P&G upbeat on Africa

19 March 2013
JOHANNESBURG: Procter & Gamble, the FMCG giant, has increased its African sales more than ten times over in the last decade, and plans to tap several key trends to further enhance its position in the region.

"We've seen our business grow in leaps and bounds in Africa. In the last decade, we've grown the African business more than tenfold," Dimitri Panayotopoulos, P&G's vice chairman, global business units, said, as reported by Business Day.

The company now plans to invest R1.6bn ($174m) to build a plant in South Africa, reflecting both the country's appeal on its own terms, and as a hub for reaching other nearby nations.

"We aim to make South Africa P&G's manufacturing hub for the markets of Southern and East Africa," said Panayotopoulos. "South Africa is the most advanced economy in Africa and represents an attractive investment destination with good infrastructure.

"What happens in the next week or month is not really important. We are here for the long term. We don't worry about the short-term ups and downs."

McKinsey, the consultancy, expects that the number of middle class households in Africa, making $5,000 per year or more, to grow to 128m in 2020, versus 85m in 2011.

The firm also believes consumer-facing industries are likely to benefit from a $410bn increase in private consumption across the continent from 2012-20, following a lift of $568bn from 2000-10.

"People here are living in fast-growing economies, the long-term business opportunities are huge, the African population is growing and consumers are becoming more affluent and demanding high-quality brands that weren't previously available," said Panayotopoulos.

The Economist Intelligence Unit, the research group, has also suggested that the 18 leading cities in Africa could collectively control $1.3tr in spending by 2030, offering great opportunities for brands.

"As in all developing markets, our business here in Africa will remain focused on leading brands that improve health, hygiene and household care, as well as substantial social investment programmes that uplift underprivileged families and communities," said Panayotopoulos.

From a purely commercial perspective, a major goal for P&G would be to fill "white spaces" in its target markets by rolling out existing top products that are not currently available to shoppers.

"There are brands and innovations we don't have here yet, and so obviously we want to get them here as fast as possible," Panayotopoulos said.

Data sourced from Business Day; additional content by Warc staff
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