Africa is an “untapped opportunity” for global coffee chain Starbucks, according to its Chairman and CEO, Howard Schultz. In a recent interview with broadcaster CNN, he predicted the brand would move into other parts of the continent following its successful launch in South Africa in April. “I think Nigeria will be at some point an interesting opportunity for us … I can't talk about specific markets, but we are a growth company,” he said. “Think about the growth we've had over the years – [we are] sitting with 24 000 stores in 71 countries. Africa is an untapped [prospect].” Schultz added: “I look at the opportunity here, which is really [unexploited], to significantly add to the revenue and gross margin of the company.” Looking to the future and the potential expansion of Starbucks across Africa, Schultz told CNN: “These are early days. We’ve got to earn the right and we have to earn respect. I'm very optimistic about the emerging middle class in Africa.” Responding to a question about the brand’s lower pricing strategy in South Africa (prices start from around US$1,20), he said it was the right decision to make the product accessible to as many Africans as possible. Starbucks was building for the long term and not concerned about managing the profit margin in the early stages. Coffee culture is on the rise in Africa and the company anticipates opening upwards of 150 outlets in South Africa alone.
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When Yunus Masaba saw that Uganda’s informal taxis weren’t providing a suitable delivery service to the growing number of online shopping businesses in the city of Kampala, he came up with a solution – and a new business model. Initially it was e-commerce operations such as Hello Food, which partners with restaurants to home-deliver food orders to consumers, which provided the impetus for Masaba to co-found the business called Transporter Corporation. “Until we entered the market, Hello Food and other [online sales] companies relied heavily on the ‘boda-boda’ taxis (motorbikes and bicycles which serve as taxis) for deliveries. However, due to their informal nature, it wasn’t working and we saw an opportunity that nobody else had noticed,” he says in the latest issue of ‘Strategic Marketing Africa’, the publication of the African Marketing Confederation (AMC). Transporter Corporation subsequently provided a delivery service for several other e-commerce businesses and then moved on to deal with supermarkets and set up its own platform called ‘Your Supermarket’. This allows customers to shop at different supermarkets and Transporter Corporation will deliver. “[But], with our exposure in transportation, we did not want to stop at only transporting goods. We have now extended our offer to a chauffeur service, which mainly provides executive transportation,” Masaba tells the magazine. Given that the business is heavily dependent on interacting with customers online, he concedes that the high cost of data is one of the threats. “New players have entered the market, so we are hoping the prices will be drop. Costly Internet limits the number of customers we reach, so our expansion is limited. We find people have to make a trade-off; would they rather physically go the marketplace, or incur the high costs of Internet in order to use our service?”
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Protea Hotels, the South African-based chain now majority owned by global hospitality giant Marriott, has confirmed the development of its first property in Botswana. This will give Protea a presence in nine African countries, among them Ghana, Nigeria and Zambia. Scheduled to open in early 2018, the Botswana property will be located in the capital, Gaborone. It is strategically positioned in the new central business district of the city where there are a number of recently developed corporate head offices, government offices and various retail facilities. “The hotel’s site was carefully selected for its visibility and accessibility; a prominent location near two of the city’s main roads,” the company says in a statement. It continues: “Characterised by prudent economic management and political stability, Botswana is one of the fastest-growing economies in the world and is classified by the World Bank as an upper-middle income state. With this sort of economic success and the positive outlook for the country, we certainly see strong value in this venture.” Meanwhile, parent company Marriott has announced a rebranding strategy for Protea that will see it now being known as ‘Protea Hotels by Marriott’. The existing logo has also been reworked. The company says this emphasises an evolution of the Protea brand from being a regional player to part of a strong global brand with recognised international appeal. It added that consumer research conducted in 2015confirmed the endorsement of Protea Hotels by an international brand such as Marriott would elevate brand perception and preference. Protea guests are already able to share in Marriott benefits such as a global loyalty programme.
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Despite sub-Saharan Africa being widely regarded as producing some of the world’s finest coffee beans, the region’s numerous producers have traditionally focused on exports and largely ignored the potential in their own backyards. But, according to a study by pan-African financial institution, Ecobank, this export focus is gradually changing, stimulated by the growth of the African urban middle class and their demand for consumer goods and services. Already this potential has been noted by big global chains like Starbucks, which is moving into the South African and wider African market. Similarly, large local coffee chains such as Kenya’s Art Caffe, Nigeria’s Cafe Neo and Ethiopia’s Kaldi’s are also looking to expand their footprint. ‘Strategic Marketing Africa’, the publication of the African Marketing Confederation (AMC), reports in its latest issue (Issue 2 2016), that East African-based coffee chain Java House, which already has 36 outlets in Kenya and Uganda, announced recently that it would be embarking on an expansion drive. CEO Kevin Ashley told news agency Reuters that the chain would be opening 12 new locations in cities such as Accra in Ghana; Dar es Salaam in Tanzania; Kigali in Rwanda; Lagos in Nigeria and Lusaka in Zambia. “Success stories such as Java House reinforce [the Ecobank] research, which carried a warning for local producers to get in on the action now at this early stage of the region’s coffee boom,” says the magazine. Coffee’s popularity is even spreading to Somalia, where many Somalis are becoming increasingly passionate about enjoying an afternoon coffee espresso – with camel milk, of course – instead of the traditional sweetened black tea.
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After much fanfare over the entry of US retail giant Walmart into the South African and wider African market via a buy-out of local chain Massmart, is the US company looking to leave again after five years? This is being suggested by some media reports emanating from the US after Walmart’s annual general meeting last week. Walmart bought SA-based Massmart – which has retailers such as Makro and Game under its umbrella – in 2011 for US$2,5-billion. At the time, ‘Forbes’ business magazine reported: “Walmart believes that South Africa is a key market for growth and it accounts for roughly 20% of consumer spending on the African continent. Africa could act as a crucial base to target other local countries in the region. Countries like Nigeria are gaining greater appeal due to rising affluence levels and increasing size of the middle class across Africa.” Since then, however, the African growth story has cooled and Walmart has not gained market share from rivals such as Shoprite. Now some reports from the US suggest that shareholders are unhappy with the performance of the African investment, which is now worth 23% less than when it was purchased. A weekend report by the Johannesburg-based ‘Sunday Times’ newspaper quotes retail analyst Sébastien Delsemme as saying: “We have heard from various sources Walmart have identified Africa as part of the divestment in their current portfolio, among others. The problem [will be] finding an investor with enough funds to take over.”
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Africa is one of the world’s great untapped markets for insurance products and services. But the challenge for the industry’s marketers is overcoming mistrust and a lack of consumer understanding. According to Issue 2 2016 of ‘Strategic Marketing Africa’, the quarterly journal of the African Marketing Confederation (AMC), the continent’s insurance landscape is one of extreme contrasts in terms of the size and sophistication of individual markets. South Africa dominates with an insurance penetration of 14% of GDP. Only five other African countries achieved penetration of over 1%: Namibia (7,2%), Mauritius (6%), Morocco (3,2%), Kenya (2,9%) and Tunisia (1,8%). Reflecting the scale of the challenge is the reality that the region’s biggest economy, Nigeria, has an insurance penetration is a mere 0,3%. South Africa’s major insurance groups are leading the charge into various parts of Africa, but other big players include Saham Finances of Morocco and Allianz of Germany. The key ingredients for achieving success, according to industry experts, are consumer education, product selection, distribution and marketing. But applying them is easier said than done. “All African countries are tough nuts to crack,” Nick Rudston of insurer MMI International tells ‘Strategic Marketing Africa’. “[Companies] must look at a long development cycle. It could be seven years or more and even then there is no guarantee of success.” Achieving brand recognition is the first step. “In every market you must invest in order to get people to have trust in your brand before you start selling,” says Delphine Maïdou, Africa CEO for Allianz. “The peace-of-mind mentality that comes with insurance is often not there yet. Only when people suffer a loss do they realise how valuable insurance is.” Product selection for specific markets is also crucial, as a product that works in one country may be a disaster in another. Funeral insurance, which is hugely popular in some markets, is an example. When Standard Bank launched a funeral policy in Mozambique, it clashed with the local culture and was viewed as a bad omen. The bank had to relaunch it as an education benefit for children in the event of the insured dying. Other topics under the spotlight in this issue of the magazine include a warts-and-all report on the Nigerian PR industry, innovation by Zimbabwean brands as they seek to overcome local challenges, and an analysis of the marketing opportunities in Tunisia. Strategic Marketing Africa is published four times a year and is distributed via marketing bodies in the AMC member countries of Ghana, Kenya, Morocco, Nigeria, South Africa, Zambia, Zimbabwe and Indian Ocean Islands. It is also available in selected airline lounges and is mailed to a selected list of marketing industry professionals.
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Despite a vibrant print media industry and rapid growth in Internet usage, it is television, radio and mobile mediums that have near-universal penetration in sub-Saharan Africa. Newspapers, magazines in online platforms still have lower levels of consumer reach, according to a study released by the Nielsen research company this week. The countries with the best overall media penetration (out of 17 nations reviewed) are Angola, South Africa and Namibia. The ranking is based on an amalgamation of their individual mobile, TV, radio, print and Internet penetration. “While Angola ranked number one overall, its Internet ranking was eighth, which shows the potential for huge growth in online activity rates if the required connectivity is provided. South Africa ranked second overall but was 10th in terms of mobile penetration, with an urban mobile penetration of 92%,” says Nielsen. “Namibia ranked third and Kenya fourth, which comes as no surprise given the latter’s diverse media sector with more than 20 television stations and over 370 radio stations, supported by a sizable middle class that sustains a substantial advertising market.” When it comes to the impact of advertising in sub-Saharan Africa, the report says consumers are highly receptive to advertising messages, with 48% of consumers saying they are swayed to a large extent by advertising. The level of influence varies by country, with Nigerians being three times more receptive to advertising messages than Cameroonians, for example. Outdoor and broadcast-based advertising platforms have the greatest awareness at 80% and 78% respectively. While consumers are aware of mobile as an advertising platform, only 8% of people say that mobile is the most-seen advertising platform. “Mobile is still primarily used for personal communication [and] it is underutilised to deliver advertising content,” says Nielsen spokesperson, Ailsa Wingfield
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Wednesday, 01 June 2016 08:21

More African expansion on cards for Uber

June is gearing up to be a busy period for global ride-hailing service Uber as it prepares to launch in Uganda, Tanzania and Ghana within a month. It is already operating in five cities in South Africa, two in Kenya and two in Nigeria. According to information given to delegates at the recent World Economic Forum on Africa meeting, Uber will launch in Uganda first, followed by Ghana and Tanzania. “Ahead of its expansion (to Kampala, Accra and Dar es Salaam) the American company is hiring people to work in operations and logistics, the major offices it needs in new markets,” ‘The Nerve Africa’ news website reported. “Uber has put up vacancies on its website for an Operation and Logistics Manager in Accra, Kampala and Dar es Salaam. It is also looking to hire Operations Coordinators in Kampala and Dar es Salaam.” As part of its Africa expansion strategy, the company is working to adapt to various local conditions. Cash payment options, for example, are being introduced as many consumers don’t have debit or credit cards and believe online payments are subject to fraud. GPS navigation is also more difficult in cities such as Kampala, where digital mapping has not been done in many areas. In addition, Uber may introduce parcel and food/restaurant delivery services called Uber Rush and Uber Food, the website ‘Kenya Buzz’ reported. “Key to Uber’s launch strategy is its Rider Zero concept,” says ‘Strategic Marketing Africa’, the African Marketing Confederation (AMC) magazine, in an article to be published it its next issue. “This involves commissioning local celebrities to be among the first in their respective cities to travel by Uber. Photographs of Rider Zeroes in or emerging from Uber cars are widely circulated to publicise the launch.”
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While the new R4,5-billion (US$280-million) Mall of Africa in Midrand continues to attract strong shopper interest following its opening in April, the redevelopment of existing shopping centres also shows no sign of abating despite slowing consumer spending. The East Rand Mall in Boksburg, east of Johannesburg, has just announced the completion of a R460-million (US$29-million) revamp which management says was necessary to improve the visitor experience and include retail brands such as Cotton On Kids, Soda Bloc, Due South, Kurt Geiger and Naartjie. Petra Foord, General Manager for the mall, said it ‘needed a more upmarket and refreshed look’ which would give it energy in a consumer market that is getting younger and more vibrant. Meanwhile, Menlyn Park Shopping Centre in Tshwane (Pretoria) is due to complete a R2-billion (US$130-million) expansion by late 2016. This will add 51 000 square metres of new retail space, taking the total retail area to 170 000 square metres. “The extension and rejuvenation caters to the diverse consumer needs of our growing and increasingly cosmopolitan shoppers, while meeting demand for more space from retailers,” centre management says in a statement on its website. “A larger mall also gives existing retailers the opportunity to create larger, flagship stores.” According to a report published on the ‘Bizcommunity’ website, Menlyn will feature upgraded specialist customer facilities such as a personal shopper service which can be booked through the marketing department, as well as a Welcome Centre with luxury shopper services aimed at visiting tourist and diplomatic delegations. Menlyn’s growth is being driven by increased corporate development in the area which includes offices for the likes of Investec, Nedbank, Rand Merchant Bank, PricewaterhouseCoopers and the SA Revenue Service
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Nigeria’s homegrown ethnic doll, Queens of Africa, is aiming build on its local success by taking on the potentially lucrative American market. The brand, which outsells the legendary Barbie in Nigeria and is popular in many parts of Africa, has begun a ‘Coming to America’ public tour that takes it to major cities such as Atlanta, New York, Chicago and Washington. At the same time, founder Taofick Okoya will be meeting with potential distributors for the North American market. At present the range is sold mainly online outside Africa. Queens of Africa has its own online store and Amazon also sells its products. Apart from ethnic dolls with different hair textures, skin tones and contemporary African fashions, the range also includes an educational book series. “Upon realising the non-existence of black dolls within the Nigerian market, he [Okoya] decided to create a brand of his own. The dolls’ body parts are manufactured in China, and are subsequently assembled in Nigeria. In the midst of it all, [Okoya] also empowers local communities of stay-at-home mothers, who make money [from] braiding the dolls’ hair and creating outfits,” ‘Forbes’, the international business magazine, reported in an article published earlier this month. Okoya told the magazine that, contrary to popular belief, selling a black doll in Nigeria hasn’t always been easy. “There’s still somewhat of a colonial brainwash present in the country and store owners would tell me ‘Oh no, black dolls don’t sell, give us more white dolls’ when I first presented them with the dolls. There’s somewhat of a bandwagon mentality here, where people simply follow trends without asking themselves why.” South African entrepreneur Maite Makgoba also markets a range of ethnic dolls called Momppy Mpoppy.
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