1. Participant Name Aashish Nakra
Institute Name NMIMS - Mumbai
Batch (1st year / 2nd year)
1st year
Email ID aashishnakra@gmail.com
Phone Number 8879****77
Topic Entry Strategy for a food retailer into African Continent

3. Top 3 Recommendations
Africa is a continent which is diverse both with respect to the countries and the consumers residing there.
40% of its population lives in urban areas with access to more non-farming jobs and higher incomes. It is
projected that by 2020 more than 82% of the population shall earn more than $2000.The primary spending
on Food & Beverages (F&B) is likely to increase at a rate of 3.3% a year from a base of $360bn in 2008.For
a packaged food company the opportunity lies in catering to both the aspiring and rising middle class and
also to the large number of impoverished. The major problems which need to be looked at are the
infrastructure, distribution, marketing and the countries which offer the highest potential.
To tap the urban population, especially the middle class ‘Cereals’ as a product in the breakfast category
should be launched. Urbanization has led to increase in disposable incomes and busy lifestyles for Africans
which can help in positioning this as a quick and nutritional product. Though the African Middle class is
aspirational and aware, success of introduction of cereals will require a cultural change which can be
achieved by advertisement and consumer awareness. Since this cultural change has already begun to take
place to some extent, a competitive advantage in terms of brand awareness and reach can help a company
outperform rivals.
Africa has the world’s largest number of malnourished population with every 1 in 3 children suffering from
it & many more living at less than a dollar a day. To reach the millions of poor the company can enter into
food fortification with micro-nutrients. Since the staple food is different in different parts of the African
continent the company may find it difficult to fortify different staple foods for different countries. It should
therefore launch low unit packs of ‘powdered-micronutrients’ which can be sprinkled on home prepared
food. The company can sell this to government and other relief agencies, schools. Apart from this it can be
sold directly through the informal retail channel. Other than offering a huge market size, this shall also help
in creating a brand name for the company as a socially responsible firm & in building a harmonious
relationship with the African governments and society at large, which is essential for a long term success
in an uncertain African environment.
To have a competitive advantage which is sustainable the company should invest in in-house research
capabilities. The African continent lacks organized 3rd party research agencies and there is a huge dearth
of data about consumer needs & behavior. The purpose of building this in-house capability is to be able to
understand the diverse consumption patterns of the African population & identify opportunities which can
be fulfilled. The company should partner with local unorganized and organized retailers, carry our internal
censuses and also partner with firms which are into gathering data from the mobile payment eco-system.

4. Explanation
1. Catering to the urban population
Product & Positioning
The African middle class forms the world fastest-growing middle class, with 123 million forming the stable
middle-class who have no risk of slipping back into poverty. Urbanization has led to busy lifestyles and
more disposable income. Also the aspirational middle class wants to consume what the upper end of the
market or the westerners are consuming. This creates a market opportunity for a product like ‘Cereals’;
which can be positioned as a quick and nutritional alternative to traditional African breakfast.
Countries to Target
The African market has been classified by McKinsey into Diversified economies, Oil-exporters, Transition
& Pre-transition economies (refer appendix I). The diversified & oil-exporting economies are the ideal
markets to launch this product. They have the highest GDP per capita & have high influx of foreign
investments as well. Higher foreign investments imply a greater number of expats and inter-mingling of
local natives with foreigners, which makes it easier to get about this cultural shift in breakfast patterns.
Advertising
The mix of advertising mediums has to be chosen on basis of the country which is being targeted. While
most countries still are dependent on traditional mediums like bill-boards, percentage of this medium in
countries like South Africa is very less. Therefore the mix has to be worked out depending upon the country.
One common pattern across the continent is the cell-phone penetration, with around 535 million mobile
users. Therefore mobiles form an important medium of advertising. The company should focus on reaching
consumers through mobile marketing campaigns, contests or promotions, apart from the traditional
mediums like radio, TV and print.
Retail & Distribution
The distribution is one of the biggest challenge in Africa due to lack of proper infrastructure. Retail is carried
in form of traditional, modern and informal channels with informal & traditional channels forming the larger
chunk. However in urban areas organized retailers have a wider reach with ‘Shoprite’ having already
expanded in 16 countries. Tie-up with such established retailers can help develop a significant reach. Apart
from organized retailers, spaza shops should be focused on as they are the prevalent source for Africans
to fulfill their daily needs. For distribution 3rd party distributors need to be partnered with as it would be
difficult and cost intensive to create a network owned by the company. These 3rd party distributors have
necessary knowledge and relationships with local officials to ensure better movement of goods. These 3rd
party distributor can be supported by company’s own work-force.
2. Catering to the bottom of the pyramid
Product
As per estimates 40% of the African population lives in poverty and 1 in every 3 children suffer from
malnourishment. Catering to this segment would provide an opportunity for the company to increase its
social impact by improving the condition of the African population as well as reaching a huge market. This
market can be tapped by launching ‘fortified micro-nutrients’ in powdered form. This powdered product
can be sprinkled over the daily staple diet to counter the deficiency of vitamins and minerals. The product
should be sold in low unit packs to increase maximum affordability as a large chunk of the population still
lives on less than $1 a day. As of now, lot of food items are being fortified in most developing countries but
considering the heterogeneity of the African continent it shall be cost inefficient to fortify different food items
as per the preferences of the local population. Hence a general powdered form is a more viable alternative.
Countries to Target
The ideal countries to target would be the pre-transition & transition economies. They have the lowest GDP
and large rural populations consisting of low income workers. International development agencies play a

5. key role in such countries and can be partnered with as discussed below (in distribution). Also the transition
countries have increasingly developed their processed food industry, which can be used for manufacturing.
Advertising through Advocacy
Apart from tie up with the third party agencies, the product can be sold directly to consumers. To create the
demand considerable exposure to behavior-change messages has to be generated. Traditional mediums
like radio & TV have limited reach in rural areas and urban slums, due to weak infrastructure. To overcome
these challenges the company can tie up with influential local partners & social groups working in that area
and form a well-defined advocacy strategy. Alliances with NGO’s and politically powerful groups which can
help promote food fortification should be formed. Apart from advocacy the company should partner with
traditional retailers at point of sale.
Distribution
To product can be sold to government or relief agencies & schools as they cater to people supported by
government programs. Apart from that this can be sold directly through informal trade channels like spaza
shops and hawkers, which form the bulk of retail channel in Africa. To reach these the company should
leverage the network of Micro Distribution Centre’s (MDC’s) which are run by local entrepreneurs who
deliver using motorbikes, small vehicles are even at times hand-carts.
Advantages
Apart from the market size this initiative will help build long standing relationship with the African
governments and the society in large & also enhance the image and the brand of the company. It shall help
in forming an allegiance with the consumer which shall be leveraged as their income level rises. The strong
relationship with the government and local groups shall also help mitigate political risks which is huge cause
of instability in African markets.
3. Invest in In-house research of African consumers
The 55 countries in Africa have diverse demographics and consumption patterns. How people spend is not
just dependent on what they earn but also the infrastructural challenges have a huge impact on what they
consume. For example, areas with no or erratic access to electricity need products which can be stored
without refrigeration. The assumption that a product successful in one country shall be successful in another
is a fatal mistake which has to be avoided.
To overcome this challenge the company should invest in developing its in-house research capabilities to
better understand the customers and cater to their demands. In Africa companies face a dearth of data and
insights about consumer needs & behavior due to unavailability of organized & established market research
firms.
The company should build capabilities to gather own information & establish programs to identify consumer
behavior in each country it operates in. This shall not only help it cater to local needs & preferences but
also help identify newer avenues of growth.
The data can be collected by partnering with informal retailers or internally led censuses. Another effective
way of collecting data is to partner with companies which can help gather data from the huge mobile
payment ecosystem prevalent in Africa.

6. Appendix I
Classification of African Countries as per McKinsey Global Institute report titled ‘Lions on the Move : The
progress and potential of African economies’
i) Diversified Economies: These are the richest economies of Africa and have the least volatile GDP growth
as they are not entirely dependent on resources for their GDP. The highest contribution in GDP is by
manufacturing industry. Growth in these economies is fueled by rising urban middle class.
Countries: Egypt, Morocco, Namibia, South Africa, Tunisia, Other, Botswana, Madagascar, Mauritius,
Rwanda, Sudan
ii) Oil exporters: Africa’s oil and gas exporters have the continent’s highest GDP per capita but the least
diversified economies. Rising oil prices have lifted their export revenue significantly. However,
manufacturing and services remain relatively small, accounting for just one-third of GDP on average.
Countries: Algeria, Angola, Chad, Congo, Rep., Eq. Guinea, Gabon, Libya, Nigeria
iii) Transition economies: have lower GDP per capita than the countries in the first two groups, but their
economies are growing rapidly. The agriculture and resource sectors together account for as much as 35
percent of GDP and two-thirds of exports. Successful products include processed fuels, processed food,
chemicals, apparel, and cosmetics.
Countries: Cameroon, Ghana, Kenya, Mozambique, Senegal, Tanzania, Uganda, Zambia
iv) Pre-transition economies: The pre-transition economies are very poor, with annual GDP per capita of
just $353, but some are growing very rapidly. Although the individual pre-transition economies differ greatly,
their common problem is a lack of the basics, such as strong, stable governments and other public
institutions, good macroeconomic conditions, and sustainable agricultural development. International
agencies and private philanthropic organizations have an important role to play.
Countries: Congo, D.R., Ethiopia, Mali, Sierra Leone

7. References
The following references have been used at various places in the document
1) McKinsey Global Institute – Lions on the move: The progress and potential of African economies.
2) http://www.howwemadeitinafrica.com
3) http://www.economist.com/topics/africa
4) http://blogs.hbr.org/