When one thinks of emerging markets, Southeast Asia and India come quickly to mind; but that’s only partly true say experts, who insist that Africa should play a critical role in every company’s growth strategy. The continent’s sheer size alone should put it on marketers’ radar screens. After all, Africa is composed of 54 countries and has a population of nearly 1.2 billion, which makes it the second largest continent by area and population in the world.


Africa was the topic of a recent one-day seminar sponsored by Women in Flavor and Fragrance Commerce (WFFC). The continent, noted WFFC chairwoman Alpa Roman of Flavor & Fragrance Specialties, is the primary source for a laundry list of key ingredients; including bergamot, ylang ylang, jasmine, eucalyptus and frankincense.


It’s the source for humanity, too, as the oldest human fossils were discovered in Ethiopia.


“We all came from Africa,” noted Manuel Alemañy of Procter & Gamble.


And Africa may be where the industry is headed.


James Russo of Nielsen Group noted that Africa has an emerging middle class of 350 million people, a median age of 20 and a good growth story—with an annual gross domestic product growth of 5%, compared to 4% in Asia-Pacific and 2% in the developed world.


“Africa is not like other emerging markets, it is younger and more diverse. There is no single African consumer,” he advised.
 

Land of Opportunity?

Russo urged attendees to look to Nigeria when they enter Africa; the country has Africa’s largest economy, and boasts the continent’s largest population, featuring a sophisticated consumer who wants to try new products.


"Nigeria is the entry point for the African opportunity. They want to stand out, keep up and try new things,” Russo insisted. “There are a lot of opportunities, but many challenges to return on investment.”


Challenge may be a bit of an understatement. In November, Nigeria was ranked third of the 162 countries of the world that have been hit by terrorist attacks, according to the 2015 Global Terrorism Index, trailing only Iraq and Afghanistan.


“We are in the early stages (of economic growth),” conceded Russo. “Nielsen has been in Africa for 20 years and it is only coming alive now.”


Coming alive in a variety of ways. For example, while Ireland is the No. 1 market for Guinness stout, Nigeria is No. 2.


To connect with Nigerian consumers, as well as those in fast-growing Ivory Coast, Kenya and Tanzania, Russo suggested that FMCG executives focus on social media, especially via cellphone, to get their messages out.


“This is a mobile story,” explained Russo. “But we see Facebook increasing in importance.”


The AC Nielsen analyst described the retail channel as dynamic, challenging and fragmented; noting that many countries lack a retail infrastructure.

 
What’s Inside?

Whatever it may lack in retail, Africa makes up for in natural resources. Hugo Bovill of Ajowan Consulting noted that the continent is the source for a range of essential products for the flavor and fragrance industry; products such as gum Arabic (Sudan), tea tree (Kenya), eucalyptus (Ethiopia), sandalwood (Tanzania) and patchouli (Burundi).


Bovill provided insights on each ingredient and country. For example, Kenya is the No. 2 grower of roses in the world, while Uganda is a key supplier of vanilla and Zimbabwe is already producing 10 tones of organic tea tree annually.


A producer’s perspective was Michele Starke of Piquet Buchu, a South African supplier of buchu oil. The material has applications as a flavor fixative to enhance berry flavors (especially blackcurrant and peach). More importantly, the black currant note of buchu leaf oil has applications in Chypre bases and colognes—although only very small amounts are added to fragrance formulas due to the oil’s intensity.


The company produces organic essential oil concentrate, soap, water and leaves for a personal care and nutrition industries. Although the market for buchu is small, demand is surging as Chinese consumers clamor for buchu leaves for tea. The company also produces citrus fruit and a host of other oils for industrial use.


Africa isn’t only profitable for raw material suppliers; Procter & Gamble has operated there for more than 50 years. P&G perfumer Rafael Trujilo explained that upper income consumers are willing to pay more for quality products and that product formulators should develop complex fragrances with chypre notes to win them over. He told the audience that there is an opportunity to provide better base odor coverage of products, but he said marketers must assess whether or not a medicinal odor connotes a product’s efficacy.


“In 1980, Procter & Gamble moved the center of its universe to the European Union,” Trujilo recalled. “In the past 10 years, that center has moved to Asia. In the next 10 years, the center of the universe will move to Africa. That’s where the growth will be.”


And with good reason; contrary to popular opinion, Africa has a healthy wealthy class and a growing middle class. Alemañy dispelled many myths that still dog the continent and its consumers; a myth such as the continent is mired in poverty. He noted, for example, that Nigeria is P&G’s third largest market for diapers and has the eighth most internet users in the world.


“Africa is fairly wealthy and it is getting better,” he insisted. “Sixty-five percent of Africans have cellphones and it is growing 20% a year.”


Life expectancy is getting better, too; rising from 38 to 60 in 50 years.


“There is a lot of money to be made in Africa,” he advised. “If you’re not in it, you’re missing out.”
 

Opportunities in Nigeria

Current unrest in Nigeria shouldn’t keep companies from investing in Africa’s largest economy, which has a GDP of $574 billion and is growing 6.2% a year, according to Jide Adedeji, president of SNF Consulting. He noted that Boko Haram, the Islamic terror group, operates primarily in the northeastern portion of Nigeria, away from raw material production.


Nigeria’s economy is growing more than 6% a year, driven by crude oil production, according to Adedeji, who is a former CEO of Teragro. He proudly noted that Teragro is a leading fruit processing plant, and that the facility was the first juice concentrate producer in Nigeria. Today, Teragro works with Coca-Cola and other multinationals.


Adedeji may no longer be CEO of Teragro, but he keeps investing in Nigeria’s future, first with MouthFresh Nigeria Ltd., a processed food manufacturer and more recently with Easy Sauces Nigeria Ltd. Tomato-based sauce is a staple of the Nigerian diet, but there is no formal industry; millions of tons of sauce is consumed on a daily basis and prepared from scratch. Easy Sauces produces a range of sauces including barbecue and pizza sauce.


“The sauce is a start; we want to create healthy and good quality processed food in Nigeria,” explained Adedeji.


To that end, he created Specialty Coffees International, which he called the premier fresh Arabica coffee roasting company in Nigeria.


“The future is bright and the opportunities are great,” Adedeji insisted. •