New manufacturing capacity set to revamp Cote d'Ivoire's FMCG market

With economic growth pushing household incomes upwards in Côte d’Ivoire, new opportunities are arising for retailers and the development of fast-moving consumer goods (FMCG). The improvement of domestic conditions, coupled with a rising population, is leading several global FMCG manufacturers to set up local production facilities to cater for the growing demand in Côte d’Ivoire and some of its neighbours. According to World Bank statistics, from 2000 to 2015 the country’s GNI per capita expanded from $640 to $1420. However, the sector still presents a number of challenges familiar to FMCG producers in other markets, including high distribution costs, a lack of warehousing space and most pertinently, cost-sensitive consumers.

Setting Up

However, this has not slowed the influx of foreign capital into the sector. Dutch beer producer Heineken recently set up a joint venture to establish a production unit in the country. The new company, Brassivoire, will be 51% owned by Heineken, with the remaining 49% belonging to retailer CFAO. The total investment in the new brewery will reach CFA100bn (€150m), with the unit expected to have an annual production capacity of 1.6m hectolitres. Planned to come on-line in early 2017, the new unit will make Heineken beer, as well as several local brands.

Also betting on the development of the FMCG market in Africa is Anglo-Dutch group Unilever. In early 2016 the firm opened a mayonnaise production plant in Abidjan, with an annual manufacturing capacity of 10,000 tonnes. The CFA6bn (€9m) venture is part of larger strategy to produce locally. Another FMCG manufacturer, France-based Bel inaugurated a new production unit in Côte d’Ivoire in early 2016. The 4200-sq-metre facility cost €3m to set up and has a daily production capacity of 100,000 portions of cheese. Another French manufacturer, CEMOI, opened a new facility manufacturing chocolate products in May 2015 in order to take advantage of the domestic cocoa supply. The 2000-sq-metre facility involved a €6m investment and is expected to have an annual production capacity of 10,000 tonnes.

Local Sourcing

The setting up of new manufacturing capabilities in Côte d’Ivoire will have a positive impact on local employment. But equally important is the potential contribution that these new production units can have on local suppliers and smaller domestic industries. The new CEMOI factory will take advantage of the locally grown cocoa, of which Côte d’Ivoire is the top producer globally, accounting for 40% of the total annual cocoa crop worldwide. The new Unilever manufacturing facility is also committed to sourcing at least part of its agricultural inputs locally. And the new Brassivoire beer venture is planning to be able to source up to 60% of its raw agricultural ingredients for production from African suppliers by 2020.

Local Retail

With distribution and retail channels in Abidjan and Yamoussoukro also improving, the outlook for local-oriented production is also brightening. In 2015 the new PlaYce Marcory shopping centre opened, covering an area of 20,000 sq metres, including a 3200-sq-metre Carrefour hypermarket, the French retailer’s first in the country. The project is the result of a partnership between Carrefour and CFAO, with a second shopping centre scheduled to open soon.

The expansion of foreign retailers in the country is putting pressure on local retail players Société Ivoirienne de Promotion de Supermarchés and Compagnie de Distribution de Côte d’Ivoire to hasten their expansion plans. Expansion of modern retail outlets is also likely to reduce the role of informal commerce in marketing FMCGs. Estimates of the size of the formal retail sector vary, ranging up to 20% according to some media outlets, which is slightly above the regional average. The arrival of a new FMCG producer is a good sign for both for the development of the industrial base, as well as for the expansion of largely untapped retail potential. To continue attracting new production, cost constraints that erode efficiencies must be addressed.

 

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The Report: Côte d'Ivoire 2017

Industry & Mining chapter from The Report: Côte d'Ivoire 2017