Home frontpage 10 business Trends, Ideas and Opportunities in E.Africa’s Consumer Industries

10 business Trends, Ideas and Opportunities in E.Africa’s Consumer Industries

NAIROBI (HAN) June 20.2016. Public Diplomacy & Regional Security News. Compared to some oil and metals exporters in sub-Saharan Africa grappling with low commodity prices, the countries of east Africa provide a more supportive economic environment for consumer-focused companies. Untapped opportunities include moving into the region’s second-tier cities; investing in packaging; and helping smaller food producers grow their businesses through new equipment and financing.

These are among the topics highlighted in the Q3 2016 edition of the East Africa Consumer Industries Quarterly™, published by Maritz Africa Intelligence. The publication focuses on business trends, ideas and opportunities in region’s consumer-facing sectors and is specifically targeted at foreign investors, consultants, financiers and industry suppliers.

Below are the major takeaways from the report.

1. East Africa is better placed to withstand the continent’s economic headwinds: Growth in sub-Saharan Africa is slowing down, with GDP expansion of just 3% predicted for 2016. On the other hand, Kenya, Tanzania, Rwanda, Uganda and Ethiopia are all expected to post GDP growth in excess of 4.5% this year. But companies cannot count on the macro-economic environment alone, and are likely to face significant challenges from various quarters.

2. Secondary cities hold potential: Throughout east Africa there are unrealised opportunities to better serve consumers in the region’s secondary cities and towns, where there is often more wealth than many might think.

3. Growth through partnerships: In retailers’ battles for market share, could partnerships be an opportunity to fast-track growth? The publication highlights the case of supermarket chain Tuskys, which plans to partner with well-located third-party shops and rebrand these to Tuskys under franchise arrangements.

4. Despite the rise of online retail, having a physical presence still essential: While growing rapidly, online retail remains in its infancy in east Africa. By examining the sales figures of one of the major e-commerce players, Maritz Africa Intelligence concludes that consumer goods companies seeking significant scale need to have a presence in physical stores.

5. Demand for investment in packaging: There are opportunities for greater investment across the fast-moving consumer goods packaging value chain – such as potential for the local manufacturing of packaging material currently being imported, and the introduction of innovative solutions that will make products stand out in an increasingly competitive market.

6. M-Kopa – an unconventional player that cannot be ignored: Since its commercial launch in October 2012, consumer-finance company M-Kopa has managed to amass over 330,000 customers in Kenya, Tanzania and Uganda. According to the report, the company’s innovative business model could pose a major threat to the status quo in east Africa’s consumer goods industry.

7. Ethiopia offering long-term rewards for consumer goods manufacturing:The Ethiopian government is pushing hard to boost the country’s manufacturing sector, and import substitution is likely to be a growing theme over the coming years. That said, Ethiopia is a long-term play and not for those seeking instant rewards.

8. Up-and-coming cosmetics companies: The beauty and personal-care market in east Africa is dominated by global companies such as L’Oréal, Estée Lauder, Unilever and Procter & Gamble, as well as a handful of established domestic operators. However, there is an emerging new trend of local entrepreneurs developing their own brands. There are a few examples where home-grown cosmetics companies have been acquired by larger players.

9. Small food producers provide an entry point for investors and equipment suppliers: As east Africa’s young food and beverage companies grow, they will need new equipment, financing, assistance and partners – which in turn provides opportunities for suppliers, financiers, consultants and possibly private equity investors.

10. Health – a small but growing trend: There is evidence of an emerging health trend in Kenya, and producers of food perceived to be wholesome are seeing growth in their businesses.

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