20/05/2014 © XCOM Africa GmbH 2013 1

The hidden growth market Africa!

Chances for companies in Africa´s packaging marketInnovation Park Packaging 2014Marc-Peter Zander, Partner & CEO, XCOM Africa GmbH

13th of May 2014

Fact and comments

The African continent is still not in focus for packaging companies

however there is a clear trend for change.

64 exhibitorTotal number of exhibitors

being active in Africa.

Today596 exhibitorTotal number of exhibitors

being active in Africa.

2030

(20

12

), X

CO

M A

fric

a s

urv

ey

20/05/2014 © XCOM Africa GmbH 2013 2

being active in Africa.

588 mio. €Total turnover in Sub-Saharan

Africa for processing and packaging

machines

$ 210bnAgricultural output

being active in Africa.

1,62 bn. €Total turnover in Sub-Saharan

Africa for processing and packaging

machines

$ 880bnAgricultural output S

ou

rce

: V

DM

A (

20

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), w

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20

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), W

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Africa seen by Americans

Africa has a bad reputation worldwide driven by prejudices...

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Fact finding trip to Africa

Take a trip to Africa and find out what Africa is like …

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A. Why Africa? Driving factors

Share of GDP

60

80

100

Developed

Countries

By 2015, emerging countries will dominate the world’s GDP.

Share of GDP (%), based on purchasing power parity

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0

20

40

1970 1980 1990 2000 2010 2015

27 %Share of

Emerging Countries*

So

urc

e:

IWF

, WE

O O

ct..

(2

01

2)

-1

97

0 in

tern

al

est

ima

tes

Emerging

Countries

31 % 35 % 37 % 49 % 52 %

* Emerging countries according to IWF: Central and Eastern Europe, Russia, Developing Asia, Latin

America, Middle East and North Africa, SSA.

Size matters…

What do you know about the size of Africa?

So

urc

e:

Th

e E

con

om

ist,

20

12

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Economic environment Africa

Africa projected to outperform world’s growth engine Asia.

GDP growth (1970 - 2015, in %)

4,55 5,1 4,9 5

3,5

2,83,3

4,8

5,5

So

urc

e:

IMF

, T

he

Eco

no

mis

t, U

nit

ed

Na

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ns

Wo

rld

Po

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on

Pro

spe

ct,

Th

e W

orl

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an

k

2,8

1970 1980 1990 2000 2015 F

Asian countries African countries

• 2010: SSA GDP - $ 954,4 billion

• 2015: African GDP > Asian GDP

• 2020: SSA GDP - $ 2,6 trillion So

urc

e:

IMF

, T

he

Eco

no

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Pro

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Th

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k

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Rising workforce

Rising middle class and health care improvement will result in a

strongly increasing workforce.

1.050

1.400

Working age population (16-64 years)

ProjectionWorking age population, in millions

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0

350

700

1970 2000 2025 2050

Africa

North America

China

Europe

Latin America and the Caribbean

So

urc

e:

Ha

rva

rd B

usi

ne

ss R

evi

ew

(2

01

3),

XC

OM

Afr

ica

(2

01

3)

Agriculture

61% of the world’s potentially available cropland is in Sub-

Saharan Africa.

Latin America

Others

80

Available cropland in 2009in millions of hectares

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Sub-Saharan Africa

590

Latin America

300

So

urc

e:

Ha

rva

rd B

usi

ne

ss R

evi

ew

(2

01

3),

XC

OM

Afr

ica

(2

01

3)

Companies moving towards Africa

... Nestlé did discover the African potential generating strong growth driven by Africa.

„Der Lebensmittelkonzern Nestle hat 2013 erneut von einem starken Geschäft in

Schwellenländern profitiert.Das Wachstum kam dabei größtenteils

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Das Wachstum kam dabei größtenteils aus Afrika, … - in Europa stagnierte das Geschäft dagegen fast“ (Focus online, 13.02.2014)

B. Key driver for

packaging

Middle class

New consumerpackaging

New consumer

Manufacturing

Growth of hidden champion

Key driving factors

A rising middle class with demand for convenient products

supplied by multinationals will drive the market.

AAn increasing middle class in Africa

demanding for new products

BAfrican consumer demanding for

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So

urc

e:

XC

OM

Afr

ica

An

aly

sis

(20

13

)

BAfrican consumer demanding for

new, convenient products

D

CGrowth of local brands by

multinational in Africa

Strong urbanisation in Africa

resulting in new demands

Middle class in Nigeria

In 2030 Nigeria‘s middle class will have $256bn per capita

income.

2012 2030

Estimated per capita income middle class Nigeria(Estimates by IWF, African Development Bank, XCOM Africa)

(201

2),

Afr

ican

Dev

elop

men

t B

ank

(201

3),

IMF

(20

12)

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$60bn

$256bn

Sou

rce:

Eur

omon

itor

(201

2),

Afr

ican

Dev

elop

men

t B

ank

(201

3),

IMF

(20

12)

Consumer spending

Total consumer spending higher than Russia and set to double

till 2020.

5,8

Total consumer spending

(2010 & 2020e)

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So

urc

e:

Inve

stm

en

t F

un

d f

or

De

velo

pin

g C

ou

ntr

ies

(20

12

)

2

1 1,1 10,8

2,62,2 2,1 2

China Brazil India Africa Russia

2010

2020

CAGR

(2010 – 2020) 11 % 7% 9% 8% 10%2

02

0

Sales in Africa

Global organizations identified Africa as an important pillar for

their current and future success.

8%

9%

Africa sales in % of total sales

(2012)

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2,50%3% 3%

4%

P&G Pepsi Nestlé Kraft Coca Cola Unilever

So

urc

e:

XC

OM

Afr

ica

An

aly

sis

acc

ord

ing

to

an

nu

al

rep

ort

s (2

01

3)

Gala

UAC Foods is one of the largest companies in Nigeria

distributing various food products.

Key facts

- Since 1879

- Over 5.000 employees

- Produced on Rondo machines - Switzerland

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So

urc

e:

Inve

stm

en

t F

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d f

or

De

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ies

(20

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)

Idea

Financials

- 300 million € turnover in 2012

- 23 % ebit margin

- Recent merger with Tiger Brands (SA)

- Distribution on roadside

- More than 1.000 street seller

- Also present in whole of West Africa

Maggi

Maggi has a long term tradition in Africa and is one of Nestlé´s

main products in Africa.

Key facts

- Over 50 million cubes sold per day

- 3.300 employees in Nigeria

- 20 million households use Maggi every day

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So

urc

e:

Inve

stm

en

t F

un

d f

or

De

velo

pin

g C

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ies

(20

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)

Idea

Financials

- 475 million turnover CHF in 2010

- Investment of 67 million in SA

- Profit margin in 2013 – 25,8 %

- Distribution in local markets

- Cooking events with African woman

- Meeting new consumer demands

Maggi

Nestlé developed a special bag for the South African market.

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Peak milk

Peak milk being the largest milk company in West Africa

continuously improves packaging.

Key facts

- Since 1954

- Reaching about 60 million consumer

- Largest milk company in Westafrica

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So

urc

e:

Inve

stm

en

t F

un

d f

or

De

velo

pin

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ies

(20

12

)

Idea

Financials- 505 million € turnover in 2011

- 18 % ebit margin

- Profit before tax increase of 46 %

- Distribution mostly in rural markets

- Milk power and can long lasting

- Small sizes serving low income households

Peak milk

Peak evaporated milk is packed in a new form of packaging

developed by German and Dutch companies.

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So

urc

e:

Inve

stm

en

t F

un

d f

or

De

velo

pin

g C

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ntr

ies

(20

12

)

Urbanization

Rural

Africa's urbanization is already on level of China and is third with

cities over 1 million inhabitants.

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48 52 109 52 63 48

Urban

Cities with > 1m

inhabitants

So

urc

e:

Un

ite

d N

ati

on

s (2

01

0),

MC

Kin

sey

(20

12

),X

CO

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a (

20

13

)

Urbanization

African cities at a center stage. New metropolitan cities emerging

with new demands for convenient products.

• 2013 – 50 % of population below 18

• 70 % rely on informal markets

• Luanda most expensive city

Market driver

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So

urc

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Un

ite

d N

ati

on

s (2

01

0),

MC

Kin

sey

(20

12

),X

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a (

20

13

)

• Luanda most expensive city

• Lagos biggest city in Africa

C. Conclusion Action points

OutlookOutlook

5 Action points

The five action points to consider when moving to Africa…

Action points

#1 Bring Africa to the boardroom and give it

senior sponsorship.

How

Invest time for Africa

on board level

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Action point 1

The CEO interest in rising on Africa and major organisation are

taking Africa to the board level.

16

24Visits to Africa by the CEO´s of 27

selected companies

(2000 – 2013)

#1

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2

43

45

4

23

7

9

1413

16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Note: The following companies have been surveyed: Barclays, BHP Billiton, BNP Parisbas, BP, Chevron, Citigroup, Coca-Cola, Daimler, Ford, General Electric, Hewlett

Packard, HSBC, Hyndai Motors, Mitsubishi, Nissan, Novartis, P/G, Pepsi, Samsung, Sanofi, Shell, Siemens, Societe General, Total and Vodafone.

So

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e:

An

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al

rep

ort

s, p

ress

an

d n

ew

s, B

CG

An

aly

sis

(20

13

)

5 Action points

The five action points to consider when moving to Africa…

Action points

#1 Bring Africa to the boardroom and give it

senior sponsorship.

How

#2 Invest in market intelligence and prioritize

your markets.

Invest time for Africa

on board level

Country and sector

strategy

20/05/2014 © XCOM Africa GmbH 2013 27

#2your markets. strategy

Angola NigeriaKenya

Cameroon

Uganda 20

25

30

Business potential for automotive company

(2013)

Action point 2

Market priorisation is key to success on the African continent

compromising of 54 countries.

high

Size of bubble indicates

business potential for Bosch

in respective country#2

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Algeria

South Africa

Egypt

Morocco

Ghana

Cameroon

TanzaniaSenegal

Ethiopia

Tunisia

Rwanda

Botswana

Mozambique

Zambia

-5

0

5

10

15

10

So

urc

e:

XC

OM

Afr

ica

An

aly

sis

(2

01

3)

highlow

low

Ris

k

Attractiveness

5 Action points

The five action points to consider when moving to Africa…

Action points

#1 Bring Africa to the boardroom and give it

senior sponsorship.

How

#2 Invest in market intelligence and prioritize

your markets.

Invest time for Africa

on board level

Country and sector

strategy

20/05/2014 © XCOM Africa GmbH 2013 29

#2your markets.

#3Concentrate on the products and technologies

which are needed.

Develop products

for Africa

strategy

Action point 3

There are a lot of challanges in Africa and we need to see on how we can bring European

solutions to Africa.

We do not want Europeans trying to

bring European solutions. We want African solutions !

#3

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5 Action points

The five action points to consider when moving to Africa…

Action points

#1 Bring Africa to the boardroom and give it

senior sponsorship.

How

#2 Invest in market intelligence and prioritize

your markets.

Invest time for Africa

on board level

Country and sector

strategy

20/05/2014 © XCOM Africa GmbH 2013 31

#2your markets.

#3

#4

Concentrate on the products and technologies

which are needed.

Build up 2020 Africa team. Investment in people

Develop products

for Africa

strategy

Action point 4

The CEO interest in rising on Africa and major organisation are

taking Africa to the board level.

Number of staff related to Africa in

selected multinationals

(2000 – 2008)

Rising interest Lack of resscources

Grade 5

math

PASEC

% change in average

archiving score

Senegal

Cameroon

#4

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15

30

45

75

130

165

2000 2002 2004 2006 2007 2008

PASEC assessment

1995-2007

Grade 6

reading

SACMEQ assessment

1998-2003

-22 -12 -2 8

Cameroon

Madagascar

Burkina

Faso

Kenya

Tanzania

Namibia

Malawi

Zambia

Action point 4

Invest in training to bulid up skill needed when dealing with

international clients and partner.

#4

Was macht der Deutsche, wenn er eine Anfrage aus Nigeria

bekommt?

20/05/2014 © XCOM Africa GmbH 2013 33

Glaubt es sei Betrug und löscht die Mail

Schickt die Mail an compliance officer

Antwortet

5 Action points

The five action points to consider when moving to Africa…

Action points

#1 Bring Africa to the boardroom and give it

senior sponsorship.

How

#2 Invest in market intelligence and prioritize

your markets.

Invest time for Africa

on board level

Country and sector

strategy

20/05/2014 © XCOM Africa GmbH 2013 34

#2your markets.

#3

#4

#5

Concentrate on the products and technologies

which are needed.

Build up 2020 Africa team.

Do it now and plan enough time.

Investment in people

Develop products

for Africa

strategy

Observe culture

when planning

Action point 5

Africa is the last untapped market with a sizable growth in

the worlds economy.

#5

20/05/2014 © XCOM Africa GmbH 2013 35

Action point 5

Africa is the last untapped market with a sizable growth in

the worlds economy.

#5

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“In the future, there will be no markets left

waiting to emerge.” (HSBC)

“Africa is the last untapped market with a

sizable growth in the worlds economy.” (Bosch)

EUROPEANS ARE

TALKING. WE ARE

INVESTING.

#5

20/05/2014 © XCOM Africa GmbH 2013 37

Action point 5

The grass doesn´t grow faster if you

pull on it ! (African Proverb)

#5

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Questions

Thank you • Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante• Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze •Achiu • Thank you • Dankie • Klitos •Danke • Gracias • Merci • Naa goodee • Siyabonga • Hvala • May-dah-say • Achiu •Thank you • Dank u • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante • Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze • May-dah-say • Achiu • Thank you •Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga • Murakoze •

Thank you • Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante• Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze •Achiu • Thank you • Dankie • Klitos •Danke • Gracias • Merci • Naa goodee • Siyabonga • Hvala • May-dah-say • Achiu •Thank you • Dank u • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga •Murakoze • May-dah-say • Achiu • Thank you • Dankie • Asante • Danke • Gracias •Merci • Naa goodee • Siyabonga • Murakoze • May-dah-say • Achiu • Thank you •Dankie • Asante • Danke • Gracias • Merci • Naa goodee • Siyabonga • Murakoze •