Consumer giant targets Africa's billion potential shoppers

Tide laundry detergent, made by Procter & Gamble Co., is seen on display at the Arguello Supermarket January 28, 2005 in San Francisco. Procter & Gamble Co. announced that it is buying shaver and battery maker Gillette Co. for $57 billion in a deal that would create the world?s largest consumer-products company.

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    Procter & Gamble sees African opportunity

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Story highlights

  • P&G is planning to build a new manufacturing hub in South Africa
  • P&G exec says there are huge opportunities in African markets
  • About 40% of the company's business is in emerging markets, he says

Extensive traveling is something that comes with the job for Dimitri Panayotopoulos.

Over the last few weeks, the vice president of Procter & Gamble's global business units has flown to every continent, minus Antarctica, overseeing the consumer giant's operations across the world.

His round-the-globe trips included a stop in South Africa, where he announced an investment of about $170 million to create a new manufacturing hub for the consumer goods giant's markets in Southern and East Africa.

The new P&G plant, which is expected to create over 500 jobs, will manufacture a range of products, including detergents and feminine hygiene goods, for local and export markets. Construction is set to begin next year while operations are expected to commence in 2016 or early 2017.

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The investment comes as part of P&G's global drive to tap the growing opportunity of developing markets, where a huge population base, coupled with an emerging middle class and a steadier economic environment, offer a potentially lucrative mix.

"We are in Africa because of the size," Panayotopoulos said. "It's about a billion people, that's the size of China and India for example, just under, and the population is growing, the economies are getting more and more stable, so huge opportunities here," he added.

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    Rob Davies, South Africa's minister of trade and industry, welcomed the news of the construction of the new P&G factory, saying that the investment was "a further example of confidence by leading manufactures in the future of South Africa."

    As the continent's biggest economy, South Africa is a key market for P&G, whose portfolio of products includes consumer stalwarts such as Tide, Gillette and Pantene. The company, which built in 2009 a manufacturing plant for Pampers nappies in Johannesburg, has been in the country since the mid-1990s and says that its brands serve more than half of South African households.

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    But while Panayotopoulos concedes that P&G has been a bit late in tapping other African markets, he says the group is increasingly looking to expand to other parts of the continent and reach its one billion potential customers.

    "We have businesses in Nigeria, in Kenya, Uganda, Tanzania -- we are going to go to Angola, Ethiopia," says Panayotopoulos.

    "We want to be in every country," he adds. "In the last 10 years we've gone from about 20% of our business being in emerging markets to about 40%. Obviously there is a huge upside; this is where the babies are being born, where more and more consumers are getting ready for our products, so it's really taken off in the last few years, last 10 years for us."

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    Panayotopoulos says that emerging markets, especially the BRIC countries -- Brazil, Russia, India, and China -- are currently driving demand for P&G and other consumer goods groups.

    "Africa is also very relevant and is very similar to the BRIC markets too," he adds.