By Tunji Faleye
Although the economies of most countries on the African continent are regarded as developing, many global brands are increasingly turning their attention to the continent as the next avenue for business growth. Many have extended their business tentacles to the continent while others that have not are also warming up to grab life-saving market share in Africa’s rapidly growing economies. From Europe to America and from Asia to Middle East, the main focus of major global brands for survival and growth is the establishment of their footprints on the continent.
Clearly, the trend will continue as long as the lingering uncertainty in developed markets such as the US, UK and parts of Asia remain a source of concern to brands. The persistent gloomy outlook in the global economy has forced many brands to look beyond their respective markets in search of new markets overseas where they can continue to grow their brands. This shifting focus has also positioned Africa as the beautiful bride in another round of ‘scramble.’
With its huge landmass, composed of diverse geographical and climatic conditions, and blighted by famine and acute poverty in some areas, the African continent is the new bride to many global brands which have received economic bruises at home. This is also regarded as a blessing to a continent that has been economically inconsistent for years due to inappropriate economic policies and political uncertainties.
The World Bank’s Africa’s Pulse report in September last year noted that some countries had registered sharp “slippages in economic growth” due to factors such as low commodity prices and domestic political problems. At the same time, other countries such as Ethiopia, Rwanda and Tanzania “have continued to post annual average growth rates of over six percent.”
Meanwhile, the Brookings Institution reports that the number of urban residents in Africa nearly doubled between 1995 and 2015 and is projected to almost double again by 2035.
It is in the light of this that many global brands have increased their share of African consumer markets in recent years to reach a dominant 84 percent in 2017. Non-African brands account for 84 percent of the top 100 most admired brands in Africa, and 99.3 percent of the most valuable according to a recent report by African Business magazine.
For instance, Facebook, H&M and Starbucks are among the brands that have launched or opened offices in Africa in the past two years. Apart, integrated marketing communication groups have also made their presence known in Africa with global agency WPP launching the WPP Africa Academy in Johannesburg, South Africa last year. The academy is a talent development project that helps WPP’s African subsidiary companies to access training programmes. Also, Publicis Group registered its footprints in Africa by buying 25 percent stake in Insight Redifini, a member of Troyka Group in Nigeria.
As global brands intensify the ‘scramble’ for markets in African countries, it is imperative that the interested brands seek a better understanding of African markets in order to guide their expansion drive.
Cultural sensitivities
Global brands must be sensitive to the diverse cultures of the continent in order to be successful. Some global brands that have been in Africa for decades have mastered this and it has paid them exceedingly. For instance, brands like Coca-Cola, HP, Unilever, Promasidor and many others have been reaping from the understanding of the diverse cultural tendency of Africa. This explains why Diageo, the world’s leading drinks group, has reaped the benefits of investing in an African strategy. The company’s latest financial results show that Africa accounts for 12 percent of total group sales while net sales in the region rose by four percent in the six months ended 31 December 2016.
Despite the challenging trading conditions facing brands on the continent, there are other opportunities for fast growth through new product launches. For example, while beer performance was impacted by a significant increase in beer duty in Kenya, with Guinness down 22 percent, sales of the Satzenbrau range rose by 108 percent. Many believe that Africa has become important source of further growth for global brands that understand the dynamics of African market.
Translating brands
No matter how big and sophisticated a global brand may be, it has to continually evolve as the market in Africa is also evolving.
A case study is the foray of MTV, Nickelodeon and Comedy Central owned by US media giant Viacom. The group has been in Africa for 11 years but this has not stopped it from continually evolving and mastering the process of communicating with an African audience. That was why, last year, the group hired Fort, an African-owned and run creative agency, to create a new visual identity for its MTV Base channel in Africa.
It will be recalled that the brand has been using imagery and logo designs used at the global level, but these paved way for a refresh identity to ensure it was entirely focused on the local market. This was achieved by creating many versions of different channel identities that mix vibrant custom-designed patterns with real life photography.
Government policies
Many global brands rushed into African market only to find themselves beating a hasty retreat back to their countries because they did not plan for or understand government policies that could make all the difference between failure and survival of their businesses. Essentially, a global brand that wants to succeed in Africa must make considerable effort to align its operation with relevant government policies and play by the rules of the land. Whether the brand is in Nigeria, Ghana, Egypt, Congo, Senegal or South Africa, one thing is important: brands must expect policy summersaults that will need the expertise of those who deeply understand the intricacy of African government institutions to survive such change in policy.