The Growing African Consumer

 

Africa’s consumer market is arguably the most attractive in the developing world. It was worth over $600 billion in 2010, and at that time, was projected to reach $1 trillion by 2020[1]. However, it hit $1.4 trillion in 2015, capturing the attention of CPG and FMCG companies around the world, and is projected to reach $2.1 trillion by 2025[2]. This astonishing rate of growth is strongly supported by continent-wide trends in population growth, demographic shifts, urbanization, rising incomes and the adoption of mobile technology. Africa’s growing consumer class comprises people at all levels of the consumption pyramid, most of whom live in urban areas.

 

Analysts agree that in the long-term, consumer spending will drive Africa’s GDP growth. However, while acknowledging the long-term prospects, there’s no denying that navigating Africa’s markets in the short-term has proven to be very challenging. Due to the recent downturn and persisting vacillation in resource prices, along with socio-political instability, Africa’s consumers have less discretionary income, and this has altered consumer spending patterns significantly, affecting the short-term outlook for CPG companies.

 

Understanding Africa’s consumers possess an additional challenge as the market is highly fragmented and heterogeneous[3]. Preferences and buying decisions often differ between cities within the same country, and the fragmented retail systems in sub-Saharan Africa means that distribution is perhaps the greatest challenge in efforts to reach the consumer. Consumer goods companies need access to first-hand data in-order the develop the data-driven localization strategies needed to navigate Africa’s consumer market. Armed with data, the likes of Coca-Cola and Heineken have thrived respectively by evolving wide-reaching local distribution networks and developing products for the low-end to premium spectrum.

 

Market research is indispensable for the short and long-term success of CPG and FMCG companies. These companies need access to fine-grained, real-time data on specific niche markets in order to develop strategies that are tailored to local needs and dynamic enough to adapt to changes in consumption patterns as they occur. Agile audience data providers like Survey54 are the missing link needed to connect CPG companies to information on the right consumers at the right place and at the right time across Africa.

[1] Accenture, The Dynamic African Consumer Market: Exploring Growth Opportunities in Sub-Saharan Africa

[2] Damian Hattingh, Acha Leke, and Bill Russo, “Lions (still) on the move: Growth in Africa’s consumer sector,” McKinsey & Company, 2017, https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/lions-still-on-the-move-growth-in-africas-consumer-secto

[3] Atlantic Council – Africa Center, Capturing the African Consumer Market. Truths, Trends, and Strategies for the Road Ahead, ISSUE BRIEF SEPTEMBER 2017