"If you love him, send him to New York, for it is heaven; if you hate him, send him to New York, for it is hell." When I was still in school, I stayed up all night watching "A Native of Beijing in New York," and this opening line left a deep impression on me. Now that I have been working on projects in Africa for over three years, I have gained some different insights. Image: Our team at the Lagos office Personally: I love my country even more. Market understanding: FMCG going global to Africa is already a present progressive! About the African FMCG market To reach a relatively correct conclusion about a new market, my approach is to base it on methodology and combine it with long-term frontline practical experience.

  • PEST analysis: Political, Economic, Social, and Technological.
  • SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats.
  • Consumer behavior research: Understand target consumers' purchase motivations, preferences, and behavior patterns.
  • 4P marketing: Product, Price, Place, and Promotion. Several important fundamental factors of the African FMCG market and the corresponding market status: 1. Large population + low Engel coefficient = rapid development of the food and beverage industry. Africa currently has a population of 1.3 billion, in a period of rapid growth, with an average age of 16-19. It is expected that by 2050, the population will exceed 2 billion, making it the world's largest demographic dividend continent, with the most dynamic consumer market and labor force. African countries have relatively low per capita GDP, with food and beverages accounting for 55% of household consumption, and household spending on FMCG exceeding 60%. In sub-Saharan Africa, each family has an average of 4-7 children, and there is strong demand for newborn products. 2. Uneven regional development, with significant political and economic differences among countries. Africa has 54 countries and regions, generally distinguished by North Africa (Egypt, Morocco, etc.), East and West Africa (Nigeria, Kenya, and other sub-Saharan countries), and South Africa. North Africa is dominated by the Egyptian market, belonging to the Arab cultural system, linking to the Middle East market. Central Africa is represented by Nigeria in West Africa and Kenya in East Africa, forming the East-West African economic belt. The old European colonial culture has influenced the language and consumption habits of each country, with English or French as common languages, and Christianity and Islam as the main religions. This is currently the most dynamic region in Africa in terms of population and economic development. South Africa has a better industrial foundation, was once the only BRICS country in Africa, and its economy and culture tend to be more European. The entry point for going global to Africa is generally choosing Nigeria in West Africa or Kenya in East Africa as a bridgehead, so competition is relatively fierce. 3. Weak industrial foundation, with a large amount of raw materials and finished products relying on imports. The manufacturing development levels of African countries vary, but overall, the foundation is relatively weak, and local production capacity is insufficient. China's exports to Africa have been growing for many years, exceeding $110 billion in 2019, with digital appliances, clothing and footwear, and daily necessities accounting for a high proportion. 4. Food, beverages, and daily chemical products are mainly produced locally, but some raw materials rely on imports. European and American international FMCG giants (Coca-Cola, Nestlé, P&G, Unilever, etc.) had already completed their layout during the colonial period, with strong brand influence on consumers. They have achieved localized production through self-built factories and mergers and acquisitions. At the same time, Indian brands and brands from Egypt and South Africa have also laid out early in various African countries. 5. In recent years, Chinese brands and local Chinese factories have developed rapidly. Digital home appliances: Chinese digital home appliance brands are popular in Africa. Hisense's TVs and air conditioners, and Transsion's feature phones and smartphones have the highest market share in their respective categories. FMCG: In personal care categories such as diapers, sanitary napkins, and soap, and in home care categories such as laundry detergent, local brands from several Chinese factories have a high market share in multiple African countries. Food and beverages: Currently, Chinese brands have relatively little influence in Africa, mainly exporting to Chinese supermarkets, with huge potential for future development in Africa. Channel Insights: Fragmented Traditional Distribution Channels From a distribution perspective, it is in the early agency distribution model, with large professional wholesale markets as distribution centers, and deep distribution models are not yet widespread. Urbanization in African countries is developing rapidly, first-tier cities have a strong siphon effect, and passenger flow, business flow, and logistics form a distribution effect around large wholesale markets. From a retail perspective, the development stages of retail channels vary by country. In most countries, modern channels account for a relatively low proportion, traditional channels are the mainstay, and e-commerce channels are in the early stages of development. Modern Channels

Hypermarkets: Distributed in core cities, with low penetration, mainly serving middle-class consumers, represented by South African chain brand Shoprite. Supermarkets: Uneven development across countries, mainly local and Indo-Pakistani supermarkets; many countries do not allow Chinese to open retail supermarkets. Convenience store chains: Some localized brands are beginning to appear, but on a small scale. Hard discount stores: Some countries are beginning to see local chain brands focused on FMCG.

Category specialty stores: A small number of brands in shopping malls. Traditional Channels Mainly various mom-and-pop shops, including small shops with storefronts over 5 square meters, table shops, street stalls, and personal mobile shops. In most African countries, traditional channels account for over 90% and are the main form of retail channels. The penetration rate of small shop owners ordering through apps has exceeded 10% in some countries. Therefore, it can be seen that in most African countries, the wholesale and retail channels are relatively close to China's commodity circulation form in the 1990s, mainly with fixed merchants supplemented by vehicle sales, and APP ordering is rapidly rising. E-commerce Channels Infrastructure is gradually improving, but the overall proportion is still low, waiting for the takeoff moment. Currently, Africa's smartphone penetration rate is >60%, mobile payment penetration rate is >30%, and network tariffs/GDP ≤2%. Reasons limiting rapid development: Uneven development of infrastructure (network, logistics, payment) across countries, and relatively high comprehensive fulfillment and delivery costs. This results in a low overall proportion of e-commerce channels, but with rapid growth. Major e-commerce giants are in the early stages of layout. Brand Marketing: The Era of Big Single Products and the Leapfrogging Mobile Internet Era Currently, Africa is still in the era of big single products, with insufficient competition, and the market share of the top single products of leading brands in each category is astonishing. There are many contributing factors, among which the traditional channel structure has a huge impact: Traditional channel stores are small, and the number of SKUs that can be displayed in a single category is limited, so the big single products that must be displayed greatly squeeze out the display space of competing products. Currently, the main marketing methods in Africa are: Offline marketing: Offline advertising is fully deployed, with billboards, wall paintings, and storefront posters covering the streets and alleys of cities, making it a battleground for big single products and new products. Traditional media: Newspapers and traditional print media currently have low coverage and are gradually being replaced by mobile internet information; in terms of TV channels, paid cable TV is the main trend, with about 50 million paid cable TV users. Online marketing: Currently, the more popular advertising methods are social media ads, search engine ads, and vertical APP traffic ads. Overall, online advertising costs are relatively low, and it is in a dividend period. Summary: The FMCG market has an imbalance between supply and demand, with big brands holding channel discourse power. Digitalized deep distribution and new marketing are in the early stages of industry development. Price remains a simple and crude effective strategy, and localized production capacity is the only way forward. Why FMCG Going Global to Africa Is an Opportunity 1. Infrastructure is gradually improving. Based on the above fundamental research, we can see that FMCG is the largest livelihood base in Africa, with a large market and strong demand growth, and it is mainly produced through localized factory construction. In the past, Chinese FMCG brands going global to Africa mostly exported by sea, mainly targeting the Chinese community in Africa, and neither the product positioning nor the sales price was suitable for the local market. With the development of the Belt and Road Initiative, following heavy industry investments such as infrastructure and energy, Chinese enterprises' light industry going global has gradually entered the fast lane, including building materials, textiles, furniture, plastics, packaging materials, small home appliances (assembly), daily chemicals, and pharmaceuticals. The supporting service industry and industrial chain have also risen accordingly. The most representative is the rapid development of industrial parks invested or participated in by Chinese parties in various countries, solving the infrastructure and upstream and downstream industrial chain connections that enterprises face when going global, such as water, electricity, policies, and security. This makes the path to Africa smoother and more certain. Image: The author inspecting the African FMCG market during the pandemic 2. Chinese enterprises' production capacity going global to Africa is already a trend. If before, enterprises going global to Africa was still an adventure for the brave, then after the pandemic, it has become a general trend. This year, the number of inspection enterprises I received during my half-year overseas stay is more than twice that of the entire last year. The reasons are multifaceted, including internal factors (domestic competition) and external factors (significant changes in the overseas environment), and the African market has truly entered the mainstream vision. To achieve twice the result with half the effort, it is essential to do market research well. In addition to the basic situation mentioned above, the following are some key points that FMCG enterprises need to focus on. It is often said that "choice is greater than effort," so sufficient effort should be made in "choice," and obtaining accurate data is key. Choosing the market: Africa has 54 countries and regions, and each market is different.

Choosing the product: Whether the product is suitable for the users of that country, and whether to choose existing or innovative categories.

Understanding competitors: How to quickly seize the market, how to grab share from existing big brands, and fully understand competitors.

Understanding users: Understand channel users and consumer users. Currently, African FMCG enterprises' products are around 2C, while operations are more around 2B.

Understanding policies: Exchange rates, raw materials, maritime customs clearance, and investment environment are all closely related to the political and economic development of each country.

Mastering localization: How to establish a complete local production and sales team in the shortest time is a must-solve problem for all going-global enterprises.

Seizing opportunities: Quick and accurate judgment is the only way to seize opportunities and find the optimal path. Wang Jun, engaged in the FMCG channel digitalization B2b industry for many years, with in-depth research on the iteration and development of retail channels, and a partner of Egatee, a China-Africa B2b e-commerce platform.