Rise of the African consumer Class – IFAMA 2014 session

Panelists

From left to right: Moderator Isaac Minde and presenter David Tschirley, both professors of International Development, Department of Agricultural, Food and Resource Economics at Michigan State University, USA, Paula Disberry, Group Director, Retail Operations, Woolworths Stores, MD Ramesh, Richard Mkandawire Vice President of African Fertilizer and Agribusiness Partnership

The rapid urbanization and change in the income and shopping patterns of consumers throughout Africa is having a profound effect on consumer choices. The rise of the African Consumer Class was therefore the topic for one of the panel discussions at the Food and Agricultural Management and CCA Agribusiness & Food World Forum Conference at the Cape Town International Convention Centre.

Article by Louise Brodie

The moderator and presenter of this session were Isaac Minde and David Tschirley respectively, and both are professors of International Development, Department of Agricultural, Food and Resource Economics at Michigan State University, USA.

The panelists were:

  • Paula Disberry, Group Director, Retail Operations, Woolworths Stores
  • MD Ramesh, President and Regional Head, South East Asia, Olam International
  • Richard Mkandawire Vice President of African Fertilizer and Agribusiness Partnership

Africa is experiencing rapid urbanization, and already more than 50% of the continent’s population live in cities. This process is driving a dietary transformation. In the city the upwardly mobile have more choices. They may choose to buy prepared or processed foods rather than prepare food from scratch, a choice also influenced by time constraints. Once people have moved off the land they are also no longer producing food for their own consumption. There is also a strong trend toward higher consumption of protein products as one of the most rapid food production and consumption increases that are currently underway throughout Africa is the expansion in milk and egg production and this will shortly be followed by the expansion in meat production.

Consumers with greater choices are also likely to change their shopping venue from traditional markets to retailers. The current rapid development of retail markets in Africa is in response to a bigger market with increased buying power. Although the transformation in the retail sector is happening rapidly, currently 90% of all food sold in Africa is still bought in traditional markets. The question arises whether the robust development of the retail sector will make the traditional African market obsolete. Projections have shown that this is not likely to be the case but that the prevalence of traditional markets will decrease from the currently handling 90% of food sold to around 65%.

The regulation of traditional markets and retailers and supply chains serving these outlets will all be influenced by government policies and the success of these developments depends heavily on how government will assist or restrict these sectors.

What has also become clear from studies in this field is that the demand for and subsequent production of processed goods is set to increase rapidly over during the forthcoming decades. Projections have shown that during the next two decades this is likely to double in rural areas and triple in urban areas. This trend is also true for the top and the bottom of the income spectrum.

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