KENYA – Rising urbanization, increasing population and incomes, rising middle class and a sophisticated consumer class will drive the growth of the cold breakfast cereal industry in Eastern Africa into the next decade, says the CEO of break fast cereal manufacturer, Proctor & Allan, David Kamau.
Addressing delegates at the recently convened African Food Manufacturing & Safety Summit (AFMASS) Eastern & Central Africa Conference and Expo which took place in Kenya recently, Mr Kamau, whose talk was on the present and future prospects of the breakfast cereals business in Eastern Africa, gave a rosy outlook for the sector.
A young youthful and large and growing population in Eastern Africa region which covers the East African community, Sudan and Ethiopia, reported at 280 million will be a major driver of consumption set to be a major of cereals consumption in the region.
With one of the youngest youth populations in the World, the region’s population under 18 years who make up 44% of the total, is a prime target for the company’s products, especially with rising incomes to boost per capita consumption, says Kamau.
“Looking at the rate of urbanization in the region, which has some of the world’s fastest growing cities in Nairobi, Addis Ababa and Dar es Salaam, and technology savvy consumers, Eastern Africa provides good opportunities for our industry,” he informed the delegates.
The rise in GDP over the last few years and the opportunity that will be availed when a number of Eastern Africa countries commence the sale of crude petroleum in a few years will even add further impetus to the growth of the demand in cereal products, he added.
Kamau notes that with the cold breakfast cereals market being worth KSh 1.8 billion (US$18 million) in 2015, with a 6% annual growth in Kenya, opportunities abound in the region to further grow the uptake of cereal products.
This compares to the hot breakfast cereals (porridge) market value of KSh1 billion (US$10 million), he said.
However, with low per capita consumption of cold breakfast cereals, Kamau informed the delegates that there is a big opportunity to improve the consumption of these products in the region, especially if the sector players engage the consumer more aggressively.
“The industry has a high level of brand loyalty, with one of the highest levels of ad-to-sales ratio, meaning that there is a high level of converting advert dollars to sales, which is a big positive for the sector,” he explained.
Going forward, Kamau explains that the trends in the developed world are beginning to shape the local breakfast cereal market.
“One of the key things we have seen is that convenience is beginning to be a major driver in the cereals market,” and shall be a key river to increasing the level of consumption of hot cereals which account for only 2% of the total breakfast cereals market in Kenya.
Other drivers include the growth of modern mass market that delivers 62% of the total volume, he informed the delegates.
The expected expansion of formal retail, considering the opening of malls in the region will drive the sector further, he says, referring to the recent spate of openings in the region by international retailers including Carrefour, Game and regional giants Nakumatt and Tuskys.
According to Kamau, the region’s breakfast cereals industry must take cognizance of global trends, including clearer and more honest labeling; convenient packaging; demand by consumers for good carbohydrates, protein and fruits; and new texture formats to deliver new products to an increasingly sophisticated and young audience in the region.
They must also brace to meet the emerging private label brands that have been introduced by leading retailers in the region to succeed, he concluded.
About AFMASS Eastern & Central Africa Conference & Expo
The AFMASS Eastern & Central Africa Conference & Expo is organized by FoodWorld Media Ltd, the publishers of the African food and beverage industry focused magazines Food Business Africa, Dairy Business Africa and Agri-Business Africa, among other publications.
The 2016 edition of the premier industry trade event took place at the Kenya School of Monetary Studies in Nairobi, Kenya from June 8-10, 2016.
The event brought together over 350 industry business leaders, suppliers to the food and beverage industry, Government regulators and NGOs involved in the food supply chain from Africa, Americas, Europe and Asia to deliberate on ways to improve food processing, food packaging and food safety, with a focus on Eastern and Central Africa.
The next AFMASS Eastern & Central Africa Conference & Expo is planned for March 22-24, 2017 in Nairobi, Kenya.
A few significant changes in 2017 will see the set up of one exhibition, but with two parallel conferences:
1) The African Food Manufacturing & Safety Summit (AFMASS) Conference will focus on the beverage; dairy; baking & snacks; fruit and vegetables; sugar and confectionery; meat; and other processed food sectors;
2) The newly introduced African Grains, Milling & Feed (AFGRAINS) Conference will cover the formulation, post-harvest management, processing, packaging and food safety in grains, milled products and animal feed.
More info on AFMASS Eastern & Central Africa Conference & Expo can be found on the website: www.afmass.com.