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In flavour of digital

The key ingredient to unlock a $152 billion opportunity in the African consumer packaged goods market.

Overview

Digital is a market disruptor. New digitally-powered entrants with different mindsets and paths to value are seizing market share from traditional players and turning value chains on their heads. At the same time, the demographic dividend associated with Africa is enormous. It contains the next 1billion consumers—young, aspirational digital natives. On this continent, the next growth frontier for consumer packaged goods (CPG) companies, the potential to engage with consumers digitally and derive quantifiable value chain benefit, is monumental. Yet CPG companies have been slow to apply digital strategies.

The advantage for first movers could be great. This point of view offers insight into the power of digital ecosystems, and looks at how digital can help address CPG value chain challenges—from research and development to sourcing to logistics and sales. It also charts a path to consumer engagement and offers advice on taking the first steps to define and implement a digital strategy.

For first movers, going digital in Africa offers a massive opportunity.

Background

With rapid adoption of digital technologies enabling the African continent to leapfrog infrastructure, technology and other limitations, the environment and its people are ripe for full digital engagement with CPG companies and their brands.

With half a billion active mobile phone users in Africa, smartphone penetration of 23.5 percent and rising and over 100 million active Facebook users every month, the nascent opportunity for digital engagement cannot be ignored. It puts building enduring relevant personalised experiences with consumers and connecting a massive business partner community on the continent within reach.

Many companies in the CPG sector have recognised the untapped potential represented by the consumer market in Africa. The question is: how to unlock the benefits?

Key Findings

There are a number of Africa-relevant digital levers along key segments of the CPG value chain that can deliver $152 billion in cumulative value over the next five years. Those levers include:

  • Better product development via crowdsourcing and open innovation, delivering $14 billion.

  • The development of connected agriculture platforms to enhance sourcing and to risk proof supply, $9 billion.

  • Implementation of digitally-driven distribution management platforms putting an end to chronic out-of-stock, $91 billion.

  • The usage of analytics, offering better product assortment to customers, $38 billion.

The key to leveraging these benefits lies in the development of digital ecosystems and platforms to better engage with stakeholders—suppliers, customers and consumers—and enhance value chain efficiencies.

For CPG companies, this will require a shift in focus from manufacturer to experience provider—one that understands and can give consumers what they want. It also means adopting digital technologies to increase the responsiveness and sustainability of the CPG value chain, and drive more value from it.

To unlock the full potential of digital within companies, African CPG leaders need to apply Africa–relevant digital levers to all aspects of their value chain.

Applying digital levers to the CPG value chain can unlock additional value

Recommendations

African CPG companies must think critically about the degree to which they will embrace digital to transform their business processes and go-to market channels, and how they will create the ecosystems around their products and services.

To this end, Accenture has developed a four-step process to help CPG companies define and implement their digital strategies:
Step 1: Digital trends and current state assessment.
Step 2: Consumer and customer journey development.
Step 3: Digital governance, business model and operating model.
Step 4: Roadmap and business case.

Companies must challenge themselves to find opportunities for creating greater consumer engagement, opening up a traditionally closed product mindset, and taking control of a massive business partner community to turn unknown quantities into a quantifiable benefit. Only in doing so can they hope to take advantage of the networked potential of their offerings—a cumulative $152 billion opportunity by 2020.


AUTHOR

Dr. Roze Phillips

Dr. Roze Phillips is a managing director at Accenture and the Management Consulting business lead for Sub Saharan Africa. She has spent over 15 years consulting in consumer related industries focusing on helping businesses drive better strategic outcomes, with a particular emphasis on transforming business in Africa. She holds Bachelor of Medicine and MBA degrees from the University of Cape Town and is a student of Future Studies. She is based in Johannesburg and can be reached at rozett.phillips@accenture.com.