2014 04 29_innovation park_the hidden growth market africa
DESCRIPTION
Africa has become a growth market for packaging companies driven by various driver such as population growth, urbanisation, growing middle class and new ways of purchasing. The presentation presents some business ideas for packaging companies in Africa with emphasis on the Nigerian market.TRANSCRIPT
20/05/2014 © XCOM Africa GmbH 2013 1
The hidden growth market Africa!
Chances for companies in Africa´s packaging marketInnovation Park Packaging 2014Marc-Peter Zander, Partner & CEO, XCOM Africa GmbH
13th of May 2014
Fact and comments
The African continent is still not in focus for packaging companies
however there is a clear trend for change.
64 exhibitorTotal number of exhibitors
being active in Africa.
Today596 exhibitorTotal number of exhibitors
being active in Africa.
2030
(20
12
), X
CO
M A
fric
a s
urv
ey
20/05/2014 © XCOM Africa GmbH 2013 2
being active in Africa.
588 mio. €Total turnover in Sub-Saharan
Africa for processing and packaging
machines
$ 210bnAgricultural output
being active in Africa.
1,62 bn. €Total turnover in Sub-Saharan
Africa for processing and packaging
machines
$ 880bnAgricultural output S
ou
rce
: V
DM
A (
20
13
), w
ww
.in
terp
ack
.co
m (
20
14
), W
old
ba
nk
(20
12
), X
CO
M A
fric
a s
urv
ey
Africa seen by Americans
Africa has a bad reputation worldwide driven by prejudices...
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Fact finding trip to Africa
Take a trip to Africa and find out what Africa is like …
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A. Why Africa? Driving factors
Share of GDP
60
80
100
Developed
Countries
By 2015, emerging countries will dominate the world’s GDP.
Share of GDP (%), based on purchasing power parity
20/05/2014 © XCOM Africa GmbH 2013 6
0
20
40
1970 1980 1990 2000 2010 2015
27 %Share of
Emerging Countries*
So
urc
e:
IWF
, WE
O O
ct..
(2
01
2)
-1
97
0 in
tern
al
est
ima
tes
Emerging
Countries
31 % 35 % 37 % 49 % 52 %
* Emerging countries according to IWF: Central and Eastern Europe, Russia, Developing Asia, Latin
America, Middle East and North Africa, SSA.
Size matters…
What do you know about the size of Africa?
So
urc
e:
Th
e E
con
om
ist,
20
12
20/05/2014 © XCOM Africa GmbH 2013 7
Economic environment Africa
Africa projected to outperform world’s growth engine Asia.
GDP growth (1970 - 2015, in %)
4,55 5,1 4,9 5
3,5
2,83,3
4,8
5,5
So
urc
e:
IMF
, T
he
Eco
no
mis
t, U
nit
ed
Na
tio
ns
Wo
rld
Po
pu
lati
on
Pro
spe
ct,
Th
e W
orl
d B
an
k
2,8
1970 1980 1990 2000 2015 F
Asian countries African countries
• 2010: SSA GDP - $ 954,4 billion
• 2015: African GDP > Asian GDP
• 2020: SSA GDP - $ 2,6 trillion So
urc
e:
IMF
, T
he
Eco
no
mis
t, U
nit
ed
Na
tio
ns
Wo
rld
Po
pu
lati
on
Pro
spe
ct,
Th
e W
orl
d B
an
k
20/05/2014 © XCOM Africa GmbH 2013 8
Rising workforce
Rising middle class and health care improvement will result in a
strongly increasing workforce.
1.050
1.400
Working age population (16-64 years)
ProjectionWorking age population, in millions
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0
350
700
1970 2000 2025 2050
Africa
North America
China
Europe
Latin America and the Caribbean
So
urc
e:
Ha
rva
rd B
usi
ne
ss R
evi
ew
(2
01
3),
XC
OM
Afr
ica
(2
01
3)
Agriculture
61% of the world’s potentially available cropland is in Sub-
Saharan Africa.
Latin America
Others
80
Available cropland in 2009in millions of hectares
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Sub-Saharan Africa
590
Latin America
300
So
urc
e:
Ha
rva
rd B
usi
ne
ss R
evi
ew
(2
01
3),
XC
OM
Afr
ica
(2
01
3)
Companies moving towards Africa
... Nestlé did discover the African potential generating strong growth driven by Africa.
„Der Lebensmittelkonzern Nestle hat 2013 erneut von einem starken Geschäft in
Schwellenländern profitiert.Das Wachstum kam dabei größtenteils
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Das Wachstum kam dabei größtenteils aus Afrika, … - in Europa stagnierte das Geschäft dagegen fast“ (Focus online, 13.02.2014)
B. Key driver for
packaging
Middle class
New consumerpackaging
New consumer
Manufacturing
Growth of hidden champion
Key driving factors
A rising middle class with demand for convenient products
supplied by multinationals will drive the market.
AAn increasing middle class in Africa
demanding for new products
BAfrican consumer demanding for
20/05/2014 © XCOM Africa GmbH 2013 13
So
urc
e:
XC
OM
Afr
ica
An
aly
sis
(20
13
)
BAfrican consumer demanding for
new, convenient products
D
CGrowth of local brands by
multinational in Africa
Strong urbanisation in Africa
resulting in new demands
Middle class in Nigeria
In 2030 Nigeria‘s middle class will have $256bn per capita
income.
2012 2030
Estimated per capita income middle class Nigeria(Estimates by IWF, African Development Bank, XCOM Africa)
(201
2),
Afr
ican
Dev
elop
men
t B
ank
(201
3),
IMF
(20
12)
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$60bn
$256bn
Sou
rce:
Eur
omon
itor
(201
2),
Afr
ican
Dev
elop
men
t B
ank
(201
3),
IMF
(20
12)
Consumer spending
Total consumer spending higher than Russia and set to double
till 2020.
5,8
Total consumer spending
(2010 & 2020e)
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So
urc
e:
Inve
stm
en
t F
un
d f
or
De
velo
pin
g C
ou
ntr
ies
(20
12
)
2
1 1,1 10,8
2,62,2 2,1 2
China Brazil India Africa Russia
2010
2020
CAGR
(2010 – 2020) 11 % 7% 9% 8% 10%2
02
0
Sales in Africa
Global organizations identified Africa as an important pillar for
their current and future success.
8%
9%
Africa sales in % of total sales
(2012)
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2,50%3% 3%
4%
P&G Pepsi Nestlé Kraft Coca Cola Unilever
So
urc
e:
XC
OM
Afr
ica
An
aly
sis
acc
ord
ing
to
an
nu
al
rep
ort
s (2
01
3)
Gala
UAC Foods is one of the largest companies in Nigeria
distributing various food products.
Key facts
- Since 1879
- Over 5.000 employees
- Produced on Rondo machines - Switzerland
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So
urc
e:
Inve
stm
en
t F
un
d f
or
De
velo
pin
g C
ou
ntr
ies
(20
12
)
Idea
Financials
- 300 million € turnover in 2012
- 23 % ebit margin
- Recent merger with Tiger Brands (SA)
- Distribution on roadside
- More than 1.000 street seller
- Also present in whole of West Africa
Maggi
Maggi has a long term tradition in Africa and is one of Nestlé´s
main products in Africa.
Key facts
- Over 50 million cubes sold per day
- 3.300 employees in Nigeria
- 20 million households use Maggi every day
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So
urc
e:
Inve
stm
en
t F
un
d f
or
De
velo
pin
g C
ou
ntr
ies
(20
12
)
Idea
Financials
- 475 million turnover CHF in 2010
- Investment of 67 million in SA
- Profit margin in 2013 – 25,8 %
- Distribution in local markets
- Cooking events with African woman
- Meeting new consumer demands
Maggi
Nestlé developed a special bag for the South African market.
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Peak milk
Peak milk being the largest milk company in West Africa
continuously improves packaging.
Key facts
- Since 1954
- Reaching about 60 million consumer
- Largest milk company in Westafrica
20/05/2014 © XCOM Africa GmbH 2013 20
So
urc
e:
Inve
stm
en
t F
un
d f
or
De
velo
pin
g C
ou
ntr
ies
(20
12
)
Idea
Financials- 505 million € turnover in 2011
- 18 % ebit margin
- Profit before tax increase of 46 %
- Distribution mostly in rural markets
- Milk power and can long lasting
- Small sizes serving low income households
Peak milk
Peak evaporated milk is packed in a new form of packaging
developed by German and Dutch companies.
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So
urc
e:
Inve
stm
en
t F
un
d f
or
De
velo
pin
g C
ou
ntr
ies
(20
12
)
Urbanization
Rural
Africa's urbanization is already on level of China and is third with
cities over 1 million inhabitants.
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48 52 109 52 63 48
Urban
Cities with > 1m
inhabitants
So
urc
e:
Un
ite
d N
ati
on
s (2
01
0),
MC
Kin
sey
(20
12
),X
CO
M A
fric
a (
20
13
)
Urbanization
African cities at a center stage. New metropolitan cities emerging
with new demands for convenient products.
• 2013 – 50 % of population below 18
• 70 % rely on informal markets
• Luanda most expensive city
Market driver
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So
urc
e:
Un
ite
d N
ati
on
s (2
01
0),
MC
Kin
sey
(20
12
),X
CO
M A
fric
a (
20
13
)
• Luanda most expensive city
• Lagos biggest city in Africa
C. Conclusion Action points
OutlookOutlook
5 Action points
The five action points to consider when moving to Africa…
Action points
#1 Bring Africa to the boardroom and give it
senior sponsorship.
How
Invest time for Africa
on board level
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Action point 1
The CEO interest in rising on Africa and major organisation are
taking Africa to the board level.
16
24Visits to Africa by the CEO´s of 27
selected companies
(2000 – 2013)
#1
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2
43
45
4
23
7
9
1413
16
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Note: The following companies have been surveyed: Barclays, BHP Billiton, BNP Parisbas, BP, Chevron, Citigroup, Coca-Cola, Daimler, Ford, General Electric, Hewlett
Packard, HSBC, Hyndai Motors, Mitsubishi, Nissan, Novartis, P/G, Pepsi, Samsung, Sanofi, Shell, Siemens, Societe General, Total and Vodafone.
So
urc
e:
An
nu
al
rep
ort
s, p
ress
an
d n
ew
s, B
CG
An
aly
sis
(20
13
)
5 Action points
The five action points to consider when moving to Africa…
Action points
#1 Bring Africa to the boardroom and give it
senior sponsorship.
How
#2 Invest in market intelligence and prioritize
your markets.
Invest time for Africa
on board level
Country and sector
strategy
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#2your markets. strategy
Angola NigeriaKenya
Cameroon
Uganda 20
25
30
Business potential for automotive company
(2013)
Action point 2
Market priorisation is key to success on the African continent
compromising of 54 countries.
high
Size of bubble indicates
business potential for Bosch
in respective country#2
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Algeria
South Africa
Egypt
Morocco
Ghana
Cameroon
TanzaniaSenegal
Ethiopia
Tunisia
Rwanda
Botswana
Mozambique
Zambia
-5
0
5
10
15
10
So
urc
e:
XC
OM
Afr
ica
An
aly
sis
(2
01
3)
highlow
low
Ris
k
Attractiveness
5 Action points
The five action points to consider when moving to Africa…
Action points
#1 Bring Africa to the boardroom and give it
senior sponsorship.
How
#2 Invest in market intelligence and prioritize
your markets.
Invest time for Africa
on board level
Country and sector
strategy
20/05/2014 © XCOM Africa GmbH 2013 29
#2your markets.
#3Concentrate on the products and technologies
which are needed.
Develop products
for Africa
strategy
Action point 3
There are a lot of challanges in Africa and we need to see on how we can bring European
solutions to Africa.
We do not want Europeans trying to
bring European solutions. We want African solutions !
#3
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5 Action points
The five action points to consider when moving to Africa…
Action points
#1 Bring Africa to the boardroom and give it
senior sponsorship.
How
#2 Invest in market intelligence and prioritize
your markets.
Invest time for Africa
on board level
Country and sector
strategy
20/05/2014 © XCOM Africa GmbH 2013 31
#2your markets.
#3
#4
Concentrate on the products and technologies
which are needed.
Build up 2020 Africa team. Investment in people
Develop products
for Africa
strategy
Action point 4
The CEO interest in rising on Africa and major organisation are
taking Africa to the board level.
Number of staff related to Africa in
selected multinationals
(2000 – 2008)
Rising interest Lack of resscources
Grade 5
math
PASEC
% change in average
archiving score
Senegal
Cameroon
#4
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15
30
45
75
130
165
2000 2002 2004 2006 2007 2008
PASEC assessment
1995-2007
Grade 6
reading
SACMEQ assessment
1998-2003
-22 -12 -2 8
Cameroon
Madagascar
Burkina
Faso
Kenya
Tanzania
Namibia
Malawi
Zambia
Action point 4
Invest in training to bulid up skill needed when dealing with
international clients and partner.
#4
Was macht der Deutsche, wenn er eine Anfrage aus Nigeria
bekommt?
20/05/2014 © XCOM Africa GmbH 2013 33
Glaubt es sei Betrug und löscht die Mail
Schickt die Mail an compliance officer
Antwortet
5 Action points
The five action points to consider when moving to Africa…
Action points
#1 Bring Africa to the boardroom and give it
senior sponsorship.
How
#2 Invest in market intelligence and prioritize
your markets.
Invest time for Africa
on board level
Country and sector
strategy
20/05/2014 © XCOM Africa GmbH 2013 34
#2your markets.
#3
#4
#5
Concentrate on the products and technologies
which are needed.
Build up 2020 Africa team.
Do it now and plan enough time.
Investment in people
Develop products
for Africa
strategy
Observe culture
when planning
Action point 5
Africa is the last untapped market with a sizable growth in
the worlds economy.
#5
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Action point 5
Africa is the last untapped market with a sizable growth in
the worlds economy.
#5
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“In the future, there will be no markets left
waiting to emerge.” (HSBC)
“Africa is the last untapped market with a
sizable growth in the worlds economy.” (Bosch)
EUROPEANS ARE
TALKING. WE ARE
INVESTING.
#5
20/05/2014 © XCOM Africa GmbH 2013 37
Action point 5
The grass doesn´t grow faster if you
pull on it ! (African Proverb)
#5
20/05/2014 © XCOM Africa GmbH 2013 38
Questions
Thank you • Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante• Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze •Achiu • Thank you • Dankie • Klitos •Danke • Gracias • Merci • Naa goodee • Siyabonga • Hvala • May-dah-say • Achiu •Thank you • Dank u • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante • Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze • May-dah-say • Achiu • Thank you •Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga • Murakoze •
Thank you • Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante• Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze •Achiu • Thank you • Dankie • Klitos •Danke • Gracias • Merci • Naa goodee • Siyabonga • Hvala • May-dah-say • Achiu •Thank you • Dank u • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante • Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze • May-dah-say • Achiu • Thank you •Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga • Murakoze •