Logistics holds the
key to realising the
vast potential of the
growing African
market for fast moving
consumer goods (FMCG).
“Africa stands out as one
of the GRDI’s (Global Retail
Development Index) most
promising regions,” states
the ATKearney 2016 Global
Retail Development Index,
which ranks 30 countries
around the world.
“Three North African
countries are in the top 30,
with Egypt’s 30th-place
ranking standing out as its
country risk slowly decreases
and a fast-growing middle
class becomes more accessible
to international retailers.
“Meanwhile in sub-
Saharan Africa six countries
make the rankings, reflecting
the huge yet still untapped
potential of the region,” states
the report.
The countries it highlights
are Nigeria (19th), Cote
d’Ivoire (21st), Zambia (23rd),
South Africa (27th), Ghana
(28th) and Kenya (29th).
The importance of logistics
is highlighted by KPMG in its
annual “Fast Moving Goods
in Africa”.
It states: “Certain FMCG
products by nature have
very short shelf lives, such
as certain foods and dairy
products.”
This provides opportunities
for local distributors and
transporters.
“As a result, it is often
necessary for retailers to
rely on local supply chains
to ensure product wastage is
kept to a minimum.”
Specialist supply chain
services are also needed.
“With logistics challenges and
foreign currency shortages,
it’s not unusual for important
products to be out of stock,”
states the ATKearney report.
“The differentiator is
planning your product
supply and stocking capacity
so that your store can be
seen as the most reliable for
having important products
available,” it adds.
If the logistics chain isn’t
strong enough then the
manufacturers and retailers
step into the gap themselves.
“Downstream industries
do not always exhibit the
necessary degree of efficiency
and flexibility required to
keep costumers satisfied
while simultaneously driving
gains on the bottom line,”
says KPMG.
“For this reason, many
FMCG retailers opt to
vertically integrate where
possible, be it through buying
a stake in a local packaging
store or establishing a wholly
owned manufacturing plant
in close proximity to the local
market,” states the report.
Having access to efficient
logistics and distribution
can significantly enhance
an FMCG business, says Raj
Kulasingam, senior counsel
at Dentons.
“This is why Kellogg paid
$450 million for a 50% stake
in Nigeria-based Multipro,
a food sales and distribution
company owned by Tolaram
in 2015,” he says. Dentons
advised Tolaram on the deal.
