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Fast-moving consumer goods in Africa

1. CEREALS, GRAINS AND WHEAT

This category of products takes up the largest share of household spending on fast-moving consumer goods (FMCG) goods. Gross household expenditure on cereals, grains and wheat surpassed $64.5 billion (Sh6.5 trillion) in 2010, representing a whopping 27 per cent of the overall consumption budget. In Africa, the gap between domestic supply and food needs in rapidly widening as demand for these products increases.

2. VEGETABLES AND FRUITS

A bulging population and increased rural-to -urban migration means demand for basic food items is going to grow. This group takes up 25 per cent of the average African consumer’s budget. 

The average household $65,000 (Sh6.6 million) income before taxes spent $731 (Sh73,909) on fruits and vegetables, with the top income quintile $167,000 (Sh16.88 million) before taxes spending $1,156 (Sh116.880)and the lowest quintile $10,000 (Sh1 million) before taxes spending only $440 (Sh44,487).

3. MEAT AND FISH

Meat and fish have been part and parcel of the African menu since time immemorial and despite a significant diet change, appetite for animal and fish protein seems to be at an all-time high with majority of consumers spending at least 20 per cent of their budgets on them.

Behind this industry lies massive opportunities ranging from agri-business, aquaculture and value addition. Almost 35 per cent of poor households’ food purchases fall into the bread and cereals category, with maize meal being the most common purchase. Non-poor households on the other hand, spend only 20 per cent of their expenditure on this category.

Inversely, poor households spend just over 22 per cent on meat and fish, with poultry being the most common purchase accounting for almost half of that expenditure.

Meanwhile, non-poor households spend almost 30 per cent on this category, and while poultry is still the most common purchase, they also have significantly more expenditure on other items like beef and lamb.

4. CLOTHING AND FOOTWEAR

Africa which is home to one in seven people on the planet remains on the fringes of the sector, both in terms of manufacturing and consumption. However, a third of the continent’s one billion people are now upwardly mobile and over the next decade, this colossal, yet fragmented market of 55 independent countries will become a lucrative frontier opportunity as both a source of production and a consumer market for fashion.

5. NON-ALCOHOLIC BEVERAGES

This industry broadly comprises soft drinks and hot drinks including sodas, juice, packaged fruit blends, mineral water and carbonated water and hot drinks such as coffee and tea. According to World Bank these beverages take up seven per cent of the average African consumer’s budget. 

Nigeria was ranked number four in the world in 2016 coming after US, China and Mexico, according to the global soft drinks market analysis while consumption of soft drinks in Africa is expected to rise significantly by 29.54 per cent by 2020.

6. DAIRY PRODUCTS

Demand for dairy products in developing countries, Kenya included, is growing with rising incomes, changes in diets, urbanisation and population growth.

According to FAO, this offers a great opportunity for potential entrepreneurs to enhance their businesses through increased production. Dairy products gobble up three per cent of household consumption expenditure.

7. PERSONAL CARE

From cosmetics, fragrances, oral care, bath and shower products to child care items, the personal care industry in Africa takes up a significant 2.8 per cent of the average household consumption budget.

According to McKinsey Africa Consumer Insights Centre, Africa’s consumer-facing industries are expected to grow by more than $400 million (Sh40.39 billion)) by 2020, accounting for more than 50 percent of total revenue growth expected to be generated by all businesses in Africa in 2020. The statistics tell a great story, but only part of the investment opportunity.

8. TOBACCO

During the past decade, tobacco leaf production has shifted from high-income countries to developing countries, particularly those in Africa. Most African governments promote tobacco farming as a way of alleviating poverty.

Despite growing health concerns related to smoking, tobacco is one of the most demanded goods by African consumers taking up about 1.8 per cent of household budgets.

African countries produced 650,000 tonnes, or 8.7 per cent of the world production of tobacco leaf in 2012, compared to 440,000 tonnes or 7.3 per cent in 2003. Total area harvested for tobacco in African countries increased by 66 per cent and output increased by 48 per cent.

9. ALCOHOLIC BEVERAGES

According to a past study by World Bank alcohol takes up 1.6 per cent of household consumption expenditure in Africa. Major competitors spend some 15 per cent on marketing while approximately only 10 per cent or slightly more on employee payroll expenses. Although, in many of these major companies net profit margin may be up to 25 per cent.

10. OVER THE COUNTER MEDICINE

The value of Africa’s pharmaceutical industry jumped to $20.8 billion (Sh2.1 trillion) in 2013 from just $4.7 billion (Sh 475.2 billion) a decade earlier. That growth is continuing at a rapid pace as the market is  predicted to be worth $40 billion (Sh4.1 trillion) to $65 billion (Sh6.6 trillion) by 2020. Africa’s pharmaceutical markets are growing in every sector.

Between 2013 and 2020, prescription drugs are forecast to grow at a compound annual growth rate of six per cent, generics at nine per cent, over-the-counter medicines at six per cent, and medical devices at 11 per cent. Three factors are driving this growth: urbanisation, health capacity and the business. environment.

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