersbasedonprice.Atthesametime,the

qualityoftapwaterinAfricaisgenerallysobadthatpeoplewillopttobuysoftdrinks,includingbottledwater,wheretheycanaffordtodoso.Asaresult,thenon-alcoholicbeveragesindustryinAfricahasaccesstoapotentiallymassivemarket.Asincomesincreaseandconsumersgetincreasinglyhealthconscious,thedemandforcarbonatesislikelytofall,whilethatofjuicesandbottledwaterwilltendtorise.Thereisalsoastrongopportunityforalcohol-free‘socialdrinks’asincomesriseandtheeconomyformalises.OthercrucialcontributingfactorstothesoftdrinksmarketinAfricaisthedevelopmentoftourism,retail,anddistributionnetworks.

Softdrinksaccountfor40%oftheglobalbeveragesmarket,withalcoholicdrinksmakingupafurther50%andhotdrinkstheremaining10%.Carbonatesaccountforthelargestshareofthesoftdrinksmarket(37%),followedbyjuices(20%),bottledwater(20%),ready-to-drinktea(9%),sports&energydrinks(9%),andconcentrates(3%).Whilecarbonatesstilldominatethesoftdrinksindustry,theothercategorieshavecaughtupquicklyinrecentyears,withespeciallybottledwatermakingupground.Asconsumersbecomemorehealth-conscious,thepopularityofdrinksthatcontainmineralsandvitaminshasincreased.

PepsiandCoca-ColaarerivalmanufacturersofsoftdrinksanddirectlycompeteagainsteachotherinmostcountriesinAfrica,althoughCoca-Colaenjoysadominantmarketpositioninmostofthebeveragesmarketsonthecontinent.Coca-ColahasfollowedagoodstrategyinAfrica,placingparticularfocusonhowtogetitsproducttoconsumers.Thecompanyhasimplementedinnovativewaysofachievingthisandovercomingthegenerallackofformalretail,forexample,byprovidingindividualvendorsandkioskswithrefrigerators,andbicycleswithcoolers.


FMCG in Africa

Personal Care ProductsThissegmentincludesshampoo,toothpaste,soap,deodorants,andmake-up.Thesub-sectorhasgreatpotentialforexpansioninAfrica.Apartfromtheusualreasons(favourabledemographicprofileandstrongeconomicgrowth),anaddeddriverforthissectoristhatmanyAfricansappearwillingtospendaproportionatelylargeshareoftheirincomesonbeautyproducts.Thisisatleastpartiallydrivenbytheentryofpopularinternationalbrandnames,thesharpuptakeofmobiletelephony,andincreasedinternetaccess,whichhaveresultedinAfricansbeingmoreexposedtoWesternculture.ThreeotherimportantfactorsthatwillunderpinthegrowthofthisindustryinAfricaoverthelongtermareimprovinglevelsofeducation,theyouthfulnessofthepopulation,andtheriseoffemaleindependence.Withregardtothelastpoint,morewomenarenowinthelabourforceandfertilityratesaredeclining,whichmeansthatmoremoneyisavailableforspendingonpersonalcareproducts.AsurveyconductedbyKenyanbusinesswomanSuzieWokabi(founderofSuzieBeautyCosmetics)showedthatKenyanwomenarewillingtospendupto20%oftheirsalariesonbeautyproducts.

AnimportantissueinthepersonalcaresectoristheadaptationofWesternproductstothespecific

needsofAfricanconsumers.Someinternationalcompanieshaverecognisedthis,andhaveeitheradaptedtheirglobalproductstosuitAfricans’needs,orlaunchednewproductranges.(Forexample,UnileverdevelopeditsMotionsrangeofshampoosandconditionersaimedspecificallyatethnichair;makeupmanufacturershaveintroduceddarkershades;andanti-ageingproductshavebeendevelopedforethnicskin.)Ithasalsoopenedupopportunitiesforlocalentrepreneurs,withexamplesincludingSuzieBeautyCosmetics(Kenya)andHouseofTara(Nigeria).

AccordingtoEuromonitorInternational,thesizeofthebeautyindustryintheMiddleEastandAfricawasUS$20.4billionin2011(around4.8%oftheglobaltotal),withSouthAfricacontributingUS$3.9billion,whileNigeriaandKenyahavethesecondandthirdlargestindustriesinSSA,respectively.Onaglobalscale,toiletriesaccountforaround30%oftotalsales,skincareandhaircareeachcontributesafurther20%,andmake-upandfragrances10%each.Theskincarecategorysawthebiggestincreaseinitsshareoftheglobalmarketbetween2008and2012,followedbymen’sgrooming.Thecategoryseeingthelargestdeclineinitsshareoverthisperiodwasfragrances.

Theglobalhomecaremarketsizein2013wasclosetoUS$155billion.Thelargestsub-categoryislaundrycare,whichaccountedforaround53%oftotalsales.Thisisfollowedbysurfacecare(14%),anddishwashing(12%).DuetotherelativelackofmodernhousinginmuchofAfrica,thissub-sector

isstilllargelyunder-developed.Overthelongterm,thissegmentshouldexpandquickly,drivenbyincreasedhomeownership,risingdisposableincome,andconsumereducationandhygienecampaigns.

Home Care Products


FMCG Growth Spots In Africa

GivenAfrica’slargemarketandthepotentialforrisinghouseholdincome,theFMCGsectoronthecontinentstandstobenefitimmensely.Giventhatthesectorprovideseithernecessitiesoraccessibleluxurygoods,thesizeofthemarketisnotconstrainedbyincomedynamicsinthesamewayasmanyothersectors.TakingtheFMCGsector’scharacteristicsintoaccount,andconsideringAfricancountries’demographicprofiles,income

levels,andeconomicgrowthpotential,wethinkthefollowinggeographieshavethestrongestprospectsforgrowthinthesectoroverthenextfiveto10years:Angola,Ethiopia,Ghana,Kenya,Morocco,Mozambique,Nigeria,Rwanda,Tanzania,Uganda,andZambia.Inthisreport,weanalysetheFMCGsectorsofthreeofthesecountries,highlightingspecificproductcategoriesthatareexpectedtodowell.

Food-Informalmarketsdominatefoodretailatpresent.Thisshouldslowlystarttochangeasthenumberofshoppingmallsrise,andconsumersincreasinglyprefertheconveniencethatisofferedbyone-stopshoppingatsupermarkets.ThelattertrendispartlybeingdrivenbythegrowingexpatriatepopulationinGhana,especiallyAccra.Inaddition,theshoppingmallexperiencehasprovedtobeverypopularinGhana:AccraMallattractsaround25,000shoppersperweek.Currently,themostimportantsupermarketchainsinGhanaareShoprite,andtwodomesticplayers,MelcomandMaxmart.ShopriteenteredtheGhanaianmarketin2003andcurrentlyhasshopsinAccra,AccraMall,andTema.ShopriteisalsoexpectedtobetheanchortenantattheWestHillsandJunctionprojectscurrentlyunderway.

Beer-Ghana’sbeerindustryisdominatedbySABMillerandGuinnessGhanaBreweries,withthebeermarketestimatedataround1.76millionhectolitres.AccordingtoBusinessMonitorInternational(BMI),beervolumesalesareexpectedtoexpandatacompoundannualgrowthrateof6.4%during2013-17.Inrecentyears,brewershaveemphasisedhigh-endbrandstoboostmarginsbygettingdrinkerstospendmoreoneachbeertheyconsume.Whilethecassava-basedEagleLagerandRuutExtraBeerarefarfrompremiumproducts,theyarestillmorethantwicethepriceofpopular

homebrews,buthavenonethelessbeenabletotapamarketthatwaspreviouslyservicedbyillicit,unregulatedproducts.SABMillerhasstatedthatthecompanyexpectstosourceitscassavaforitsEagleLagerfromasmanyas1,500smallholderfarmerswithinthenextyear.Thegovernmentchargesanexcisetaxof47.5%forbeersthathavelessthan30%localcontent.Forbrewswithmoredomesticingredients,theexcisetaxdropsto10%.ThisfollowstheLocalRawMaterialslawthatimposesconcessionaryexcisedutyratesonaslidingscaleontheuseofrawmaterialsproducedinGhana,insubstitutionofimportedrawmaterialsintheproductionofexcisablegoods.

Soft drinks-Largebeverage-producingcompaniesincludingCoca-ColaandPepsiCohavebeenoperatinginGhanaforsometime.Coca-Cola’soperationinGhanaismadeupofCoca-ColaEquatorialAfricaLimitedanditsfranchisedbottlingpartner,TheCoca-ColaBottlingCompanyofGhana(TCCBCG),whilePepsiCooperatesunderthesubsidiaryBeverageInvestmentGhanaLimited.Meanwhile,VolticGhanaisthemarketleaderinbottledwaterinGhanawithan85%shareofthemineralwatermarket.SABMilleracquiredamajoritystakeinVolticGhanain2009.AsignificantchallengefacingthebeveragessectorinGhanaisthefactthatmanymaterialsneededtosupportgrowthofthe

Ghanadrivers: Important gateway to large west African consumer market; generally

accommodating business environment

Risks: Purchasing power of consumers under pressure at present due to high inflation and depreciating currency; risk of higher taxes due to the government’s weak finances



sectorarenotproduceddomestically,andhavetobeimported.Thisrendersthesectorvulnerabletoexchangeratefluctuationsandkeepsproductioncostsrelativelyhigh.BMIforecastsacompoundannualgrowthrateof7.5%incarbonatedsoftdrinksvolumessalesduring2013-17.

Personal Care-Ghanahasstrongprospectsforgrowthinallofthesub-categoriesofthissegment.Wehighlightparticularlystrongprospectsfororalcareandmake-up.AccordingtotheWorldHealthOrganisation(WHO),manyAfricanwomenusedamagingskin-bleachingproductsonaregularbasis.GhanaianGraceAmey-Obengopenedabeautyclinicinthe1980stohelpherfellowGhanaianstoreversethedamagingeffectsthatbleachingproductshavehadontheirskin.However,withtheimportedskincareproductssheprescribedbecomingtooexpensiveforhercustomers–especiallygiventheGhanaiancedi’s

poorperformance–MsAmey-Obengdecidedtostartherownproductrange,ForeverClair,in1998.StartingoutwithonlyUS$100,thebusinessnowhasanannualturnoverofUS$8million-US$10million.ThecompanyhaseightbranchesinGhanaandalsoexportstoNigeria,BurkinaFaso,Togo,theIvoryCoast,andevenSwitzerlandandtheUK.

Food-Kenya’sfoodretailsectoriswelldevelopedinanAfricancontext.Foreignretailersareyettobreakintothemarketwithfourlocalplayers–Nakumatt,Tuskys,Uchumi,andNaivas–dominatingthescene.Nakumatthasthebiggestmarketshare,althoughTuskyshasalargernumberofbranches.StoresofthesecompaniesarealsoveryprevalentinotherEastAfricancountries,especiallyUganda.InJanuary2014,itwasrevealedthatNakumattislookingtobuythreeofShoprite’sstoresinTanzania,whereKenyanretailersstillhaveonlyalimitedpresence.Kenyanretailersareexpectedtoincreasetherangeoftheirproductofferingsovertheoutlookperiodinordertobuildmarketshare.Theywillalsobelookingtoexpandfurtherintheregion,especiallyincountrieswheretheirpresenceisstillrelativelylimitedsuchasTanzania,Rwanda,andSouthSudan.

Meanwhile,Massmart’sattempttoacquireastakeinNaivashadfailed,althoughthecompanyisstilllookingtoexpandintotheKenyanmarket,mostprobablythroughtakingspaceintheGardenCityMallthatiscurrentlyunderconstruction.

Beer-WhilestillthedominantproducerinKenya,EastAfricanBreweriesLimited(EABL,asubsidiaryofDiageo)hasseencompetitionintensifyinrecentyearsfromsmalllocalbrewersandimportsofinternationalbrandssuchasHeinekenandSABMiller.Still,EastAfricanBreweriescontrolsaround90%oftheKenyanbeermarket,andcontinuestoexpandintotherestofEastAfrica.Aglanceatthecompany’ssubsidiariesactsasconfirmationofthis:KenyaBreweriesLimited,UgandaBreweriesLimited,SerengetiBreweries

Kenyadrivers: Strong population growth; growing middle class; educated labour force;

dynamic private sector; regional leader – possibilities for regional expansion; relatively well developed retail infrastructure

Risks: Risk of terror attacks by Al Shabaab; private consumption partly dependent on agricultural earnings; risk of inflation and higher taxes; exposure to europe for export and tourism revenues



Limited,UnitedDistillerVentnor,CentralGlassIndustries,andEastAfricanMaltingLimited.EABLislistedontheNairobi,Uganda,andDaresSalaamstockexchanges.Thecompanyhasinvestedinnewsupplychaincapacity,includinganewcanningline,inordertoboostproductionlevels.EastAfricanBrewerieshas26,000localpartnersacrossthevaluechain,andsources10,000tonnesofsorghuminKenya(fromonly400tonnesfouryearsago),whiletwonewvarietiesofhigh-yieldingbarleyseedwererecentlylaunched.

AbigfocusforEastAfricanBreweriesistoboostthespiritspenetrationrateamongstEastAfricanconsumers;thecompanyhasaccordinglyinvestedinmarketingandsalescapabilitiesinthisarea.Whileits‘mainstream’brandsremainthemostpopular,thecompanyexpectsconsumerstotradeupovertimeasincomesrise.EastAfricanBreweriesstatedinits2012annualreport:“Asoureconomiesdevelop,weexpectthatmoreconsumerswilltradeupfromhomebrewsandunbrandedalcoholintobrandedproducts.Thesizeofthisopportunityisconsiderable.ThistrendhasalreadydrivensignificantgrowthforSenatorKeginKenya,andweareintheprocessofrollingoutSenatorinbottlesinourothermarkets.”Withregardtospirits,theJohnnieWalkerbrandexpandedby74%acrossEastAfricanBreweries’marketsin2012,Smirnoffby55%,Baileysby82%,andRichotby40%.Althoughspiritsstillaccountforonlyasmallshareofoverallalcoholconsumption,thesharpgrowthisnotable.Interestingly,mainstreamspiritsperformedpoorlyforEastAfricanBreweriesin2012(withsalesfallingby6%),whileemerging,premium,andreservespiritssalesgrewby32%,22%,and276%,respectively.Thesametrendwasnoticedforbeer:salesofmainstreambeerincreasedbyonly3%,whilethatofemergingandpremiumbeerexpandedby12%and18%,respectively.EastAfricanconsumersappeartohave‘tradedup’inthealcoholmarketoverthisperiod,withsomeconsumersswitchingfromhomebrewstoentry-levelbrandedproducts,andothersfrommainstreamtopremiumbrands,althoughadmittedlysomemayhaveswitchedfrommainstreamtoemergingbrandsduetopressureonpurchasingpower.EastAfricanBreweriesrecentlyintroduceditsTuskerLitebrandduetoanincreasing“tasteforproductsthatarelowincarbohydrates”amongyoungadults.Thiscontributedtoa17%growthintheTuskerbrandin2012.Meanwhile,PilsnerIcewasrebrandedinordertoappealtomodernyoungadultmales,whilethenewSNAPPisaimedatyoungworkingwomen.

Mostrecently,thealcoholicbeveragesmarketinKenyawashitbytaxchanges,namelyachangeinthevalue-addedtax(VAT)bill,andareductionintaxincentivesforEABL’sSenatorKegbrand.AccordingtoEABL,volumesalesofSenatorKegdeclinedby85%aftertheincreaseinexcisedutyon1October2013,andthisresultedintheclosureof3,000outlets,with3,000morereportedlyindangerofbeingclosed.WhilebeingnegativeforEABL,thetaxincreasedoesopenupopportunitiesforothercompaniesactiveintheKenyanbeermarket,althoughEABListryingtooffsetthefallindemandforSenatorKegbypromotingitsotherbrands.

AlthoughEABLclearlydominates,competitioninKenya’sbeerindustryhasincreasedinrecentyears,asbothmacrobrewersandmicrobrewersattempttotakeadvantageofnaturallyexpandingmarkets.Attheendof2012,KerocheBreweries(Kenya’sonlylocalbrewery)statedthatitplanstoraiseitsshareofthebeermarketinKenyato20%(fromaround3%currently)intwoyears,andisincreasingcapacitytomeetthattarget.Thisincludestheconstructionofabrewhousewithanannualcapacityofonemillionhectolitres,whichisexpectedtobecompletedbytheendof2014atanestimatedcostofUS$29.4million.Apartfromboostingproductionofexistingbrands,thecompanyalsoplanstostartproducingotherproductsthatarenotcurrentlyinitsportfolio,suchasstoutsandnon-alcoholicdrinks.KerochealsoplanstoexpandintoTanzania,Rwanda,andUgandaoverthemediumterm.

Soft drinks-Kenyahasastrongdomesticsoftdrinksmanufacturingsector.Softdrinksproductionincreasednotablyduring2007-09,risingbyanannualaverageof4.9%.Productionstagnatedsomewhatin2010,beforeincreasingby2.8%inthesubsequentyearandfallingagainin2012.Availabledatafor2013indicatesthatproductionhasonceagainincreased.Infact,duringthefirst11monthsof2013,Kenya’ssoftdrinksproductionincreasedby19.1%y-o-y,whiledomesticsugarproductionroseby18.9%y-o-yoverthesameperiod.(Domesticsugarproductionhaddeclinedduring2009-11.)Bysubtractingexportsandaddingimportstotheseoutputlevels,onecanestimateKenya’sdomesticconsumptionofsoftdrinks.Asaresult,weestimatethatKenya’ssoftdrinksconsumptionincreasedfrom306.8millionlitresin2007to350.7millionlitresin2011.Overthisperiod,percapitaconsumptionofsoftdrinksrosefrom8.13litresperpersonperyearto8.35litres.PercapitaconsumptionofsoftdrinksinKenyaisprojectedtoreach14litresp.a.by2030,and30litresby2050.



KenyaimportsalargeamountofsoftdrinksfromAustria,andtoalesserextentfromMauritius,theUnitedArabEmirates(UAE),Thailand,SouthAfrica,andtheUK.Ontheotherhand,Kenya’ssoftdrinksexportsaremainlydestinedforSudan,Uganda,Tanzania,andSomalia.

Coca-ColahasdominatedthesoftdrinksindustryinKenyaforanumberofyears.Coca-Cola’sdominancemayinfacthavecontributedtotheindustrynotgrowingatsuchrobustlevelsasinsomeneighbouringcountrieswherethereismorecompetition.Thiscouldchangeinthenearfuture,withPepsiCorecentlyopeningamanufacturingplantinRuaraka(Nairobi)atacostofsomeUS$28million,throughitsAfricanfranchiseeSeven-UpBottlingCompany(SBC).Pepsihastriedtore-entertheKenyanmarketsince2010,andhasquiteabitoflostgroundtomakeup,havingexitedKenyainthe1970s.CokehassevenbottlingplantsinKenya,andhasbeenoperatinginthecountryfor65years.FollowingPepsi’smove,CokerecentlyinjectedsomeUS$50millionintoitsmanufacturingplantsinKenya.ConsumptionofCoca-Colaproductshasshownmoderategrowthinrecentyears,withpercapitaconsumptionofcompanybeverageproducts(inunitsof237mlofafinishedproduct)fallingfrom35in1992to31in2002,beforeincreasingto39(approximately9.2litres)in2012.Incomparison,percapitaconsumptionwas26servings(6.2litres)inNigeria,39inChina,and87(20.6litres)inMorocco.AccordingtoCoca-Cola,itisfacingrisingcompetitionfromfruitjuicesduetoconsumersbecomingincreasinglyaversetocarbonateddrinksforhealthreasons.Thisalsocontributedtohigherimportsinrecentyears,inturnforcinglocalcarbonatesmanufacturerstocutproductionlevels.Inresponse,Coca-ColarecentlylauncheditsCokeZerobrandinKenya,aswellasitsMinuteMaidfruitjuice.Thecompanyalsocutitspricefora300mlsodafromKSh25(US$0.3)toKSh23(US$0.27)inJune2012inordertoboostdemand.OtherplayersinKenya’sjuiceindustryincludeKevianKenyaandDelMonte.

InMarch2008,EastAfricanBreweriessuccessfullylaunchedanon-alcoholicmaltdrink,calledAlvaro.Eightmonthslater,Coca-Colafollowedsuitwithitsownmaltdrink,Novida.Theseproductsareaimedatyoungprofessionalsthatwanttosocialisebutdonotwanttoconsumealcohol.Demographic,cultural,andincomeshiftsareexpectedtoleadtoabigexpansionofthenon-alcoholicsocialdrinksmarketinKenyaoverthenextfewdecades.Furthermore,thelowqualityofdrinkingwaterinurbanregions

willencourageconsumerstospendmoreonbottledwaterandothersoftdrinks,particularlyastheirincomesrise.InApril2013,UnileverlaunchedahomewaterpurifierontheKenyanmarketatacostofKSh10,000(aroundUS$116)inordertocaptureashareofthegrowingnumberofKenyansswitchingtobottledwater.

AnarticlepublishedintheInternationalJournalofResearchinManagementinMarch2013exploredthedeterminantsofbrandloyaltyamongsoftdrinksconsumersinKenyaandIndia.ThestudyfoundthatforKenyanconsumers,thepromotionoftheproductwasthemostimportantfactorthatdrovethedecisionwhethertobuyitornot,whileonaverage,Indianconsumerstendedtoberelativelymorepricesensitive.

Personal Care-UnileverKenyaisthemarketleaderinthepersonalcareindustry.ThecompanyhasbeenpresentinKenyaforalongtime,andhasestablishedastrongdistributionnetwork.Brandloyaltyhasalsobeenentrenchedbymarketingandpromotionalcampaigns,aswellastheprovisionofgoodqualityproductsataffordableprices.Intheoralcaremarket,Unilever(CloseUp)facescompetitionfromColgate-PalmoliveEastAfrica(Colgate)andGlaxoSmithKlineKenyaLimited(Aquafresh).ThroughouttheMiddleEastandAfricanregion,Colgateisthenumberonebrandfortoothpasteandtoothbrushes,andthesecondmostpopularbrandformouthwash.Meanwhile,Procter&Gamble(P&G)islookingtogrowitsoralcaremarketshareintheregion,andrecentlylauncheditsOral-Btoothbrush.Asconsumers’incomesrise,theywillfirstmakeaquantityshift,i.e.brushtheirteethmoreoften,andthereforebuymoretoothpaste,afterwhichtheywillmakequalityandvarietyshifts,i.e.shiftingtobrandsthatoffermorethanjustthebasics,andbuyingmouthwashandflossinadditiontotoothpaste.AccordingtoDrAndrewWetendeoftheKenyaDentalAssociation,only5%ofKenyanscurrentlyhaveaccesstoqualitydentalcare.MrWetendewants“Kenyanstotakeupbrushingtheirteethasahabitandstopconsideringitasaluxury”.Thisisindeedexpectedtohappenovertimeasincomesriseandtheproportionspentonfooddeclines,therebydrivingthestrongexpectedgrowthintheoralcaresector.TheaccompanyinggraphsshowKenya’simportsandexportsoforalcareproductsoverthepastdecadebasedontradingpartnerdatafromTradeMap.ThemainsourcesofKenya’soralcareimportsareIndia,Thailand,SouthAfrica,andChina,whiletheprimarydestinationsareUganda,Ethiopia,Somalia,Rwanda,andTanzania.



Inthe2013/14fiscalbudget,theimportdutyonplastictubesforpackingoftoothpaste,cosmeticsandsimilarproductswasraisedfrom10%to25%toprotectdomesticmanufacturers.

Home Care-Thissegmentwillbenefitfromthecurrentboominconstructionactivitiestakingplaceacrossthecountry,asitwillincreasetheneedforspecialisedcleaningproducts.Inthetoiletcarecategory,ReckittBenckiseristhemarketleaderthankstoitspopularHarpicbrand.EuromonitorInternationalexpectstheintroductionofnewfragrancesinthetoiletcaremarkettoboostsalesovertheoutlookperiod.Meanwhile,aircareproductshavetraditionallynotsoldwellinKenya,astheyarenotconsideredanecessity.However,thisisslowlystartingtochange,andsaleshavepickedupoflateastheiruseincommercialbuildingshasincreased.Furtherincreasesindemandareexpectedonthebackofanumberofmallsandmixed-usedevelopmentsbeingbuilt,urbanisation,increasedhomeownership,andtheexpansionofthemiddleclass.Inthelaundrycaresegment,Unileveristheclearmarketleader,withthecompanyaccountingforaroundhalfofallsalesinvalueterms.Thecompany’sOmoandSunlightbrandsarewellestablished,whileUnilevercancapitaliseonitsstrongdistributionnetworkthathasbeenbuiltoveranumberofyears.AccordingtoresearchbyEuromonitorInternational,stronggrowthisexpectedforthiscategoryonthebackofincreasedinnovationandbranddiversification,aswellastheongoingswitchfrombarformatcleaningproductstoliquidforms.



nigeria

Food-TheNigerianretailsceneremainsdominatedbyinformaltrade,althoughthisisquicklystartingtochangewiththeentryofsupermarketsandtheincreaseinthenumberofshoppingcentres.TheUSDepartmentofAgriculture(USDA)notesthatthemajortraditionalfoodstuffsconsumedbythemajorityofthepopulationarepredominantlyunprocessedand/orsemi-processed(includingmaize,sorghum,tubers,andfish).However,changesthatareoccurringwithregardtopurchasingpower,demographics,lifestyles,andconsumerpreferencesareresultinginincreaseddemandforawiderrangeofproducts.ThemostimportantsupermarketsinNigeriaareArteeGroup’sParknShopandSparstores,andSouthAfrica’sShoprite.ArteeGroupisSpar’spartnerinNigeria,openingthefirstSparstoreinthecountryin2010.ArteeGrouphasidentifiedafurthersixsitesforSparsupermarkets,andwillalsoconvertParknShopsupermarketstotheSparbrand.Meanwhile,MassmartlaunchedapilotfoodretailprojectinLagosinFebruary2014,anddependingonitssuccess,thecompanymaydecidetoopenatleastninefurtherstoresinthecountryduringthenexttwoyears.Massmartissettingupsmallershops–incontrasttoitsusualstyle–owingtothedifficultyingettingaccesstolargetractsoflandinAfrica.Thestoresizesarearound280m2withfiveemployees,around10%itsusualsize.

SouthAfricanbasedfoodretailerShopriteenteredtheNigerianmarketin2005,andwasslowtoincreaseitsnumberofshops.Atpresent,theretailerhassevenoutletsinNigeria.Alackofavailablesiteshasreportedlyslowedtheretailer’sexpansionplans.Shopriteisintheprocessofaddingafurther37storesinNigeria,althoughCEOWhiteyBassonbelievesthecountry“couldhandle600to800stores”.Apartfromalackofavailablesites,thecompanyisalsobeingheldbackbythedifficultyofimportingproducts,andforthisreasonislookingtoestablishitsowndistributioncentreinthecountry.ShopritestoresthatareduetoopeninNigeriathisyearareSilverbirdAbuja,OnitshaMall,EffurunMall,AdoBayeroMall,CocoaMall(Lagos),FestivalMall,

andIbadanMall.MTNNigeriaandShopriterecentlysignedanagreementwherebycustomerswillbeabletopurchaseairtimeanddatabundleswhilstdoingtheirnormalshoppingatallShopriteoutletsinthecountry.

Gloo.ngisNigeria’sbiggestonlinesupermarket,anditoffers“100%freesamedaydelivery”incertainareassurroundingLagos,aswellasacashondeliverypaymentoption.Thisisappealingasitsavestheconsumertime,andcircumventstheproblemoflimitedformalretailoutletsinthecountry.E-commercehastakenoffsharplyinNigeria,withKongaandJumiaalsodoingwell,althoughthesetwowebsitesgenerallydonotofferalargevarietyoffoodproducts.

Wide-rangingreformsinNigeria’sagriculturalsectorareongoing.Thesearecentredaroundimportrestrictionstoboostlocalproduction,betterdistributionoffertilisers,ascrappingofimportdutiesonagriculturalequipment,andeasieraccesstocreditforfarmers.Thoughthepolicyofrestrictingimportsismeanttosupportlocalproduction,farmershavebeenunabletosatisfydemand,resultinginshortagesandcausingheadachesforgrocers.Arguably,moreneedstobedonetoimprovethebasics,suchashighlevelsofcorruptionandthepoorstateofinfrastructure.Intheinterim,andasShoprite’sexperiencehasshown,itisimportantforentrantsintoNigeria’sretailindustrytodevelopandbuildlocalsupplychainsanddistributionnetworks.

Beer-NigeriaisAfrica’slargestalcoholconsumeraccordingtoDeutscheBankMarketResearch.Basedonsalesoftheworld’slargestdistiller–Diageo–onthecontinent,thecountryaccountsforaround36%ofAfrica’sformalalcoholmarket.TheNigerianbeerindustryhasrecentlyevolvedfromaduopolytoanoligopoly,withHeinekencommandinga71%shareofthemarketthroughitstwosubsidiaries,NigerianBreweries(61%)andConsolidatedBreweries(10%);Diageohasa27%marketsharethroughitsstakeinGuinnessNigeria;whileSABMillerhasrecentlyenteredthemarket

drivers: large market size; youthful population; urbanisation

Risks: Risk of naira devaluation, which would raise cost of imported goods; poor infrastructure; difficulty to source products due to small local manufacturing sector; political risk in run-up to elections in February 2015; security risks in northern states



andshownstronggrowth.NigerianBrewerieshasthelargestcapacity(13.5millionhectolitresannually),followedbyGuinnessNigeria(7.5millionhectolitresannually),andSABMiller(1.8millionhectolitresannually).AccordingtofiguresreleasedbyHeineken,theNigerianbeermarketisexpectedtorecordacompoundannualgrowthrateof5.6%between2011and2020.

Despitethestronglong-termoutlook,theNigerianbeerindustryisgoingthroughatoughperiodatpresentduetoanincreaseinthecostofliving,aswellasdistributionpressuresstemmingfromsecurityconcerns.ResearchbyFinancialDerivativesCompany,adiversifiedfinancialinstitution,indicatesthattheNigerianbeerindustrycontractedbyabout10%betweenJanuaryandSeptember2013.Inparticular,thedemandforpremiumandmainstreambrandsdeclinedtothebenefitoflowerpricedbrands.GuinnessNigeria’sprofitbeforetaxdeclinedby32%y-o-yinthesixmonthsendingDecember2013,followinga17%y-o-ydeclineinthe12monthsendingJune2013.Despiteconsumers’purchasingpowerbeingunderpressure,GuinnessNigeriaincreasedthepriceofitsMaltaGuinnessby10%toN110,andthatofHarpLagerby5%toN210(bothofthesearemainstreambrands).Thesepriceincreaseswerelaterreversedduetoadeclineinsalesvolume.ThevaluebeersegmentiscurrentlythelargestintheNigerianmarket,accountingforaround25%oftotalconsumption.Asaresult,Guinnessisnowtryingtoboostproductionofitsentry-levelbrandDubicLager,whichwaslaunchedin2011.ApartfromDubic,thecompanyhasalsolaunchedseveralothernewproductsinrecentyears,includingMaltaGuinnessLowSugar,SNAPP(forfemaleworkingprofessionals),Alvaro(anon-alcoholicdrink),Orijin(premiumbitters),andMaster’sChoice(premiumwhisky).NigerianBrewerieshasexperiencedmuchofthechallengesfacedbyGuinness.AccordingtoaSeptember2013reportbyARMResearch,thefactthatmainstreambrandsareperformingpoorlywhileeconomybrandsaredoingwellisindicative“ofapossiblestructuralchangeintheNigerianbeermarketaslessaffluentconsumersswitchtocheaperbeerandmoresophisticateddrinkers(theprimarytargetofmainstreambrands)migratetowineandspirits”.Theprominenceofeconomyandpremiumbrandsandthepoorperformanceofmainstreamproductstendtosuggestthatthereisalargemarketattheverylowendandattheveryhighend,butthatthereisamissingmiddleclass.Nigerianconsumersareexpectedtoremainrelativelysqueezedinthe

shortterm,withthenairaunderpressureandinterestratesremaininghigh.Meanwhile,expansionaryfiscalspendingaheadofelectionsisnotexpectedtoleadtoanotableincreaseinconsumerspendingattheaggregatelevel.Overthelongterm,theemergenceofalargemiddleclasswillbeveryimportantfortheNigerianbeerindustry.Someanalystsestimateacurrentinstalledcapacitydeficitof53millionhectolitrestoservicethepotentialmarket.

Soft drinks-Coca-ColaNigeriaLimitedremainsthedominantproducerofcarbonatesandbottledwaterinNigeriadueitslongestablishedhistoryinthecountry,strongdistributionnetwork,andaggressivemarketingtechniques.Inturn,ChiNigeriaLimitedleadsCoca-ColaNigeriaLtdinfruit/vegetablejuice,withanoff-trademarketshareofaround45%.Competitionisintensifying,withinnovativedomesticcompaniesgainingmarketshare,suchasLaCasera(formerlyknownasClassicBeveragesNigeriaLimited)thatrecentlyintroducedthefirstsugar-freecarbonatewithrealfruit,Latina.PercapitaconsumptionofCoca-Colaproductshasfalleninrecentyearsintermsofunitsof237mlservings,decreasingfrom31in2002to26in2012.RisinghealthawarenessamongNigerianconsumershasresultedinparticularlystronggrowthinthefruit/vegetablejuicesandbottledwatercategories.Inaddition,risinghealthawarenesshasbolstereddemandforlow-caloriecarbonates.Consequently,manufacturershaverespondedtothisgeneraltrendbydevelopingnewreducedsugarandsugar-freevariants,aswellasproductsthatcontainmorenaturalingredients.Themovementawayfromsugarydrinkshasbeensupportedbyanincreaseintheimportdutyonrawsugarfrom5%to10%inthe2013budget.Thisisinadditiontoalevyof50%,bringingcumulativetaxonsugarto60%.

AccordingtoEuromonitorInternational,off-tradechannelssuchassupermarketsandsmallgrocerscontinuedtoaccountforthelion’sshareoftotalsoftdrinksvolumesalesinNigeriain2012.However,on-trade(restaurantsandnightclubs)softdrinksvolumesalesgrewfaster,partlybecausetheywereemergingfromamuchlowerbase,butalsoduetotheexpansionoflargefast-foodchains.During2012,independentsmallgrocersremainedbyfarthemostimportantchannelintermsofoff-tradevolumesales,followedbyothergroceryretailers.EconomicgrowthandthegrowinginfluenceofWesternconsumptiontrendswillencourageNigerianstotradeuptohigherqualityandmoreexpensivesoftdrinks,particularlyhealthierproducts.



Personal Care-TheNigerianpersonalcaresectorisdominatedbyinternationalbrandnames.KeyroleplayersintheindustryincludeUnileverNigeria,PZCussons,SoulmateIndustries,HouseofTaraInternational,MACCosmetics,andSleekNigeria.AccordingtoEuromonitorInternational,maturepersonalcarecategoriessuchasgeneralpurposebodycareandlipglosscontinuedtogrowrapidlyin2012.Evenstrongergrowthwasseenindevelopingcategoriessuchasshowergels,men’sdeodorants,andwomen’srazors.Whiledemandforthebasicproductsismainlyexpectedtobedrivenbypopulationgrowth,theothercategorieswillrelyonincreasesindisposableincome.Haircareproductsaregenerallyconsideredtobemoreessentialthanmanyothercategoriesofpersonalcare,andassuch,ithasperformedwellinNigeriaoverthepastdecade,drivenbythegrowingyoungworkingfemalepopulation.Otherfactorsthathavesupportedthesector’sperformancearetheriseoftheinternet,andthegrowingnumberofWestern-styleshoppingcentresinthecountry.BothofthesefactorshavebroughttheWesternculturetoNigeria’sdoorstep.SoftSheenCarsonhadan11%shareinthehaircaremarketin2012,withitsleadingbrandDark&Lovelyenjoyingloyalsupportfromcustomers.Meanwhile,themen’sgroomingcategoryisalsoexpectedtoshowrapidgrowth,thoughfromalowbase.Demandhasincreasedastheavailabilityoftheseproductsimproved,whichindicatesthattherewasineffectalatentdemand

forbeautyproductsformen.Overtime,theuptakeoftheseproductsshouldincreaseonthebackofincomegrowth,theformalisationoftheeconomy,thefast-growingyouthpopulation,andincreasedexposuretoWesternculture.ThemainroleplayerinthiscategoryisProcter&Gamblewitha44%marketshare,mainlyduetoitspopularGilletteproducts.Inthebath&showerdivision,PZCussonsisthemarketleaderwithashareinsalesof30%.ThecompanyhasbuiltastrongdistributionnetworkinthecountryandhasanumberofpopularbrandnamessuchasJoy,ImperialLeather,andPremier.

Home Care-Unileveristhemainplayerinthissegment,withamarketshareofaround25%.Thecompany’sproductsenjoystrongbrandloyalty,andaccordingtoEuromonitorInternational,“theeffectivenessofitsdistributionnetworkisphenomenal”.Smallerdomesticcompanies,includingEkoSupremeNigeriaandLimexGlobalIndustries,haveshownstronggrowthonthebackofaffordableproductofferings.GrowthinNigeria’shomecaresectorisexpectedtoberobustoverthemediumterm,asconsumerscontinuetoswitchfrom(cheaper)generalsubstitutestoproductsthataretask-specific(e.g.switchingfromusingabarofsoaptocleanvarioushouseholditemstousingdifferentproductstofulfildifferentneeds),inlinewithrisingincomes.Otherfactorsdrivingthismarketincludeurbanisationandincreasedhomeownership.

AFKInsiderAfricanDevelopmentBank.ARMResearchBBCBloombergBusinessDaily(Kenya)BusinessMonitorInternationalDeutscheBankMarketResearchEastAfricanBreweriesEuromonitorInternationalFinancialDerivativesCompanyGhanaBusiness&FinanceGlobalBeautyIndustryTrendsinthe21stCentury(Łoboda&Łopaciuk)GuinnessNigeria

InternationalFuturesInternationalJournalofResearchinManagementProcter&GambleNigeriaCommunicationsWeekNKCIndependentEconomistsRolandBergerStrategyConsultantsShopriteSmallstarter.comTheNewYorkTimesTheWallStreetJournalTradeMapUNPopulationDivisionWorldBankWorldHealthOrganisation

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