Ethio Lease this month became the first foreign-owned company to secure a financial services license in Ethiopia. Simplifying the country’s forbidding bureaucracy would help the country’s leasing market to reach its full potential.
Nestlé: “We invest continuously, good times or bad”
TAR: How do you tailor products to places?
Kais Marzouki: Tastes, as you can imagine, are very local. The taste of our products varies around the world. Maggi stock cubes in Germany don’t taste the same as they do in Nigeria because they are based [in Nigeria] on fermented soy, which is a staple of local cuisine. We have all our research and development in Abidjan to work with all our brands.
Then we have a challenge with visual communication. We want nutrition to be at the forefront. Half of our consumers don’t know how to read, so we have to explain in a visual way what fortification in iron means, what vitamin D does to your body, to [help people to] understand the benefits. And then, of course, it needs to be affordable, especially with these difficult economic conditions. Many of our consumers are living on $2 a day, so you have to have the right offering at the right price point, sometimes in smaller serving sizes.
What goes hand-in-hand with this is the capability to distribute widely. Our trade is extremely fragmented. You can’t just drop it off at the supermarkets. We have to make our products available in tens of thousands of points in the country. And this is day in, day out. It requires a big team.
How is that done? What are the ways of getting market information about, say, demand from a small rural town?
We walk the streets to count all the doors, and then we map them to determine how we are going to cover it, mostly by third-party distributors. We employ around 4,500 people for selling in the streets. They are all entrepreneurs. They have their pushcarts, and they enable us to reach our consumers in a different way.
Have you been affected by currency fluctuations? What are your mitigation mechanisms?
The depreciation of the naira was, of course, a big event for us last year. This has led to a lack of forex availability in the country, which has put a lot of pressure on people importing products. We were in a good position because we are manufacturing locally. Nevertheless, we have to import some raw materials. We have had for many years a strategy of local sourcing of our raw materials and have got down to a ratio of more than 70% sourced locally. We still have to import the remaining [share].
What are the most resilient product lines?
It depends how deep down the socioeconomic axis you go. For example, there are certain products that are not consumed by every person every day. Other things, like Maggi, are in every pot every day. So when you are entrenched in the daily consumption habits, these are the resilient ones. The products used by the middle and upper classes, these ones will be less resilient.
Was it too early for Nestlé to talk of a real middle class in Africa?
From our point of view, there is a rising middle class despite all the economic, political and social difficulties. In the past 10 years, every single year, these markets have outperformed the group’s results in terms of growth. This can only come from the fact that our products are consumed by the middle class. You just have to look out of the window and you see traffic jams because more and more people have cars.
Do you have expansion plans, despite the harsh economic weather?
In the past four years we have invested over Fr300m ($297.5m) in our region, across distribution centres, manufacturing sites, offices and machinery, so obviously investing is something we do continuously, good times or bad. It’s a long-term outlook. We won’t stop investing in Côte d’Ivoire just because it has one bad year. ●