Skip to main content
Part of complete coverage on

African consumers 'underestimated' by Western firms

By Robyn Curnow and Teo Kermeliotis, CNN
updated 10:53 AM EDT, Thu July 5, 2012
STORY HIGHLIGHTS
  • Frank Braeken is the executive vice president of Unilever in Africa
  • He says African consumers have been underserviced by western firms
  • A Nielsen report has identified seven types of African consumers
  • Braeken says infrastructure, good governance and fostering local talent are still challenges

Editor's note: Marketplace Africa offers CNN viewers a unique window into African business on and off the continent. It is the destination for movers and shakers at the forefront of African business.

(CNN) -- Western companies operating in Africa have long underestimated the continent's consumers, according to a top executive in one of the world's biggest consumer goods groups.

Frank Braeken, executive vice president of Unilever in Africa, said that for a long time multinationals have thought of the vast continent as a "monolithic" market, failing to address its diversity.

"The African consumer has been underestimated, underserved and underserviced," said Braeken. "What I mean is we have looked at it a little bit generically, like 'the Africans,' a little bit patronizing generically. Now we start to take the African consumer seriously."

Unilever, the maker of brands such as Lipton and Knorr, has been active in the continent for more than a century, with a presence in 15 countries and employing thousands of workers there.

Read more: Are one in three Africans really middle class?

Yet, despite its long history and deep presence, Braeken acknowledged that the company had been slow in engaging with the diverse types of consumers in the continent.

"I'm almost somewhat ashamed to admit that we are still very much in learning mode about what the differences are within Africa."

Braeken said that it was becoming increasingly clear that there were major differences between the different countries in the continent.

"What we now increasingly do is we think much more in terms of sub-clusters, where you have east Africa, where you have west Africa, where you have southern Africa," he said.

The human side of market research

"It is more about how you define the brand mix, how you bring it to the consumer, that we localize and that we make it relevant for the local consumer."

A recent survey by Nielsen has identified seven types of consumers that companies targeting African markets need to be aware of.

"Rather than just a continent, Africa must be viewed as 54 separate and distinct countries with a wide array of political, economic, geographical, cultural and social features," said Nielsen's "The Diverse People of Africa" report.

According to the research firm, there is no "single African consumer." Instead, Nielsen says its seven types of consumers can be grouped in three tiers based on monthly income and average spending.

7 types of African consumers
Tier 1
Trendy Aspirants: 21%
Progressive Affluents: 7%

Tier 2
Balanced Seniors: 17%
Struggling Traditionals: 10%

Tier 3
Evolving Juniors: 24%
Wannabe Bachelors: 11%
Female Conservatives: 10%(Source: The Diverse People of Africa, Nielsen)

In the first tier belong the "Trendy Aspirants" and "Progressive Affluents" (wealthy, urban, well-educated Africans with high income and consumer packaged goods spending (CPG)).

The second group is comprised of "Balanced Seniors" and "Struggling Traditionals" (middle aged, mid-income Africans with average CPG category spend), while the third one includes "Evolving Juniors," "Wannabe Bachelors" and "Female Conservatives" (this is the continent's biggest tier, consisting of consumers who spend much less than average on CPG categories -- see fact box).

Meanwhile, household spending in Africa is projected to increase from $860 billion in 2008 to $1.4 trillion in 2020, according to a report by McKinsey.

The growth in spending on consumer goods, telecoms and banking can turn Africa's consumers into an increasingly attractive business proposition, creating markets large enough to be appealing for multinational firms, said McKinsey.

Read more: EasyJet founder to launch low-cost airline in Africa

I'm almost somewhat ashamed to admit that we are still very much in learning mode about what the differences are within Africa.
Frank Braeken, Unilever

Braeken said the emergence of a stronger middle class is only one part of the story. He argued that the focus should be on how companies can foster innovation and organizational capability to tap the collective spending power of both the high and low ends of the continent's consumer market.

"By having a product that is more affordable you reach down, so certainly you have more consumers in your catchment area," he said, noting that Unilever has doubled the number of stores it goes to physically in the last few years to over 400,000. "So certainly your products can be found in more places in Africa, so you expand your catchment area -- that to us is the real story of our growth in Africa at this moment."

Looking ahead, Braeken said he was very positive about the continent's future but warned that there were still many issues that needed to be addressed, citing infrastructure, good governance, corruption and fostering local talent.

"I'm very optimistic about Africa, but I say it always with a tinge of hesitation because one of the big risks is that we get carried away and therefore forget to talk about the real challenges that are still ahead of it," he said.

"We have to keep on talking about the real issues and then I am sure that Africa can continue that path that it's on now, and we will see not only Unilever but many other companies easily double in size from what they are today."

ADVERTISEMENT
Part of complete coverage on
Marketplace Africa
updated 7:14 AM EDT, Wed October 1, 2014
In Uganda, a group of landmine victims are using banana fiber to create rope, profit and community.
updated 9:37 AM EDT, Thu September 25, 2014
What does it mean to be Nigerian? That's the question on the lips of many in Nigeria as new national identity cards are being rolled out.
updated 7:05 AM EDT, Thu September 18, 2014
 General view of an oil offshore platform owned by Total Fina Elf in the surroundings waters of the Angolan coast 15 October 2003. The 11 members of the OPEC oil cartel have agreed to slash output by a million barrels a day, the OPEC president said 11 October 2006, in a move aimed at shoring up sliding world crude prices.
Six of the top 10 global oil and gas discoveries last year were made in Africa -- but can these finds transform the continent?
updated 6:21 AM EST, Thu February 20, 2014
A South African app allows buyers to pay for goods using their phone, without having to worry about carrying cash or credit cards.
updated 10:23 AM EST, Wed February 19, 2014
A Zambian computer tablet -- known as the ZEduPad -- is trying to open up the country's information highway.
updated 5:57 AM EST, Thu January 9, 2014
South Africa may be the dominant force in Africa's wine economy, but other countries are making inroads in the industry.
updated 6:55 AM EST, Mon January 6, 2014
Commuters aboard an overloaded passenger train 03 February 2004, celebrate after arrival at the train station in the centre of the capital Nairobi.
A $5 billion Chinese-funded railway project in Kenya could transform transport in east Africa.
updated 7:27 PM EST, Thu December 12, 2013
African astronomers want world-class observatories to inspire young scientists and build a tech economy.
updated 5:29 AM EST, Wed November 27, 2013
A new report praises South Africa's economic transformation since apartheid. But enormous challenges remain.
updated 12:18 PM EST, Fri November 22, 2013
zword app zombies
From zombie spelling games to walking snails, Africa's mobile gaming industry is taking off across the continent from Uganda to South Africa.
updated 6:46 AM EST, Fri November 8, 2013
Ethiopia is turning to renewable energy technology as the East African country looks to become a powerhouse for its regional partners.
updated 7:16 AM EST, Mon November 4, 2013
Downtown Johannesburg -- once a no-go zone riddled with crime -- is undergoing urban restoration.
updated 10:12 AM EDT, Wed October 16, 2013
Using helicopters and night-vision, crime syndicates are taking rhino poaching to a new level and conservation parks are struggling to keep up.
updated 5:27 AM EDT, Thu October 10, 2013
Eko Atlantic city design concept
A lack of infrastructure has hindered Africa's development, but a series of megaprojects could change that.
Each week Marketplace Africa covers the continent's macro trends and interviews a major player from the region's business community.
ADVERTISEMENT