Do Brands Matter in Africa?

Many people argue that brand awareness, and more importantly brand loyalty, is low in much of the African continent. Given the per capita GDP in particular of many African nations, academics and bureaucrats often argue that basic commodities, such as rice, oil, sugar, soap, clothing, etc. are all interchangeable and that those with the least means will inevitably purchase those products with the most affordable price. And this is often the case when it comes to certain products – evidence would suggest that many African consumers are still “switchers” for given basic commodity categories, and do not display what the West would categorize as classic brand loyalty.

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Above: FanMilk is one of the fastest growing ice cream brands in West Africa, offering affordable cool treats in hard to reach places.

But this is not the whole story. In the past several decades, brand awareness and brand loyalty have become increasingly common, as per capita GDP creeps up across the continent and the proliferation of options intensifies. No more are the days where you can only find local soaps for sale in a rural village market – now we see soap brands from Turkey, China, Lebanon, USA, and the UK being sold in wheelbarrows in towns where there might be only two or three generators. And with this proliferation of new brands entering the market, they are finding the need to distinguish themselves more and more to capture the attention of the increasingly brand aware target audience.

1000x393_primus_africaAbove: Primus beer is a semi-regional African brand, with operations in both Burundi and Rwanda, achieving great success as part of the Heineken brand family and enjoying their distribution systems and immense marketing budget.

While before quality was denoted by the local source of a product, African consumers are now assessing the quality of their products based on their foreign place of origin (for instance, “Made in China” is always seen as inferior to “Made in the USA” or “Made In Europe.”) The story is not new, but our acceptance of the speed at which things are changing is often behind the times, and I want to explore how the dialogue is now being held locally instead of just amongst the ivory towers of the West.

A recent pan-African assembly of both public and private sector individuals, called the Brand Africa Initiative, is increasingly interested in understanding these trends throughout Africa. The group, founded in 2010, aims to achieve an “insightful, brand-driven approach [for] sustainable socio-economic growth,” with a chief objective being the “championship and recognition of global African brands and global brands in Africa.” Every year since 2010, they have published their independent ranking of the best brands throughout Africa, ranking them based on value and admiration.

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Interestingly, only one brand in the top 50 was from Africa (#36, MTN, from South Africa), while the rest of the leaders in Africa are from the US (Apple, Google, Microsoft, Coca Cola, McDonalds, Nike, Cadbury, P&G, Levis, etc.), France (Orange, Gucci, Alcatel), South Korea (Samsung, LG), Japan (Toyota, Mitsubishi, Sony, Panasonic, etc.) Germany (BMW, Mercedes, Porsche, Nivea, Adidas, etc.), Switzerland (Nestle), UK (Smirnoff, BBC, Dove), and China (Toshiba, Lenovo). What does this tell us?

For one, it tells us that brands matter to Africa. No matter what the indicators tell us – the per capita GDP is too low, awareness of key health and societal issues are frighteningly low amongst our target audience, behavior change is a slow and arduous journey to overcome ancient historical dogma, etc. – brands have broken through and captured the attention of one of the world’s most diverse and disparate continents. All in a matter of a few years for some. In my own research, I have asked about brands amongst even the lowest SES quintile and, despite not having the purchasing power to buy many of these popular brands, they are still ever present in their minds and aspirations.

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Above: Huggies has taken the developing world by storm, successfully converting users from cloth to disposable.  While their prices are high, African consumers have adjusted their patterns to make the investment worth it: many lower SES users will buy one diaper at a time, and focus only on the sleeping hours, to ensure a good night, and refrain from using multiple diapers throughout the day to save money.

To support this thinking is a recent study conducted by Deloitte in 2013 entitled “Africa: A 21st Century View.” The statistics in this report often contrast what we see in public health reports and are informative for how anyone trying to conduct business in Africa: the economy is growing twice as fast as more developed countries; by 2017, Africa will be the 2nd largest market for investment among European companies; the rise of the middle class is growing at a shocking rate, with expectations that by 2060 half of the population will be considered middle class; and the list goes on.

Of the four countries focused on in the study, Kenya has the lowest per capita income at the moment by purchasing power parity at $2,180, Nigeria is second at $5,120, Egypt is at $10,600, and South Africa is the richest, at $11,970. But Kenyan youth, it seems, are the most image-conscious and consumerist of the four countries, who even run the risk of falling into debt just to keep up with the latest trends. In fact, one in three said that “buying well-known brands makes me feel good” – at 32%, the highest of the four countries surveyed. They also report the highest percentage agreeing with the statement “I would spend a bit extra to keep up with the latest fashion”, at 25%. This doesn’t automatically suggest that brands should, en masse, raise all of their prices; however, it does suggest that brands are increasingly having a strong impact on the purchasing patterns of youth in the continent and that (as we see often in more developed nations) the less your purchasing power, the more you need a brand to self-identify with a more aspirational quintile.

UnileverAbove: Unilever has introduced many of their global brands, and acquired several local brands as well, to develop a portfolio of over 400 brands sold throughout 190 countries.  Africa is a key growth market for them and they have found the formula (pricing, packaging, distribution, etc.) that works for them to ensure profitability.

But what I find most interesting in the Brand Africa 100 2014 findings is that there is actually an African brand on the list that has secured a spot in the top 50, showing that there is a lot of space for local and regional brands to win back consumer loyalty. MTN has done a wonderful job of this, pairing first class marketing efforts with emotionally-driven local insights, delivering work that helps their brands stand out not as another provider but a trusted ally on the path to economic and personal growth.

A new spot by MTN under their “Welcome to the New World” campaign has launched this past month throughout South and East Africa, called “Moon Campaign.” The commercial is simply wonderful and is a continuation of the work they did last year in Rwanda. Most importantly, this campaign has been aired regionally, contributing to their status as Africa’s most beloved local brand.

Above: MTN’s Recent “Moon” Spot

Above: MTN’s 2013 “Oh The Things You’ll Learn” Spot

What else can we glean from MTN’s “Welcome to the New World” campaign that other African regional brands can learn? First of all, they didn’t get mired in their eternal quest for localization – they found regionally-relevant insights and linked them to their product benefits. In a continent where education is widely praised as a path to self-fulfillment, but often expensive (at least for a quality one), MTN sets itself up perfectly as the answer to every proud parents worries in a developing context: they offer affordable access to a world of knowledge and expertise, from the convenience of a phone. This might not work so well in more developed western societies, where children can easily access this world of information from their local school’s library.

They also used English as the common denominator language, suggesting that you don’t have to localize to the point of making your brand a local name or using the local language for your promo or packaging – you can still have something uniquely “African” that people feel connected to while embracing a more global approach. This is true for all of the competitive set in condoms, such as Durex, Lifestyles, Moods, Ichi-Ban, Contempo, etc. not to mention most global brands being sold throughout the continent.

I will be sharing more African brand campaigns as I discover them and, if I think they can teach us something about how we market condoms to our end users, I will share them.

The $755 Condom Pack in Venezuela

Bloomberg Business recently reported on the alarming situation in Venezuela, where condoms (among other staple items) are becoming incredibly scarce due to high inflation and a lack of imported goods making their way to the country.

Durex and Trojan, a few of the more popular brands in the country, have nearly stocked out – except for a few black market channels or scarce-good auction sites, such as MercadoLibre, where you can still bid on a 36-pack of Trojans for around 4,760 bolivars (roughly one months wages) which translates to about $755.

Interestingly, there is still a supply of cheaper Asian-made condoms available in parts of the country; however, the stigma against these apparently low quality condoms have kept them on shelf, despite the lack of alternatives.  Interesting to see how important brand perceptions are even in the midst of a financial crisis.  A lesson that sometimes cheap and available is not all that matters to those in dire need…

Read the entire article below:

The $755 Condom Pack Is the Latest Indignity in Venezuela

Venezuelans who already must line up for hours to buy chicken, sugar, medicines and other basic products in short supply now face a new indignity: Condoms are hard to find and nearly impossible to afford.

“The country is so messed up that now we have to wait in line even to have sex,” lamented Jonatan Montilla, a 31-year-old advertising company art director. “This is a new low.”

A collapse in oil prices has deepened shortages of consumer products from diapers to deodorant in the OPEC country that imports most of what it consumes, with crude exports accounting for about 95 percent of its foreign currency earnings. As the price the country receives for its oil exports fell 60 percent in the past seven months, the economy is being pushed to the brink with a three-in-four chance of default in the next 12 months if oil prices don’t recover.

The impact of reduced access to contraceptives is far graver than frustration over failed hookups. Venezuela has one of South America’s highest rates of HIV infection and teenage pregnancy. Abortion is illegal.

“Without condoms we can’t do anything,” Jhonatan Rodriguez, general director at the not-for-profit health group StopVIH, said by phone Jan. 28 from Venezuela’s Margarita Island. “This shortage threatens all the prevention programs we have been working on across the country.”

Scarcity, Risks

The condom shortage, caused by a scarcity of dollars among importers, has prices on a website used to find scarce goods soaring and risks aggravating one of South America’s highest HIV infection and teenage pregnancy rates.

Condoms and other contraceptives disappeared from many Venezuelan pharmacies and clinics starting in late December, as the government tightened dollar disbursements amid sliding oil revenue, according to the Venezuelan Pharmaceutical Federation. No condoms were available in 10 eastern and central Caracas pharmacies visited in late January, compared with as many as 20 different kinds available at some locations in November, including Reckitt Benckiser Group plc’s Durex and Church & Dwight Co.’s Trojan brands.

Infection Rate

Venezuela had the third-fastest rate of HIV infections per capita in South America, after Paraguay and Brazil in 2013, United Nations data shows. The country also has the highest rate of teenage pregnancies on the continent after Guyana, at 83 per 1,000, according to 2012 data from the World Bank. This compares to just 4 per 1,000 in Germany and 31 in the U.S.

On the auction website MercadoLibre, used by Venezuelans to obtain scarce goods, a 36-pack of Trojans sells for 4,760 bolivars ($755 at the official exchange rate), close to the country’s minimum monthly wage of 5,600 bolivars. At the unofficial black-market rate used by people with access to dollars, the cost is about $25, compared to $21 in the U.S.

A two-thirds drop in the value of Venezuelan oil since June has brought the country to the brink of a debt default, according to prices in the swaps market. Instead of cutting social spending, President Nicolas Maduro has responded to lower revenue by slashing imports.

This year Venezuela will import 42 percent less than in 2012 in dollar terms, according to Bank of America Corp. estimates.

Lining Up

Shortages of everything from flour to heart medicine have spiked since December. Hundreds of people line up outside Caracas supermarkets at delivery times to buy food or household products at subsidized prices. Protests against Maduro’s handling of shortages, inflation and crime left 43 people dead last year.

Lining Up at a Pharmacy in Caracas

People queue up outside a pharmacy in Caracas, on Jan. 20, 2015.

Photographer: Federico Parra/AFP via Getty Images

In Venezuela, with abortion illegal, the disappearance of contraceptives will raise the number of female deaths by driving more pregnant women to clandestine clinics, said Carlos Cabrera, vice president of the local branch of London-based International Planned Parenthood Federation. A lack of condoms will also leave a long-lasting economic impact by taking girls and young women away from schools and the work force, he said.

“An unwanted teenage pregnancy is a mark of government’s failure: failure of its economic, public health and educational policy,” said Cabrera, a practicing gynecologist in Caracas.

No Trust

In the town of Los Teques on the outskirts of Caracas, Ramo Verde pharmacy manager Katherine Munoz stood by a contraceptive shelf filled with Asian-made condoms. No Durex or Duo, a Beiersdorf AG product, have arrived in her shop since October, with stocks depleting last month, she said, adding that customers “don’t trust” the brands she has left.

“People ask me whether I have used them myself and can recommend them,” Munoz said. “I can’t say I have.”

Supplies of birth control and emergency contraceptive pills as well as anti-retroviral drugs for HIV patients are also at critically low levels, according to IPPF and StopVIH.

Durex imports to Venezuela have collapsed “because of the political situation the country is going through,” Reckitt Benckiser spokeswoman Priscilla Sotela said in an e-mailed response to questions. Church & Dwight didn’t respond to an e-mail and phone calls seeking comment

Maduro promised in 2013 to build a network of condom factories to protect Venezuela’s youth from the effects of “capitalist pornography.”

‘Ears Grow Hot’

“When the ears grow hot and nothing can wait, and everything must happen now or the world will end — that’s when you end up with a tremendous belly at 14 or 15 years of age,” he said in a televised address in June 2013. “This can’t be.”

None of the factories have been completed, according to the pharmaceutical federation President Freddy Ceballos.

Officials at Venezuela’s Health Ministry didn’t respond to e-mails and phone calls from Bloomberg News seeking comment on contraceptive shortages.

“I ran out yesterday. Now, there’s next to nothing, and what you find is really expensive,” said Montilla, the advertising company art director. “You can’t take any risks.”

To get contraceptives in the capital, residents can still go to one of three family-planning centers run by IPPF subsidiary PlaFam, where in late January condoms were sold freely for 3 bolivars a piece.

“This is all there is,” said pharmacist Carlos Hernandez as he handed out the last two condoms available in the dispensary of the University Hospital of Caracas on Jan. 29. “Who knows when we will get more.”