{"id":1596,"date":"2016-06-22T12:37:11","date_gmt":"2016-06-22T11:37:11","guid":{"rendered":"https:\/\/blog.iese.edu\/africa\/?p=1596"},"modified":"2016-10-26T15:32:02","modified_gmt":"2016-10-26T14:32:02","slug":"consume-products-a-luxury-product","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/africa\/2016\/06\/22\/consume-products-a-luxury-product\/","title":{"rendered":"Consumer Products: A Luxury Product?"},"content":{"rendered":"<p>Before moving to Nigeria for a relatively long period, I thought that testing the waters would be a good idea: would I adapt to a country so different to my own? I had many question marks: some were important issues, others were really minute. One of these minute issues was: <strong>will I find the toiletries that I\u2019m used to\u2026?<\/strong> I wanted to check that out in case I needed to take an extra stock with me.<\/p>\n<p>The reality is that <strong>you can find essentially any consumer product \u2013 but at the same prices as in Europe!<\/strong> Which means that those items are<strong> a luxury for most of the population<\/strong>.<\/p>\n<figure id=\"attachment_1597\" aria-describedby=\"caption-attachment-1597\" style=\"width: 744px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1597\" src=\"https:\/\/blog.iese.edu\/africa\/files\/2016\/06\/Africa-consume-products.jpg\" alt=\"Africa: consume products, a luxury\" width=\"744\" height=\"558\" srcset=\"https:\/\/blog.iese.edu\/africa\/files\/2016\/06\/Africa-consume-products.jpg 744w, https:\/\/blog.iese.edu\/africa\/files\/2016\/06\/Africa-consume-products-300x225.jpg 300w, https:\/\/blog.iese.edu\/africa\/files\/2016\/06\/Africa-consume-products-500x375.jpg 500w\" sizes=\"auto, (max-width: 744px) 100vw, 744px\" \/><figcaption id=\"caption-attachment-1597\" class=\"wp-caption-text\">Stores in Lagos<\/figcaption><\/figure>\n<p><strong>The potential for fast-moving consumer goods (FMCG) to grow in Africa seems to be there<\/strong>.\u00a0 In a recent <a href=\"http:\/\/www.kpmg.com\/Africa\/en\/IssuesAndInsights\/Articles-Publications\/General-Industries-Publications\/Documents\/Fast-Moving%20Consumer%20Goods%20sector%20report%202015.pdf\" target=\"_blank\">industry report<\/a>, KPMG identifies the sector\u2019s growth drivers. I want to comment on those that relate to the population:<\/p>\n<ol>\n<li><strong>Size of the population<\/strong>:\n<ul>\n<li><strong>Africa\u2019s population is larger than any other continent except for Asia<\/strong>. Close to 1.2 billion people in 2015, it\u2019s expected to approach <strong>1.7 billion by 2030, and 2.2 billion by 2050<\/strong>.<\/li>\n<li>Compare this to the Western world: current populations of North America (0.4 billion) and Europe (0.7 billion) are expected to remain virtually at the same levels. My favorite question in relation to this: <strong>any doubts about where the future is?<\/strong><\/li>\n<\/ul>\n<\/li>\n<li><strong>Spending power<\/strong>:\n<ul>\n<li><strong>This increases with the size of the middle class<\/strong>. The critical question here is: \u201cwhat\u2019s the middle class?\u201d<\/li>\n<li>The <a href=\"http:\/\/www.afdb.org\/en\/\" target=\"_blank\">Africa Development Bank<\/a> defines it as <strong>people spending between $2 and $20 per day<\/strong>. That\u2019s quite broad a range! This gives an estimate of <strong>313 million people<\/strong> (34 % of the continent\u2019s population). Others are more conservative: Standard Bank estimates the middle class at 15 million households in the 11 largest sub-Saharan Africa economies (source:\u00a0<a href=\"http:\/\/newafricanmagazine.com\/11558-2\/\" target=\"_blank\"><em>New African Magazine<\/em><\/a>).<\/li>\n<\/ul>\n<\/li>\n<li><strong>Population density<\/strong>:\n<ul>\n<li><strong>The largest city in Africa is Cairo<\/strong> with an estimated population of 12 million in 2014, and a metropolitan population of 22 million. Nairobi &#8212; with 3.5 million people and 6.5 if we include the suburbs &#8212; is # 10 according to the KPMG report, and # 14 according to the <a href=\"http:\/\/worldpopulationreview.com\/\" target=\"_blank\">World Population Review<\/a>.<\/li>\n<li>Beware! <strong>Disposable income may be higher in the rural areas than in large cities<\/strong>. For instance, <strong>Nairobi<\/strong> is home to Kibera, the largest slum in Africa. There, close to 1 million people live on less than 1 $ \/day.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p>Opportunities to grow in FMCGs are there. The obstacles are there as well (e.g., insufficient infrastructure that drives logistics costs up). Most importantly, let\u2019s not forget that taking advantage of these opportunities shouldn\u2019t come at any cost. <strong>Economic development is not authentic unless it comes hand-in-hand with social development<\/strong>. Let\u2019s not only ask: what\u2019s in it for my company or for me as an investor. Let\u2019s also ask: what\u2019s in it for the millions of Africans who live at poverty? <strong>Is there a way that basic consumer products are not a luxury for them?<\/strong><\/p>\n<hr \/>\n<p>Related posts:<\/p>\n<ul>\n<li><a href=\"https:\/\/blog.iese.edu\/africa\/2015\/03\/19\/a-young-population-a-youthful-mentality\/\">A young population, a youthful mentality<\/a><\/li>\n<li><a href=\"https:\/\/blog.iese.edu\/africa\/2015\/03\/25\/launching-consumer-brands-in-sub-saharan-africa\/\" target=\"_blank\">Launching consumer brands in sub-Saharan Africa<\/a><\/li>\n<li><a href=\"https:\/\/blog.iese.edu\/africa\/2014\/10\/15\/kenyas-middle-class-and-economic-growth\/\" target=\"_blank\">Kenya\u2019s middle class and economic growth<\/a><\/li>\n<li><a href=\"https:\/\/blog.iese.edu\/africa\/2014\/10\/01\/doing-business-in-africa-some-practical-advice\/\" target=\"_blank\">Doing business in Africa: some practical advise<\/a><\/li>\n<li><a href=\"https:\/\/blog.iese.edu\/africa\/2015\/05\/13\/the-rich-poor-divide-in-sub-saharan-africa\/\" target=\"_blank\">The rich poor divide in sub-Saharan Africa<\/a><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before moving to Nigeria for a relatively long period, I thought that testing the waters would be a good idea: would I adapt to a country so different to my own? I had many question marks: some were important issues, others were really minute. One of these minute issues was: will I find the toiletries [&hellip;]<\/p>\n","protected":false},"author":1654,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[85385,492],"tags":[12541,447,121,80782,70262,5461,100271,100270],"class_list":["post-1596","post","type-post","status-publish","format-standard","hentry","category-doing-business-in-africa","category-development","tag-consumer-goods","tag-consumer-products","tag-economic-growth","tag-fmcg","tag-infrastructures","tag-middle-class","tag-population-density","tag-population-size","megacategoria-mc-africa"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/users\/1654"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/comments?post=1596"}],"version-history":[{"count":4,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1596\/revisions"}],"predecessor-version":[{"id":1601,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/posts\/1596\/revisions\/1601"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/media?parent=1596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/categories?post=1596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/africa\/wp-json\/wp\/v2\/tags?post=1596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}