Consumer preferences in Africa a stew of nuance and complexity

On a bridge linking two islands that are home to some of Nigeria’s richest people, a giant billboard advertises Moët & Chandon, the Champagne that has become a favourite tipple of the country’s wealthy elite.

Last week, a UK newspaper reported that Shoprite’s seven stores in Lagos sold more of the high-end drink in 2013 than the chain’s 600 South African stores did.

While this highlights Nigerians’ desire for luxury products, it also indicates their preference for foreign goods, something much less prevalent in another large market, Kenya.

I travelled to Lagos and Nairobi over the past fortnight to find out from retailers, manufacturers and analysts whether the provenance of consumer goods affects buyers’ preferences. The research was for an upcoming book about Africans investing in Africa, being produced jointly by the Brenthurst Foundation in South Africa and the Tony Elumelu Foundation in Nigeria.

The simple answer is that the picture is complex, nuanced and hard to pin down.

A Ghanaian executive who has lived in Nairobi for several years said many products enjoyed by Kenyans would not gain much traction in his home country. Kenyans, he said, focused on value for money in choosing goods, while his countrymen emphasised image.

More grooming products are sold in Ghana than Kenya, even though the former has half the population.

There is another issue at play, and that is the origin of consumer goods.

In West Africa, foreign goods are perceived to be more valuable and attractive. The consumer mindset is not particularly well disposed to locally made goods as they are perceived to be inferior and of low quality.

In Nigeria and Ghana, wealthy consumers fly to western markets to find the brands they prefer — not just luxury goods. A prohibition on many imports imposed by the Nigerian government means consumers have had to adapt to certain locally produced goods such as fruit juices, and have come to enjoy them, but a lingering desire for foreign brands remains.

In Kenya, the picture is slightly different. If you want to sell to Kenyans, it is better to flag goods as “Kenyan made” to tap into a strong sense of patriotism about local goods that is highlighted by brands such as the payment system M-Pesa, devised by cellphone company Safaricom. This is held up as a symbol of Kenyan pride but has not travelled that well to other African markets. But M-Pesa, and many other brands perceived to be local are actually owned by foreigners. Safaricom is majority owned by the UK’s Vodafone.

Goods that have been manufactured for many years in East Africa by foreign multinationals such as Unilever, Nestlé and GlaxoSmithKline are now viewed as local. Similarly, favoured beer brands perceived as local, such as Tusker, are owned by British brewer Diageo. But beer seems to buck the trend of favouring imported goods in Nigeria, where the best-selling beers, Star and Guinness, are regarded as local brands although they are produced by foreign-owned companies Heineken and Diageo.

Some South African brands have been adopted as local in countries where they are popular. A favoured tea brand, for example, is seen as a Botswana product in Gaborone and a Zambian product in Lusaka.

It is hard to unravel all these brand issues — there are many dimensions, nuances and complexities that companies doing business in Africa must consider when entering new markets. But what it clearly shows is the need for a differentiated strategy for countries that takes into account local, national and regional dimensions.

By now, this should be common cause, but there are still South African companies with Africa strategies that are, as a colleague of mine often says, an inch deep and a mile wide. Companies that fail to dig deep into the consumer psyche in African markets before making a move, and even adjusting the model in market, are bound to fail.

This article was first published by Business Day.

Dianna Games is the CEO of Africa @ Work, a South African-based company that aims to facilitate and improve business in Africa through the provision of research, information and networking opportunities. She is also a columnist for Business Day.