In flavour of digitalThe key ingredient to unlock a $152 billion opportunity in the African consumer packaged goods market

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Executive SummaryDigital in Africa - a first mover advantage awaits in the consumer packaged goods market

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. In Africa, the next growth frontier for consumer packaged goods (CPG) companies, the potential to engage consumers digitally is monumental. Yet African CPG companies have been slow to apply digital strategies. The advantage for first movers could be great.

What exactly is the opportunity? There are a number of 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; and

• 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.

This point of view offers insight into the power of digital ecosystems and the status of brand engagement with African consumers, and looks at how digital can help address CPG value chain challenges—from 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. Right now is the time to explore that opportunity.

With half a billion active mobile phone users in Africa, smartphone penetration of 23.5 percent1 and more than 100 million active Facebook users every month,2 the nascent opportunity to engage consumers digitally is monumental.

ContentsIntroduction: The digital (r)evolution in Africa’s consumer packaged goods market 2

Unlocking the digital opportunity 5

Beyond product: From product manufacturer to experience provider 6

Hitting the bullseye: Giving consumers what they want 9

Digitally risk-proofing supply: The power of connected agriculture 12

Right product, right place: The death of chronic out-of-stock 15

The ripple effect: The impact of analytics 16

First steps: Defining and implementing a digital strategy 17

Conclusion 17

Appendix 19

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Introduction: The digital (r)evolution in Africa’s consumer packaged goods (CPG) marketDigital is a game-changer. It is disrupting markets and dislodging traditional players. On the African continent, the next growth frontier for the CPG industry, digital holds the key to market expansion and domination. With rapid adoption of digital technologies

enabling the continent to leapfrog infrastructure, technology and other limitations, the environment and its people are ripe for full digital engagement with brands.

The next one billion consumers will be African. Young, urban

and aspirational, they will be digital natives. Many companies in the sector have recognised the untapped potential represented by the consumer market in Africa. The question is: how do they unlock the benefits?

The next 1 billion

consumers

• 300 million-strong middle class (the size of US population)• Additional 133 million African middle class by 2020, with

increasing disposable income

High mobile penetration: • 500 million active mobile

Growing smartphone penetration

Lagos, Cairo, Kinshasa and growing

phone users in 2015• 651 million by 2020

Growing base of Internet users :279 million in 2015494 million by 2020

23 percent in 201557 percent by 2020

Youngest consumers: 54% of the

2010

2020

433 million

300 million

GDP growth of 7%

between 2015 and 2020 for sub-Saharan

Africa

3 mega cities3

7%

CPG market: $135 billion in 2015$216 billion by 2020

Middle class

AFRICAN OPPORTUNITY

population are aged 15 - 64

The next 1 billion

consumers

• 300 million-strong middle class (the size of US population)• Additional 133 million African middle class by 2020, with

increasing disposable income

High mobile penetration: • 500 million active mobile

Growing smartphone penetration

Lagos, Cairo, Kinshasa and growing

phone users in 2015• 651 million by 2020

Growing base of Internet users :279 million in 2015494 million by 2020

23 percent in 201557 percent by 2020

Youngest consumers: 54% of the

2010

2020

433 million

300 million

GDP growth of 7%

between 2015 and 2020 for sub-Saharan

Africa

3 mega cities3

7%

CPG market: $135 billion in 2015$216 billion by 2020

Middle class

AFRICAN OPPORTUNITY

population are aged 15 - 64

3 Metropolitan area with a total population in excess of 10 million people

Introduction: The digital (r)evolution in Africa’s consumer packaged goods market 2

Unlocking the digital opportunity 5

Beyond product: From product manufacturer to experience provider 6

Hitting the bullseye: Giving consumers what they want 9

Digitally risk-proofing supply: The power of connected agriculture 12

Right product, right place: The death of chronic out-of-stock 15

The ripple effect: The impact of analytics 16

First steps: Defining and implementing a digital strategy 17

Conclusion 17

Appendix 19

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whose tastes and wants are relatively unknown; improving sourcing and production; and closing logistics gaps to facilitate in time and on time distribution, and maximise sales.

Applying Africa–relevant digital levers

Globally, new and unpredictable industry leaders are emerging with growing frequency through smart digitisation of business channels and digitalisation of business processes.

Since 2000, 52 percent of Fortune 500 companies have gone bankrupt, have been acquired, or have ceased to exist.5 In the next 10 years, another 40 percent of the Fortune 500 will go the same way.6

In Africa, the digitalisation of the African CPG value chain is likely to have as disruptive an effect.

Focusing on products and traditional business models is not enough; the next one billion consumers—individuals engaging with content, commerce and personal communities through new and increasingly affordable mobile technologies—will consider you irrelevant and the opportunity will pass you by as new digitally savvy entrants capture market share.

With half a billion active mobile phone users in Africa, smartphone penetration of 23.5 percent and over 100 million active Facebook users every month, the nascent opportunity for digital engagement is monumental—it puts building enduring relevant personalised experiences with consumers on the African continent within reach.

What this means is that digital (r)evolution is a critical imperative for CPG companies on the continent—not just in terms of attaining short-term growth and market share, but to ensure their long-term survival and relevance.The benefits of going digital and being digital go well beyond closer engagement with consumers, however. Digital platforms and ecosystems can drive supply chain efficiencies, and through new and unexpected collaborations, create new value for businesses and for customers. These platforms and ecosystems are becoming essential to sustained competitiveness and growth.

Connected platforms: Solving CPG operational challenges

According to Marshall Van Alstyne, Associate Professor at Boston University and MIT ResearchFellow, platform companies—those that connect the numerous intricate ecosystems interacting with them—will far outstrip product-centric companies in the future.4 Such companies have come to understand “network effects”, the ability of a product or service to become more valuable as more people use it.

Rapid advances in cloud and mobility solutions are eliminating the technology and cost barriers associated with technology-enabled platforms, blurring the lines between geographies and industries. This has led to the emergence of digital platforms and ecosystems, networks of players working together to build, connect and deliver solutions to specific industry problems.

African platforms forAfrican problems

In the African CPG context, there is great opportunity for digital platforms to address key AfricanCPG challenges—for example, reaching the consumer where there is no formal retail infrastructure; achieving effective consumer engagement across a widely diverse population (from South Africa’s townships to Nigeria’s open markets)

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Research & development

Consumer experience

Sourcing & manufacturing

Perfect storeperfect product

Crowdsourcing& open innovation

Digital supply chain

Digital ecosystem and platforms

Sales ecosystem

• Better product - Price premium - Increased gross margin • Cheaper to develop - Decreased R&D costs

• Cheaper and more reliable raw material - Reduced supply chain risk - Faster to market - Decreased cost of goods sold• Sustainability - Improved brand perception (price premium)• Lower property, plant and equipment /

revenue ratio - Faster or more accurate production - More efficient production

• Improved sales force and distributor recruitment, training and tools

- Decreased cost of sales - Increased reach - Increased penetration - Broader assortment• Visibility and accuracy - Decreased out-of-stock - Decreased inventory• Cheaper logistics/ distribution due to better

analytics • Better execution in store (merchandising,

in-stock, product info, assortment) • Increased revenue (more sales of same

product, bigger market baskets) and margin

Applying digital levers to all aspects of the value chain can unlock additional value

revenue1.5%

revenue1%

invoice value revenue5%10%

Unlocking the full potential of digital

To unlock the full potential of digital in their companies, African CPG leaders need to apply Africa–relevant digital levers to all aspects of their value chain (Fig1).

Figure 1: Applying digital levers to the CPG value chain can unlock additional value

Those digital levers are:• Research and development (R&D)

via crowdsourcing and open innovation.

• Digitising the supply chain to enhance sourcing and manufacturing.

• Adding digital solutions to improve the effectiveness of distribution and sales.

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Accenture Research estimates that by leveraging mobile applications and digital ecosystems along the African CPG value chain, companies can capture up to $152 billion in accumulated value by 2020.

Figure 2: The $152 billion digital opportunity in the African CPG market (in $ billion)

The $152 billion digital opportunity in the African CPG market ( in $ billion)

Sales ecosystem

$152

2016 marketsize

R&D(crowdsourcingand open innovation)

Sourcing &manufacturing(digitalSupply chain)

Distributormanagementsolution

Perfect sales and perfect store

(Channelanalytics)product assortment

Total digitalopportunity to beunlocked

$38

$91

$38

$91

$9

$14

$149

$9

$14

Cummulative digital value by digital lever2016 - 2020

By applying digital levers along the African CPG value chain, companies can capture up to $152 billion by 2020.

The $152 billion opportunity

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A breakdown of that $152 billion:

• Digital platforms can enhance the value of products, helping CPG companies to craft uniquely African products. By crowdsourcing product ideas on open innovation platforms, CPG companies can give customers what they want, creating more engaged, brand-loyal consumers. This can improve their revenues by up to 1.5 percent, which equates to an accumulated industry value of $14 billion by 2020.

• By connecting myriad small suppliers in the manner of Accenture’s Connected Agriculture platform, a growth of 1 percent in revenue is forecasted. In the African CPG market, this equates to an additional $9 billion in revenues by 2020. This $9 billion sourcing opportunity is made possible through improved supply assurance, enhanced social capital through upliftment of farmers, and greater consumer trust achieved via product traceability.

• Previously at the mercy of poor

visibility across distributor channels, CPG manufacturers can implement distribution management platforms that can lift sales by $91 billion by 2020.

• Leveraging channel sales analytics will provide intelligence that will lift the lid on a $38 billion opportunity, through assortment optimisation and improved service levels to customers.

For methodology details, please seethe appendix, pg 18.

On the African continent, nurturing brand loyalty through consumer engagement will be a key differentiator in the battle to win African consumers over.

“You get Colgate?“

It is very common in African markets for consumers to ask for “Colgate” in lieu of toothpaste, “Vaseline” instead of petroleum jelly, or “Peak” instead of evaporated milk.

Although this suggests strong brand recognition, it does not necessarily translate into brandloyalty as these same consumers are often quick to specify “Colgate with a white tube” or “Vaseline with a pink lid”, referring to competing brands. Brand recognition is thus mostly due to the brand’s historical presence in the market, rather than consumers’ attachment to it.

Customised experiences that reach beyond sales conversion improve consumer engagement.

Unlocking the digital opportunity Beyond product: From product manufacturer to experience provider

Creating customised, omni-channel experiences

Accenture’s consumer engagement insights reveal that when brands leverage digital to deliver consumer experiences and personalised services beyond the actual products, they are rewarded with significant increases in consumer engagement and brand loyalty.

Nike’s Nike+ Run Club and Nike+ Training Club digital platforms, which provide consumers with personalised training plans and guidance to help them reach their fitness goals, have been major contributors to the company’s sustained double-digit annual growth. Many still think Nike is a shoe company. In fact, it is a platform company that facilitates consumer wellness goals whilst at the same time selling shoes. Through this initiative, Nike has broadened the consumer base it can engage, attract and retain, differentiating itself from other shoe companies.

In search of African engagement platforms

African CPG companies have been striving to step up consumer engagement through the use of Internet and social media platforms. However, the greater opportunity lies in owning a platform.

Procter & Gamble (P&G) created the Beinggirl.com page, which provides answers and adviceto South African teenagers on changes in their bodies, along with products ranging fromsanitary pads to cosmetics for this demographic.

When brands leverage digital to deliver consumerexperiences and personalised services beyondthe actual products, they are rewarded withsignificant increases in consumer engagementand brand loyalty.

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Similarly, Johnson & Johnson (J&J) partners with The Babysense Company to provide mothers-to-be and young mothers with advice on the most common issues they face and on relevant products.The Babysense Facebook page allows users to pose live questions to experts that are featured on a regular basis.

These efforts deliver limited success because the CPG brand merely rents space on someone else’s platform (e.g. Facebook) to access an already established user base. By developing a platform strategy and investing in the ownership of a platform, the brand gains the opportunity to manage its own content and offer a truly personalised experience—an essential ingredient in the fight to attract, acquire and retain loyal consumers and brand advocates.

There are very few African brands that can truly boast ownership of a digital platform or ecosystem, however. This leaves a clear gap in the market for leadership in the CPG sector.

One stand-out example of a successful platform company is South Africa’s Discovery Vitality Health loyalty scheme, which leverages behavioural science to incentivise members to make better lifestyle choices.

The highly personalised rewards-based experience offered by the Discovery Vitality platform and app keeps users engaged and wanting to do more to get bigger rewards. The platform offers a range of products, including medical aid, underpinned by Vitality rewards

which can be redeemed from an ecosystem of partners.

Vitality encourages Discovery Health members to get healthier, and gives them rewards that support a healthy lifestyle. Discovery Vitality members can purchase goods at significant discounts from Vitality partners, which include airlines, supermarkets, retailers, gyms, and entertainment outlets, as well as earn and use Vitality points to acquire goods.

The Vitality platform has been credited as the backbone of the company’s success and its double-digit growth in the South African market. As a platform owner, Discovery understands the economics of networks. The more tenants it attracts in the form of loyalty partners, the more consumers it will attract, making it even more attractive to tenants.

By investing in ownership of a mobile platform for consumer engagement, African CPG companies can unlock the network opportunity, creating truly personalised experiences and consumer intimacy, both essential ingredients to attract, acquire and retain loyal consumers and consumer advocates.

Finding consumer engagement opportunities

Where are the consumer engagement platform opportunities for African CPG companies?

Digital engagement is about connecting with the consumer in

relevant, meaningful ways.Engagement often occurs at key life events (a birth, marriage, buying a home, death) or to meet lifestyle needs (fashion, food, styling). A digital platform may cater to a few or many related needs.

One area for consideration is disease prevention. The World Health Organisation estimates that between 2014 and 2030, Africa will have 28 million additional deaths due to non-communicable and chronic diseases such as heart disease, stroke, cancer and diabetes.

African consumers are increasingly seeking solutions such as healthy lifestyle coaching or services for the prevention or management of these devastating diseases.

Personalised digital services could support consumers in their lifestyle choices—from providing guidance on the types of foods to consume, to household and personal care advice, including monitoring fitness and wellness progress.Young, trendy and aspirational African consumers may be interested in personalised coaching and training on personal care, including African skin-specific make-up advisories. The possible avenues are numerous.

Digital can drive supply chainefficiencies and collaborationwithin the value chain, helpingbrands create new value forall stakeholders that supportssustained competitiveness andgrowth.

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Targeting &Personalisation

CustomerExperience

Apply digital strategy across brands to reflect a“new marketing funnel” Create user-centric journeys that are objective driven.Create personalised experiences based on social media insights, (CRM) Customer Relationship Management& the consumer’s digital profile. Centralise and standardise the digital experience by applying a singular user experience & design across the ecosystem.

Empower brands and retailers with tools to influence brand consideration and purchase.

Website owned media optimisation with dynamic, intelligent content platform based on search intent.Multi-variate testing of content, images, design & layout.Collate data for personalisation based on consumer profile, social media insights & CRM.

Loyalty & Retention

A/B testing for social post content.Optimise loyalty & brand’s owned media strategy.

Dedicated social media engagement team. Platform, processes & framework for engagement.Feedback loop into product & service design.

Social Listening

Social engagement strategy & framework for brand advocates.Social media servicing framework and internal service level agreement policies.

In-house social listening platform.Actionable insights/reporting.

DigitalOperations

Develop a digital corporate identity frameworkContent management system platform for responsive experiences.Decoupling digital production from creative, with separate partners.Deliver Marketing Return on investment (mROI)Conduct a media audit.Establish an optimal reporting framework across channels.Implement MROI toolset.Analytics framework/tools to manage and optimise spend across channels.On-going management service to do the above every 6 months.

CONSUMER

The path to consumer engagement - a model

For brands to succeed they have to offer–and be part of–the total and continuous ecosystem of consumer needs. The goal is to attain hyper-relevance.

Designing a digital platform that facilitates fluid, intuitive, contextualised consumer experiences within a broader consumer ecosystem will take brand experiences to the next

level. Continuous social listening and extracting rich insights using analytics will help brands direct marketing spend more efficiently and design consumer experiences within the living service ecosystem.

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Hitting the bullseye: Giving consumers what they want

Diageo’s Orijin beer with extracts of herbs and fruits such as kola nut, prune, oakwood and bitter orange peel is a run-away success that contributed significantly to the company’s revenues from new product and brand launches in Africa, which is estimated at GBP 300 million for the financial year ended June 30, 2015.

Consumer engagement starts long before marketing–and often even before a product exists. The Asian ventures of CPG multinationals invested extensively in researching consumers’ preferences, using the insights to develop unique local products. However, CPG multinationals venturing into African markets often opt to introduce simplistically “Africanised” adaptations of their products.

All eyes are on Africa as CPG multinationals increasinglyannounce their intentions to enter, or significantly ramp up their presence on the continent, and competition is mounting.

CPG multinationals’ one-size-fits-all approach manifestlyfails, leaving a large opportunity wide open to the company who figures out what African consumers need and want.

Differentiation through consumer insight-driven innovation will allow CPG companies to commanda premium for driving relevant value-adding products to market.

This approach will be instrumental in achieving high performance and market domination on the continent in the near future. The increasing relevance of consumer inputs into the creation and delivery of products reflects the shift from a “me” to a “we” economy.7

Examples include products likeUnilever and L’Oréal’s BB Creams or the L’Oréal Mizani African American hair care product range. Products designed specifically for the African consumer, such as SABMiller’s Impala cassava beer or Diageo’s herb-and-nut flavoured Orijin beer, are less common.

An opportunity going begging

While these global multinationals have had some satisfactory results, their one-size-fits-all approachmanifestly fails due to a prevailing lack of insight to address the very diverse collective of African consumers. It leaves the question of what African consumers want and need unanswered—and a large opportunity wide open to the company that figures it out.This opportunity won’t beckon forever.

SABMiller’s Impala Cassava beer has experienced consistent growth of over 10 percent, and triple-digit volume growth in Mozambique since its launch in 2012.

On the African continent the CPG sector winners will be those that deliver products that meet con-sumers’ needs and desires. Getting this right can add $14 billion in value to the CPG market by 2020.

Leveraging digital can provide a differentiator when it comes to understanding what the consumer wants, separating high performers from laggards.

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Making the shift from “me” to “we”

The majority of business leaders are making the shift from the “me” to the “we” economy in the area of innovation. Fifty three percent of the companies surveyed in Accenture TechnologyVision 2015 study are now using an open innovation programme to innovate, multiplying their innovation capability with the help of consumers, customers, suppliers and partners. Many are using digital platforms.

Your ecosystem as an innovation sandbox

General Mills’ G-Win digital platform gives external parties the opportunity to submit innovative ideas on anything, from products’ ingredients and packaging to processes and technology, and even sustainability.

Effectively creating an innovation sandbox through this approach, General Mills crowdsources ideas, consumer insights, innovation expertise and trends, using them to rapidly co-develop and launch new products. The G-Win platform has led to the successful 2014 launch of snack products like Chex Chips and Nature Valley Nut Clusters.

Consumer crowdsourcing-led innovation has proven particularly beneficial in highly competitive

consumer industries. PepsiCo’s Frito-Lay chips brand has been capitalising on this with the “Do Us A Flavor” crowdsourcing campaign it has been running in North America since 2012.The brand invites US consumers to submit innovative flavour suggestions for its chips through various digital channels. Fans are invited to vote for the flavour they want to see in their supermarkets and PepsiCo offers $1 million in prize money or 1 percent of the flavour’s sales, whichever is higher, to the winning participant. The annual competition, which the $14 billion brand cites as a key contributor to its growth, attracted 14 million submissions in 2014, and created enthusiastic consumer engagement.

A company that sells spices, McCormick and Company, also took advantage of the connected “we” economy when it created a crowdsourcing platform for co-creation of flavour innovations.

First, it introduced “Flavorprint”, an app that creates flavour archetypes based on consumers’ input. The consumer can set up a profile on Flavorprint, specifying preference for spice, heat, toasted or even fruity flavours. He or she can then access recommendations for recipes that would suit their

profile. More importantly, in addition to creating content for consumption by its user base,McCormick encourages consumers to upload recipes. This allows the company to capture information and, through this feedback loop, identify new trends.Could flavour-sourcing work in Africa? Or rather, could digitalplatforms help CPG companies understand what Africanconsumers really want?

Leveraging high and growing levels of mobile penetration in Africa, CPG companies have an unprecedented opportunity to collaborate with consumers and rapidly develop and bring to marketAfrican-relevant products, through “Do Us A Flavor”-like initiatives.

In this way a food manufacturer might, for example, discover products or solutions that shorten or streamline the preparation time for staple foods in Africa such as pounded yams, egussi soup, fufu and plantain dishes.

Accenture Research estimates that by leveraging crowdsourcing, CPG companies could improve their revenues by up to 1.5 percent. In the African CPG market, this equates to an additional $14 billion in accumulated revenues by 2020.

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Mobile technologies and digital platforms offer tremendous benefits to farmers and buyers of agricultural commodities in emerging markets.

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Digitally risk-proofing supply: The power of connected agriculture As local demand grows, new solutions are emerging to strengthen the supply of agricultural commodities in Africa. Mobile technologies and digital platforms are proving to be of great use.

“Connected agriculture” digital platforms can deliver improved quality and security of supply, lower costs and carbon footprints, and enhance the social capital of the brand. They also offer the potential of defining new business models.

The benefits are quantified at $9 billion.

But the digital ecosystems these platforms create can be a double-edged sword, potentially disintermediating the CPG company as suppliers and buyers connect. This provides even greater incentive for CPG companies to drive consumer engagement and loyalty, strengthen platform relationships, and ensure ongoing business agility.

Smart platforms to grow local input

Securing the inflow of agricultural raw material inputs in affordable, consistent and sustainable ways has long been a challenge for CPG companies in Africa due to the prevalence of independent small farmer holdings in the African agricultural landscape.

Unskilled farmers who often have little equipment mainly produce small quantities of produce of unpredictable quality, offering no guarantee of supply and significantly increasing CPG supply chain risk in Africa.

As a result, most CPG companies resort to imports that are often costly, expose them to erratic fluctuations in commodity prices, and generate additional costs related to transport and various import-associated taxes and duties.

Although some CPG companies have embarked on fairly successful local sourcing programmes, the management of these programmes remains cumbersome.

Brewers Heineken and SABMillersource the handful of commodities required for the manufacture of their locally flavoured beer brands from 100,000 and 80,000 individual farmers in Africa, respectively.

Approximately 100,000 farmer families supply Heineken in Africa;80,000 contracted farmers prop up SABMiller’s value chain on the continent.

The expected growth in demand from African consumers will inevitably require increased production quantities and the contracting of more farmers. Without efficient management of contractors, the procurement of raw materials would become even more challenging. However, with significant African mobile phone penetration, local sourcing can be simplified, streamlined and up-scaled affordably by CPG companies.

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Linking suppliers: connectedagriculture

The Accenture Connected Agriculture study,8 conducted in partnership with Vodafone, showcases the tremendous benefits the use of mobile technologies can deliver to farmers and buyers of agricultural commodities in emerging markets.

Information services platform

Farmers in rural India significantly increased their outputs and earnings by using a digital information services platform. Upon subscribing to the service, farmers receive text messages with information ranging from weather forecasts to advice on fertiliser use and improving yields. The service also gives farmers access to a helpline where they can get

insights from agricultural experts.As a result, farmers saw an increase in production yield as well as the quality of their products, which translated into higher revenues. For their part, buyers of the agricultural raw materials benefitted from a more sure supply of quality products, produced sustainably and in adherence to the standards they had set.

In Africa, small-scale dairy farmers in Kenya are going high-tech with the help of iCow, a mobile agricultural information services platform backed by Accenture. Comprising a series of text messages, the service provides farmers with relevant data such as the best time to feed and milk cows, the proper amount of sun or shade for the animals, and the crop types that keep them healthier and more productive.

Another frequently used service provides information about proper treatment of cows during gestation.

As a result of using iCow, Kenya’s connected farmers are experiencing higher milk yields (in one case, a four-fold increase), improved food production for livestock and healthier animals.

Carbon footprint

The benefits of using “connected agriculture” digital platforms for local sourcing go beyond saving on international transportation and importation costs—they reduce CPG companies’ carbon footprint.

Cost savings

Local sourcing can secure tax incentives for CPG companies, as brewers on the continent have discovered, increasing cost savings.

Support of connected agriculture digital platforms and information services platforms will help CPG companies acquire a much sought-after license to operate.

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Social capital

Moreover, and most fundamentally in some cases, the support or creation of connected agriculture digital platforms will allow CPG companies to acquire a much sought-after license to operate in various African countries, based on their contribution to the betterment of farmers’ lives.

Increased brand value

Canned sea food brand John West has capitalised on the potential of a connected value chain with its tuna products. Through its “Can Tracker” initiative, consumers can track the source of the fish in their can to a high degree of precision, including not just the ocean but boat involved in catching the fish.

Linking ecosystems-adapting to new digital models

It is not inconceivable that such platforms can be used to link the supplier to the consumer. It is a double-edged sword that brands may be forced to take up in the battle for consumer hearts and minds. Indeed, today’s consumer expects and often demands transparency and adherence to sustainability principles from brand manufacturers.

The successful 2010 social media campaign led by NGO Greenpeace against Nestlé’s Kit Kat brand speaks volumes in this regard. The campaign focused on mobilising hundreds of thousands of consumers around the world in petitioning Nestlé to change its palm oil sourcing methods. This highlights the growing importance of sustainability and traceability to today’s consumers.

Our research in supply chain sustainability shows that leveraging technology to trace raw materials could translate to an uplift in trust, resulting in additional sales of up to 1 percent as a result of improved brand value. This would represent up to $9 billion in additional accumulated revenues for the African CPG market. In the longer term, it is not inconceivable that an agricultural digital information platform can be used to generate additional business and revenue streams through partnerships with third-party companies.

Collaboration with financial institutions, for example, can provide finance to farmers based on their now visible and traceable revenue streams. Commodity trading application development partnerships allowing farmers to trade excess stock on the markets is another example. The possibilities and revenue potential are tremendous.

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Right product, right place: The death of chronic out-of-stock

Digital solutions, analytics and applications accessed via shared industry platforms are increasingly emerging as a foil for the logistics and distribution challenges facing CPG companies in Africa. These solutions are not just driving business efficiencies and customer satisfaction, they are seeing the evolution of innovative new business models.

The benefits are significant. Increased visibility across distributor channels can lift sales by $91 billion by 2020, while leveraging channel sales analytics will provide intelligence that will lift the lid on $38 billion.

The out-of-stock challenge

Efficiently ensuring availability of relevant stock and product ranges in a dramatically increased number of outlets is undoubtedly one of the most pressing concerns of CPG companies. Reaching this goal in emerging markets has been less than straightforward, as the retail landscape is predominantly composed of small, independent traders. CPG manufacturers in Africa have thus set up route-to-market models based on leveraging a selected number of third-party distributors on which they rely heavily for the distribution of their products. While necessary to date, this approach keeps CPG manufacturers

guessing on key issues like inventory levels, sales by channels, promotion management at point of sale and even the levels of customer service offered by distributors.

Debilitatingly, it leaves them unable to perform demand forecasting or effectively monitor activities on the ground with a view to rapidly taking corrective measures when required. This state of affairs considerably limits growth potential.

Linking your distributor ecosystem

Connected industry platforms close this gap. Accenture Newspage, integrated distributor management and mobility software for emerging markets, for example, creates a mobile-powered digital ecosystem linking distributors to CPG manufacturers. It has proven extremely effective in addressing the lack of visibility CPG manufacturers face in emerging markets, as well as the frequent lack of distributor capabilities.

A global non-alcoholic beverage manufacturer using the system gained real-time access to its third-party distributor’s entire operation in India, attaining an instant view of the market with accurate information on product availability, orders taken and deliveries made, as well as insight into what product sold where and when.

A home and personal care company in India has, thanks to Accenture Newspage’s “new orders tracking” feature, been able to keep track of unfulfilled order lines, improve cross-selling, reduce invoicing errors and offer the right promotions to the right customers.

Accenture’s expertise has assisted CPG companies to achieve quantifiable benefits. These include reductions in out-of-stock items of between 5 and 8 percent, and a market share gain of 30 percent for a global personal care company.

Linking distributor ecosystems can result in an increase of up to 10 percent in average invoice value. This represents a not-insignificant $91 billion in accumulated revenues for the African CPG market by 2020.

In fact, as a result of the implementation of the Accenture Newspage solution at various CPG clients in emerging markets, they have been able to increase their outlet coverage by 15 to 20 percent.

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As immediate and direct as the benefits of visibility are across channels, they are dwarfed by the opportunities of using analytics to leverage these market insights.

Our experience in distributor channel sales analytics and assortment optimisation has resulted in a 5 percent sales increase at a global CPG company in India. Extrapolated to Africa and taking into account local dynamics, this could yield additional sales of $38 billion by 2020 over and above initial benefits.

By applying analytics to insights gained on distributor and retail activity, CPG companies will be able to better allocate marketing and promotion spend.

This can yield up to 10 percent savings in advertisement and promotion spend, representing significant savings for CPG companies operating on the continent. In addition, there are potentially significant additional benefits, such as savings in transportation costs due to more efficient delivery routes and schedules.

Innovative business models

While distributors are an obvious first port of call, similar solutions could be extended to individual points of sale in remote and rural areas, allowing CPG companies to have direct relationships with thousands of small independent

grocers. Digital platforms could enable collaboration through which CPG manufacturers could offer training, sales support services and even financing in exchange for uninterrupted availability and active sales of favoured brands.

The ecommerce opportunity

Over the past few years, Africa has seen considerable growth in ecommerce outside of the traditional South Africa market. The Nigerian ecommerce market alone is valued at more than $1 billon, with more than $2 million in transactions weekly spurred by leading African ecommerce players such as Nigeria’s Jumia and Konga.

Jumia is the largest ecommerce platform in Nigeria, giving manufacturers direct access to consumers. Its site traffic is now at approximately nine million sessions a month and doubles annually.

Digital will have the same leapfrog effect on retail as it did in telecommunications, according to Juliet Anammah, CEO of Jumia. She says that while ecommerce presently accounts for 15 percent of retail sales in the US, she anticipates that that figure will reach at least 30 percent in Nigeria in the near future.

With the rapid growth and, of late, pan African expansion of these African ecommerce players, CPG companies operating in Africa would do well to start considering

The ripple effect: The impact of analytics

the opportunities this growing channel can offer their businesses.Whether they set up direct business-to-consumer ecommerce platforms or leverage existing online retailers as platforms as P&G did through its partnership with Amazon, CPG companies in Africa need to start planning around ecommerce.

Unlike most of their global counterparts who often turn to online shopping for good deals and discounts, African consumers do not mind paying premium prices for the convenience offered by ecommerce shopping. CPG companies thus have an unprecedented opportunity to boost their growth potential by developing high-margin premium products and brands specific to the direct-to-consumer channel in Africa.

Some global CPG companies are starting to bundle their products (e.g. baby products) together and offer them at a discount in return for a subscription commitment. CPG companies should certainly ask themselves whether they could bundle their products in relation to an event or recipe, and offer them on a direct-to-consumer basis?

Although it is too soon to predict with certainty the long term potential of ecommerce for CPG companies in Africa, it is imperative that CPG business leaders start thinking and planning around it today.

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ConclusionCompanies 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.

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, companies must create mobile-powered digital platforms that connect consumers,

suppliers and distributors if they are to transcend a product-centric view of their business that ignores African challenges and opportunities.

Only in doing so can they hope to take advantage of the networked potential of their offerings—a cumulative $152 billion opportunity by 2020.

Accenture has developed a four-step process to help CPG companies define and implement their digital strategies.

First steps: defining and implementing a digital strategy

2 3 41Digital trends and current stateassessment.

Consumer and customer journeydevelopment.

Digital governance,business model and operating model.

Roadmap andbusiness case.

Define your digital vision, value proposition, objectives and initial targets.

Determine consumer and customer journey:Workshop to define to-be consumer journey scenarios and touchpoints for your digital interventions.

Define the governance, business model and operating model. Agree on technology infrastructure needed to support your new digital operating model.

Long-term implementation roadmap with prioritisation of initiatives.

Step 1 Step 2 Step 3 Step 4

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1. GSMA Intelligence, Africa Market Data © GSMA Intelligence 2015

2. Facebook, Facebook for Business: Connecting 100 Million People in Africa Facebook © 2015

4. UBS IT Hardware: Platforms Beat Products: Platform Economics; 27 October 2014. © UBS 2014

5. Constellation Research, Big Idea: Constellation’s 2014 Outlook on Dominating Digital Business Disruption © 2014 Constellation Research, Inc. All rights reserved.

6. Socialnomics, Stats from Social Media Revolution 3. Copyright © 2015 Socialnomics

7. Accenture defines the “We economy” as a world in which digital businesses are moving beyond their traditional models. It focuses on how these businesses, in aggregate, are creating a hyper-connected world where companies, consumers and even everyday objects have instant capabilities to act and interact with each other digitally across the globe.

8. Accenture and Vodafone, Connected Agriculture: The role of mobile in driving efficiency and sustainability in the food and agriculture value chain Copyright © Vodafone Group 2011

9. World Economic Forum in collaboration with Accenture, Beyond Supply Chains Empowering Responsible Value Chains

Digital valuation methodology

To create a model to quantify the impact of applying digital levers along key segments of the value chain for CPG companies operating in Africa, Accenture Research predicted the size of the CPG market in 2016, then applied the benefits of various digital levers to derive their immediate value.

The underlying variables included indicators such as CPG manufacturer sales, past and projected grocery sales in Africa, and results from our market experience. These were sourced from leading research institutions and from Accenture’s insights in digital. The variables used include:

• • Estimations of the African CPG

market size: this was based on reported 2014 sales by manufacturers of packaged foods, alcoholic beverages and non-alcoholic beverages in Africa. These values were extrapolated to 2016 based on observed and expected market growth.

• Crowdsourcing value: 1.5 percent additional sales extrapolated to 2020 based on expected market performance.

• Traceability of raw material value: 1 percent additional sales.

• Distributor management value:

Appendix

References

10 percent additional sales.• Product assortment analytics: 5

percent additional sales.

Values obtained were extrapolated to 2020, leveraging our in-house modeling capabilities.

This model was designed to be non exhaustive, and therefore only represents aspects of the value chain on which we believe digital could yield immediate results for the African CPG industry.

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Copyright © 2015 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 358,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$31.0 billion for the fiscal year ended Aug. 31, 2015. Its home page is www.accenture.com.

About Accenture Digital

Accenture Digital combines Accenture’s capabilities in digital marketing, analytics and mobility to help clients unleash the power of digital to transform their businesses. We help clients use digital technologies to deliver more meaningful and relevant customer experiences across all channels and customer segments, as well as to create new products and business models and to optimise the efficiency and effectiveness of their internal operations.

About Accenture Consumer Goods and Services

To help consumer goods and services companies effectively serve emerging and mature markets, Accenture’s Consumer Goods and Services practice, with its more than 10,000 professionals across the world, brings efficient global operating models, processes that manage scale and complexity, and strategies to drive growth. We help consumer goods companies create market differentiation, reach emerging global markets and tap the ever-growing power of today’s consumer. Packaging efficiency, unwrapping growth.

For more information

Dr Roze PhillipsManaging Director-Accenture ProductsSouth, West and East Africa rozett.phillips@accenture.com

About Accenture Research

Accenture Research is a global team of industry and digital analysts who create data-driven insights to identify disruptors, risks and opportunities for Accenture and its clients. The team includes 200 business researchers, economists, data scientists and survey experts based in 20 countries.

Special acknowledgement for their contributions to Anoka Balram Ilan Sparrius Joëlle Kana Karen Fang Grant Richard Murton Wayne BorchardtYusof Seedat