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July 22, 2014

National Automotive Industry Development Plan (NAIDP) Drives Car Sales to Record Levels in Nigeria

Neil-KingAnalyst Insight by Neil King - Automotive Analyst

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In October 2013, the Federal Government of Nigeria announced its National Automotive Industry Development Plan (NAIDP). In order to stimulate investment in local vehicle production and thereby bolster Nigeria’s economy instead of revenues heading abroad, a core component of the plan is an increase in import duties for passenger cars from 20% to 70% (35% duty and 35% levy) and to 35% for commercial vehicles. However, the duty applied to vehicles which are assembled locally is set at 10% for SKD (semi-knockdown) Part 2 kits, 5% for SKD Part 1 kits and 0% for CKD (complete knock-down) kits. Also, manufacturers that assemble vehicles locally can import up to twice as many FBU (fully built units) as they do kits at the reduced import duty rate of 35% for passenger cars and 20% for commercial vehicles.

The plan was fully implemented on July 1 and, not surprisingly, new car sales soared as consumers took advantage of the lower duty rates while they still could. The Executive Director of the Nigerian Automobile Manufacturers Association (NAMA), Mr Arthur Madueke, was quoted on July 8 on This Day Live that “between January and December 2013, about 52,000 new vehicles were imported, while by May this year, 37,000 cars have been imported.” With CBU imported vehicles paying the old rate of duty until the end of June, sales are likely to have boomed in the month and a 30% growth rate for the first half of 2014 is therefore not out of the question.

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July 17, 2014

Heineken NV: Reaching Out to Africa’s Growing Beer Market

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

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Heineken NV is opening a third brewery in Ethiopia in 2014 in an effort to expand in African markets. This is expected to be the world's fastest-growing region in beer volume sales, in percentage terms, in the 2013-2018 period. The Middle East and Africa (MEA) is forecasted to grow, according to Euromonitor International, by a 5% CAGR in total volume sales. The significance of this logistical move derives from the company’s strategy to dominate the continent’s second-most populous market.

Africa’s population size, untapped low-income consumer expenditure, growing incomes and rate of urbanisation are all playing a part in its global significance. It is no surprise that global companies like Heineken are looking to get a stronger foothold in this continent, but they have to contend with incumbent brewers, especially SABMiller Plc.

Demography and Economy in Favour of Africa

As the urban population is expected to grow at 3% CAGR over 2013-2018 in the MEA, and the population is expected to grow by a CAGR of 2%, Heineken is looking towards a growing consumer base. But let’s not forget that growth of a beer consumer base will also depend on the degree of social mobility, and growing accessibility of low-income consumers to beer markets via affordability.    

Source: Euromonitor International from national statistics/UN

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June 24, 2014

What Next for Mondelez’s Hot Drinks Following the JDE Deal?

Hope.LeeAnalyst Insight by Hope Lee - Senior Beverages Analyst

Once coffee leaves the Mondelez family, other hot drinks such as chocolate-based flavoured powder drinks will be the main hot beverages left. Other hot drinks together with the powder concentrate brand Tang will form Mondelez’s major beverage business following the deal with DE Master Blenders to create Jacobs Douwe Egberts (JDE) and will account for an insignificant share of its global fmcg sales. In the days of Kraft, chocolate-based flavoured powder drinks appeared to be a minor area of its beverages business. Euromonitor International believes that there may be substantial cross-branding opportunities for the Cadbury brand, which may have encouraged Mondelez to retain its chocolate powder drinks. Mondelez is the world’s largest chocolate confectionery maker and the ingredients used in its chocolate powder drinks (cocoa) are similar to those used in its confectionery. Therefore, procurement-wise, it makes sense to keep cocoa-centric Cadbury in the family.

 

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June 11, 2014

Consumer Health Developments in North Africa

ChrisSchmidtAnalyst Insight by Chris Schmidt - Consumer Health Analyst

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With emerging market focus shifting from the once vaunted Brazil, Russia, India and China (BRIC), The Middle East and Africa is gaining clout as a potential growth engine for the future. Within the region, North Africa – namely Algeria, Egypt, Morocco and Tunisia – offers an exciting, and challenging, opportunity. While the area’s political instability has spooked some producers, its relatively sizeable markets and generally rosy growth outlook will continue to draw interest from the consumer health industry.

Demographic Opportunities Face Political Headwinds

North Africa is an intriguing region, in that it offers a number of advantageous socio-economic characteristics. Algeria, Egypt, Morocco and Tunisia all feature higher per household annual disposable incomes than the average of the Middle East and Africa region and have populations that are expected to grow faster than much of the rest of the developing world in the next two decades. These factors have helped drive consumer health sales and will be important contributors to the expected 4% retail value sales CAGR those four markets will combine for through 2018.

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June 8, 2014

Africa Is Rising, but Important Challenges Remain

An HodgsonAnalyst Insight by An Hodgson - Income and Expenditure Manager

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Although the phenomenon of an “Africa Rising” has captured a great amount of attention from global businesses, the region’s growth figures have not reflected an improving quality of life and rising purchasing power for many consumers. Sub-Saharan Africa as a whole still faces major challenges, which have held back growth in household income and expenditure, with implications to the overall consumer market. Whilst companies can expect many long-term opportunities on the back of forecast solid economic growth in the period through to 2030, it is vital that businesses are fully prepared for the challenges and risks they are likely to encounter in Africa.

Annual Real GDP Growth in Sub-Saharan Africa and Other Emerging Market Regions: 2000-2016

Source: Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF), World Economic Outlook (WEO)

Note: Data for 2014-2016 are forecasts 

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June 6, 2014

Beer Concoctions: Will Commercialised Versions Attract Consumers in Africa?

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

Concoction beers, or opaque beers, are growing in popularity as the tipple of choice for many low-income sub-Saharan African consumers. These products are relatively affordable, partly due to the use of low-cost and locally grown fermentable starches such as sorghum, cassava and millet. These concoctions, however, are increasingly becoming a modern business, involving major global brewers such as SABMiller and Diageo. Such companies are using factory lines, thus replacing homemade traditional wooden drums with brick liquid carton packaging and focusing on rural-centric distribution networks.

Although, according to Euromonitor International, volume growth of sorghum beers in South Africa began to slow towards 2% in 2013, there remains potential for further growth beyond this market in the rest of Africa. As the illegal or untaxed trade of alcohol remains prominent in many African markets, companies like SABMiller are seeking to commercialise concoctions and expand affordability to low-income consumers. Diageo’s attempt has worked well thanks to the use of transactional packaging to reduce costs; such an example can be seen in Kenya where the Senator Keg brand is sold in large returnable containers suitable only for communal consumption. SABMiller has commercialised opaque beer variant Chibuku Shake-Shake to undercut unbranded concoctions. Yet, regardless of such innovative attempts to bring illicit trade to the fore by investing in commercialising traditional concoctions, there still remain limitations to their future success.

Continue reading "Beer Concoctions: Will Commercialised Versions Attract Consumers in Africa?" »

May 30, 2014

Emerging Markets Account for 90% of the Global Population Aged Under 30

Looking-down-at-cameraAnalyst Insight by Media Eghbal - Country Insight Managing Editor

Although the world population is ageing, Euromonitor International estimates that half the people on the planet are under the age of 30 in 2014. Emerging and developing countries stand out as home to a massive 89.8% of the global population under the age of 30, up from 85.3% in 1980 and we expect this ratio to remain stable until 2030. The 0-29 age bracket is an important one for marketers in terms of the consumer spending potential for families with children, young adults and those entering working-age who will experience discretionary spending for the first time. Children and young consumers have an appetite for the latest technologies and can quickly adapt to modern trends. They are more digitally tuned in and switched on than any generation previously and keener to interact with brands directly. However, per capita discrepancies in the spending potential of younger consumers in emerging vs developed markets will continue to dictate growth opportunities and strategies. This age group is also vital in order to assess the labour market potential across countries and whether the working pool is growing or shrinking, which will have an impact on skills availability and consumer spending prospects.

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May 24, 2014

Nigerian Schoolgirl Abduction Highlights Female Inequality and Education Challenges

186159700(1)Analyst Insight by Media Eghbal - Country Insight Manager

The kidnapping of over 200 schoolgirls in Nigeria in April 2014, which shocked the world and resulted in widespread international condemnation, highlights two major challenges facing the government: narrowing the country’s gender gap and improving educational attainment. Nigeria is Sub-Saharan Africa’s largest economy and most populous country and is recognised as one of the next big emerging markets to watch beyond the BRICs. The female population stood at 84.3 million in 2013, equivalent to and just over the size of Germany’s entire population in the same year (81.8 million). However, Euromonitor statistics reveal that Nigeria has one of the lowest female adult literacy rates in the world while it also has the largest out-of-school population of primary school age globally, according to UNESCO, at 10.5 million in 2010 (latest data available). Improving opportunities for women is vital for Nigeria’s modernisation strategy, diversification of the economy away from oil dependence and to fulfil its Vision 2020 target to become one of the world’s largest 20 economies by 2020. Nigeria’s female consumer market potential, the largest in Sub-Saharan Africa, will also be limited until more girls are educated and enter the workforce in the future.

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April 28, 2014

The Global Economy’s Unsung Heroes

Sarah-B-Banner

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Which are the smaller, well-performing economies, with strong fundamentals and friendly business environments? Looking outside of the world’s largest emerging markets – in this case those who rank outside of the largest 20 emerging markets - and excluding those who receive more than 25% of GDP from mineral fuels, there are some interesting candidates – chief amongst them Kazakhstan, Peru and Rwanda.

Real GDP Growth in Kazakhstan, Peru and Rwanda: 2008-2016

Source: Euromonitor International from national statistics/UN/IMF

Note: Data from 2014 are forecast

Continue reading "The Global Economy’s Unsung Heroes" »

April 14, 2014

The New African Order

Sarah-B-Banner

View Sarah Boumphrey's profile on LinkedIn

The Nigerian statistics office, recognised by the IMF, has recalculated Nigerian GDP and the economy is now 89% larger than it was previously stated. This makes it the 22nd largest economy in the world (measured in current market prices in US$) – compared to 37th pre-revision, and the largest economy in Africa – now 49% bigger than South Africa.

Total GDP in Nigeria Pre- and Post-revision: 2010-2013

Source: National Bureau of Statistics

Note: Data refer to GDP in current market prices. 2013 data are estimates.

Continue reading "The New African Order" »

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Recent Posts

National Automotive Industry Development Plan (NAIDP) Drives Car Sales to Record Levels in Nigeria

Heineken NV: Reaching Out to Africa’s Growing Beer Market

What Next for Mondelez’s Hot Drinks Following the JDE Deal?

Consumer Health Developments in North Africa

Africa Is Rising, but Important Challenges Remain

Beer Concoctions: Will Commercialised Versions Attract Consumers in Africa?

Emerging Markets Account for 90% of the Global Population Aged Under 30

Nigerian Schoolgirl Abduction Highlights Female Inequality and Education Challenges

The Global Economy’s Unsung Heroes

The New African Order