Changing demographics drive breakfast cereal adoption across the continent

Gerald Mahinda joined Kellogg’s as MD of Sub-Saharan Africa in February to steer the company’s emerging markets strategy in what has been identified as a key long term growth area. Mahinda sees Africa playing a pivotal role in contributing to Kellogg’s global top line with the right investments into consumer research, developing product tastes and packaging formats that meet their needs, investing in communities, supply chain and distribution infrastructure, as well as nurturing talent.
Mahinda is working closely with the leadership of Kellogg’s Mediterranean, Central Europe, Middle East and Africa (EMEA) businesses, to transition into the new sub-Saharan leadership role. The North Africa business remains under the leadership of Kellogg EMEA. He joins Kellogg’s from Diageo, where he spent 14-years in three leadership roles: MD of East African Breweries in Kenya, MD of Brandhouse in South Africa and most recently as MD of Diageo Africa Spirits Transformation, where he was responsible for embedding optimum sales and marketing solutions in key markets as well as a fit-for-purpose upply footprint that specifically met the local demand in each market.
Mahinda believes that working for multinationals in 23 different African countries at senior levels has allowed him to influence their decisions for the benefit of the continent and to achieve abovebenchmark returns on investment (once the right investments have been made and the hard work has been done). The dramatic changes over the past 10 years make him bullish about the continent.
“My view is that what we saw happening in Asia over 20-30 years will happen in amuch shorter space of time in Africa.”
“Sub-Saharan Africa – Ghana, Nigeria, Cameroon, Gabon, the DRC, Uganda, Angola, Tanzania, Kenya, Ethiopia and Rwanda – is home to more than a billion people and has growth rates higher than the rest of the world. These markets are characterised by positive real GDP growth forecasts (4.5% on average), increased private sector employment and consumer spending, as well as high levels of foreign direct investment because they have arable land available and are resource-rich. “Ethiopia, for instance, has been in the top 10 global economies for the past five years and its Food and Agricultural Minister has stated that Ethiopia can feed Africa on its own. Nigeria’s Minister of Agriculture has said that his country will be self-sufficient in terms of its food supply in the next 10 years. “These are examples of huge opportunities in Africa – but there are still many doubters. This is where a company like Kellogg’s has an advantage to take the gap and shift a good percentage of its revenue stream to these unexploited markets – though that’s not to say it’s going to be a walk in the park.
“We do, however, have a very strong base in South Africa already (which is why I am based there), and the added advantage of spare capacity at our manufacturing facility in Springs, outside Johannesburg. We plan to grow our market leadership beyond our core markets of South Africa and southern Africa, utilising them as a springboard to enter the broader African market,” Mahinda explains. “I don’t see any market we cannot go into in the next 10 years. I’m not sure we’re going to be present in all of them, but I think the opportunity in the whole continent is very big. The needs and sizes of those markets will dictate how we approach the whole manufacturing element. We will start off with product(s) from Springs being introduced into a market, we may get into a scenario where the packaging format will need to be changed to cater for affordability and then possibly even get to the point where that market is big enough to justify making an investment into a production facility.”
Changing needs insights
He adds that because the company produces breakfast cereals it’s well-placed to address the changing demographic trends in Africa. “Some of the key ones are urbanisation – with 60 cities expanding to a population of more than one million people each over the next five years, a middle class that is set to double around every three years, plus a very young population that will experience a dramatic change of behaviour in terms of convenience and lifestyle.
“These factors all lend themselves to building our business across Africa because we are able to provide a solution like a quick and easy communal breakfast that meets consumers’ needs for convenience and love of socialising. The size of the opportunity depends on our ability to provide for that change in lifestyle needs. The most fundamental aspect of this is the offering we make
to consumers. I have seen companies jump to the conclusion that they need to innovate to meet the local need – only to find
that it bombed out because the consumer actually wants something entirely different,” Mahinda says.
“This makes consumer research and insights vital. If the research says that we have to innovate and change packaging formats for smaller serves or adapt the product for local tastes and palates, then we are geared to do this because our capabilities in the US and the new facility that we are putting up in India are all geared towards the twists of emerging markets.
He adds that an element of education in terms of nutrition, consumption and what the brands offer will also be required. “We are likely to find that consumers already have a level of awareness – mobile telephony has created an often-underestimated source of exposure and knowledge.”
He provides an example of the growth of online shopping in Nigeria to illustrate his point. “Although there is an absence of global online businesses because of their traditional model of having a credit card, a home address and insurance does not work in Nigeria, online shopping is the fastest growing business today because it’s fulfilling a need in the trade environment.” Three innovative companies deliver purchases to homes or offices, take them back if they are deemed unsuitable, and accept payments in cash.
“Kellogg’s has powerful brands and assets on the ground and its people work with supply chain partners to make things happen in the market. My approach is therefore always to create the most conducive environment to harness their best potential in running the business. I am a strong believer in getting success through people, so I give them all of the capabilities – the capex, leadership
and direction – for them to exploit their full potential. I am the product of an incubator programme and I believe there is deep enough talent across the patch that can be utilised to meet African needs and to exploit the various opportunities that are available.” – Nici Solomon