Expansion of fast-moving consumer goods industry in Côte d'Ivoire

Although it has increasingly become an important regional market in itself, Côte d’Ivoire’s geographic position has also made it a preferential destination for fast-moving consumer goods (FMCG) firms to base their regional operations. Attesting to that, several large-scale international operators are pushing through with plans to open new manufacturing and distribution centres to cater to West Africa’s mostly francophone markets. These new ventures are taking advantage of two significant benefits: the fast-growing Ivorian market, and the access it allows to underserved countries in the region.

However, multinationals still have to overcome several hurdles that come with operating in the country: the slow emergence of a middle class, difficult logistics and the high cost of energy. All of these factors are set to impact the profit margins of several new production projects currently under development, but for many of theses international players, a stronger presence in Côte d’Ivoire and thus closer access to a combined West African market of 350m people will likely make up for the risk. Agro-industrial producers in particular are leveraging their access to agricultural commodities that serve as manufacturing inputs.

Promising Numbers

With the establishment of peace after a decade-long conflict that ended in 2011, Côte d’Ivoire has been able to post high-growth figures and attract foreign direct investment into several of its economic sectors. Annual GDP growth hovered between 8% and 9% between 2013 and 2017, according to the World Bank. However, this economic growth has still to trickle down towards the majority of the population. The poverty rate has seen a reduction, but remained considerably high at 46.3% of the population in 2015, according to the World Bank. “In Côte d’Ivoire we see that the middle class has still not fully emerged in terms of consumption patterns and volume,” Oussame Azwat, assistant general manager at Compagnie de Distribution de Côte d’Ivoire, a retailer and wholesaler, told OBG. Another challenge is the fact that modern distribution remains a small part of the market, at 20% to 25%, according to Azwat.

This means that although the market has growth potential, FMCG players wanting to increase their market share need to have local conditions in mind and adapt accordingly. This might involve maximising local sourcing to save on import costs and minimise logistic difficulties, as well as adapting product doses and prices to cover different income segments.

Recent Arrivals

Despite the challenges, many international brands are betting on the country’s prospect for growth. Swiss-based agro-industrial producer, Nestlé, recently expanded its presence in Côte d’Ivoire via the opening of a new CFA6bn (€9m) distribution centre for its operations. The 29,000-sq-metre logistics area is located in the Yopougon industrial area in Abidjan, where several domestic and foreign industrial operators already have located their operations. The firm has already been operating in the Ivorian market in the infant nutrition, soluble coffee and chocolate drinks segments.

In March 2016 Anglo-Dutch multinational Unilever inaugurated a new mayonnaise production unit in Abidjan, the country’s most important economic centre. Budgeted at CFA6bn (€9m), the new factory has an annual production capacity of 10,000 tonnes. For Unilever, the new unit allows it to produce locally, as opposed to the previous strategy of selling on the Ivorian market through imports. Several FMCG operators expanding into African markets have used local manufacturing capabilities to help ease the flow of manufacturing inputs by sourcing as much as possible locally. At the time of the launch of the new Unilever unit, company sources announced that the goal was to move towards having 100% of its inputs sourced locally. To this end, Unilever has announced that it will invest in establishing soya, corn and poultry production capabilities in northern Côte d’Ivoire.