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Tiger Brands Limited integrated annual report
2015 23
Key trends over the next five years
Demand
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Strong population growth in Africa – youngest in the world, with rapid adaptation to modern trends and technology.
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Urbanisation continues, with increased income and spending power changing consumer patterns.
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SA retailers strengthening their presence on the continent, although traditional trade remains the dominant channel.
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Economic pressures lead to the continued growth of value segments across markets.
External factors
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Domestic economic and infrastructure constraints compress South African economic growth.
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Slow recovery in global advanced economies and slowdown in emerging market economic trends will continue to
impact Africa.
Supply trends
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Food markets characterised by volatile commodity prices and rising input costs.
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Skills shortage in emerging markets will make talent management critical for business success.
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A focus on a streamlined value chain will be imperative to manage efficiencies and costs in a competitive
environment.
Rest of Africa
In the rest of sub-Saharan Africa, economic growth rates
have fared better, driven by infrastructure investment, direct
foreign investment and consumer expenditure. Rapid
urbanisation and improving living standards are supporting
growth in these markets. However, the larger economies
have been affected by the effects of lower oil prices and
inflationary cost pressures due to weaker exchange rates
as a result of devaluation. This has led to pressures on
consumer demand and increased competition. While
consumers seek out aspirational brands and new variety,
value for money remains key as the overwhelming majority
of consumers remain in the low-income bracket.
Nevertheless, most markets are showing robust growth, as
purchasing patterns change from bulk, unbranded products
to branded packaged goods.
Although consumers are embracing trade expansion in
Africa, the route-to-market in sub-Saharan Africa remains
largely informal. The resulting reliance on wholesalers
and distributors to reach the final point of purchase is
significant and key to achieving market success. Poor
infrastructure and logistical problems continue to restrict
business expansion while socio-political instability and
growing political/regulatory controls in certain countries
present business challenges.
Given the size, changing demographic profile and growing
income levels of the population in sub-Saharan Africa, we
continue to believe that expansion in the rest of Africa
represents a significant growth opportunity for Tiger Brands.