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12 Countries, 350 mil people, 6,5 mil km2

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The Urban rising middle class Urbanization rates vary between 20 and 25%

Africa 6.5%

7.2%

7.5%

5.0%

5.4%

4.8%

4.0%

3.9%

4.7%

3.3%

4.0%

3.0%

Fastest Growing Region in the World

China

Brazil

EU

Japan

Share of World Real GDP (%)

Africa is expected to have the fastest growing population and GDP

in the world, along with strong GDP per Capita growth

Increasing

relevance in

the global

economy

Diversified Growth = over the past decade, the services sector has

contributed over 50% of Africa’s GDP growth

Large Urban Centers = 52 cities with populations of 1 million or

more, comparable to Western Europe

Rapid Urbanization = proportion of people living in cities is higher

than in India and will be of 50% by 2030

Expanding Middle Class = bigger than India, 50% of Africa will

have discretionary spending power by 2020

Agricultural Potential = 60% of the world's uncultivated arable land

Enhanced Regional Cooperation = Intra-African trade represents

c.11% of total African trade, with significant room for growth

UK

2010

Africa

4%

2050

Africa

12%

Africa: a Giant … … with Strong Growth Prospects

Population (bn) Real GDP Growth CAGR Real GDP per Capita Growth

USA

India

Source: Population Bureau. Source: CIRA. Source: CIRA.

Source: CIRA.

2013

2025

2050

2010-2020

2020-2050

|

2010-2020

2020-2050

Sources: Harvard Business Review, CIRA.

0.60.70.8

India

China

Europe

US

LatAm

Dev. Asia

ME

LatAm

CIS

CEE 3.1%

3.0%CEE

CIS

LatAm

ME

Dev. Asia

Africa 5.2%

4.9%

4.7%

5.5%

3.5%

3.4%

3.4%

3.0%

3.6%

4.0%

Africa represents a frontier market with an attractive growth profile, supported by healthy

demographics and macro dynamics.

Africa 1.1

1.5

2.4

1.31.4

1.7

1.41.41.3

0.70.70.7

0.30.30.4

• population is 45 million people, 1/3 of themliving in urban areas

• population is optimistic: 52% of Kenyans believe their household to be much better off in two years

• shopping population is young: 66% of them are between the ages of 25 and 40

• Expanding middle class is spending its way to comfort: in the home, in health and fitness, in state-of-the-art schools and in communication services

• For the middle class shopping malls are the place to be

– Shopping malls are expanding in main cities

– Garden City, a new 130, 000 m2 shopping spaceopened in 2015 and is the largest in East Africa

The Growing Middle Class

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610,000 Kenyans spend more than $5,000 a year - the level at which householdsbegin to spend more than a half of theirincome on items other than food

Size of the middle class (% of population)

4,7% 2,1%

Rate of urbanization Population growth

Kenya’s

Source: Afdb

44,9

21,518,7

12,1 7,7 5,3

Kenya Ethiopia Uganda Tanzania Rwanda Burundi

Consumers

• The number of dollar millionaires in Nairobi is the fifth largest in Africa, and is expected to exceed 8,000 in 2020

• The high income class creates the demand for luxury products: Bentleys, Aston Martinis, Porsches and Jaguars can be seen in the streets of Nairobi.

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• In East Africa about 2 million peoplebecome adults every year

• Young people increase the demand for consumer goods as they are more eager to consume and try new products than the elderly

• Especially young consumers are adopting a Western lifestyle as well as Western style consumer behavior

By 2040, Africa will be home to one in five of the planet’s youngpeople and and the world’s largest. In two generations it will have half of the worlds population under 25.

Young ConsumersC

hin

a

Ken

ya6.3%

4%

The High Income Class

The share of highest income people in Kenya is projected to grow by 6,3% annually from 2011 to 2020, one of the highest rates in the world (4% in China)

Consumer profile

Profile of average consumer is changing rapidly

• Wealthier, better educated and increasingly conscious

of price

Urbanites lead the way

• In Kenya consumption per capita per year is $1,526

while in Nairobi it is $2,827

• People are influenced by social media, their travel experiences, premium pay -TV and Internet

• East Africans prefer luxurious, strong and visible brands

– they want to show what they can afford

• There are no clear preferences for foreign or local brands

• Challenge: consumers’ reluctance to change brands

– Flipside: instinctive brand loyalty once you get it

• Some products tailored to suit local conditions

– E.g. Samsung – Built for Africa products are

designed for blackouts.

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Prime drivers for purchasing decisions: • Recommendation• Affordability• Availability• Familiarity

GDP per capita: East Africa

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0

200

400

600

800

1000

1200

1400

1600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ethiopia - GDP per capita, PPP (constant 2005 international $) Kenya - GDP per capita, PPP (constant 2005 international $)

Rwanda - GDP per capita, PPP (constant 2005 international $) Tanzania - GDP per capita, PPP (constant 2005 international $)

Uganda - GDP per capita, PPP (constant 2005 international $)

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ICT

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Infrastructure

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Energy

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Construction

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• Most new apartments are opting for a fitted

kitchen and bathroom. The number of companies

offering high quality fitted kitchen solutions in

Kenya has increased from 3 to more than 10 in the

past 5 years

• Prafulchandra and Brothers Ltd have supplied

Italy’s leading kitchen design brands since 2011

(e.g. Scavolini)

• Duravit, a supplier of bathroom ceramics and

furniture has opened an outlet in Nairobi

• Boom in the real estate markets has led to increased

demand for good quality bathroom and kitchen

furniture.

• Style of new apartments is Western and high quality

materials are used for the surfaces

• Wooden floors and especially laminates are popular

• There is a growing market for exclusive furniture and

carpentry

Household

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BoConcept opened its store in Nairobi in 2013.

Panesar Interiors has manufactured high endfurniture and interiors in Kenya since 1948

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Healthcare

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Health Spending

• Middle class is the key driver of healthcare expenditure in Kenya and the region

• Spending on medical care and other healthcare products is growing rapidly

• Private insurance provides access to health services for the growing the middle-class

– In addition to several credible local providers, international health insurers (e.g. Bupa) have established themselves in the market

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0,75 m 1,5 m

Number of privatemedical insurancecovers in Kenya

2009

2013

Private expenditure on health as a share of totalexpenditure on health in Kenya (2012)62%

• Diversified insurance products are reaching ever more people

• Linda Jamii, a medical insurance product by Safaricom, Britam and Changamka allows their clients to purchase insurance through mobile phones

• UAP Insurance covers can be bought at Uchumisupermarkets. Customers purchase a scratch cardand activate the insurance policy by sending an SMS

Health and Wellbeing: Gyms

• Kenya has witnessed a proliferation of gyms in recent years in tandem with the expansion of the middle class

• Changing beauty norms as well as increasingcases of obesity contribute to the trend

• Gyms are most often situated in shopping malls

• They offer an increasing variety of aerobics and dance classes

• Zumba is extremely popular

• Yoga studios are popping up as part of a wellbeingand lifestyle boom

• Many start training by hiring a personal trainer

• Instructors are also available in most gyms as methodical excercising is a relatively new phenomenon

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Racing Sports Gym opened in Westlands, Nairobi, in April 2014. By July it had approx. 72 visitors per day and and the number of memberswas expected to double within three months. In addition to regular gym equipment it also has a cardio room and a studio for aerobics, pure stretch and cross training.

Retail

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Uch

um

i

Tusk

ys

Nak

um

att

$670m

$300m

$180m

Supermarkets

• Nakumatt has 46 branches in East Africa, mostly in Kenya, and it’s valuation hasrisen 2,5 times in four years to $400 million

• Chandarana Food Plus has a 2,5% national market share in Kenya, but they target the high income niche in Nairobi with 8 branches

• South African Massmart entering the market

• The top 5 Supermarkets are brandingtheir own labels aggressively

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Largest retailers(revenue in 2013, USD)

• Share of population that shop in supermarkets/ other formal retailers weekly:

• 55% of Kenyans

• 45% of Ugandans

• 45% of Tanzanians

• The consumption patterns are changing fastest in cities making a ready market for consumer goods. Retailers look beyond purely national markets concentrating in cities in the region.

Online Shopping

• New online shopping sites are being launchedcontinually

– Bid or Buy, OLX, Nation Media Group’s N-soko, Jumia, Cheki, Rupushops, Closet 49 and Mama Mikes.

– E.g. Jumia attracts 13,000-20,000 Kenyansdaily to its website and has a common ownerbase with German Zalando

• The most preferred and common paymentmethod is cash on delivery, but M-Pesa and credit cards are also an option for payment

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• There are 16,2 million Internet users in Kenya.

• In urban Kenya, Internet penetration stands at 78%, propelled by affordable mobile broadband and high penetration (95%) of Internet-capable mobile devices.

• 47% of people in Nairobi connect to the Internet daily

Food

• The consumption patterns of food are changing rapidly

• New foods will be demanded by middle class urbanites as people change their eating habits: The demand for pasta, energy drinks, cheese, wines, bakery products is increasing

• Fast foods have picked up in popularity as city life becomesfaster, e.g. KFC and Subway have opened shops. Local fastfood chains such as Kenchic and Pizza Inn have expandedin recent years

• Concerns about healthy eating are starting to show in the offering of products and the consumption of low fat, lowsugar and functional food products

• Sweets are not as popular as in Finland, but there areglobal brands like Werther’s and Chupa Chups

• Panda licorice is sold in supermarkets and healthfoodstores in Kenya

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The first ever Nairobi Kitchen & Food Festival, held in July 2014, advertised itself as a “a huge celebration of all things culinary”.

Case: Urban Bites

• Urban Bites potato snacks brand, produced by Norda Industries Ltd founded in 2008, has become one of the most popular in the East African market.

• The brand has been successfully marketed as a cool, funky snack for teenagers and young adults.

• Their manufacturer claims to have stumbled upon the business almost by accident: While visiting South Africa he saw corn bites sold in every street corner and spotted an opportunity since maize, oil and packaging are locally available in Kenya.

• Currently Norda Industries Ltd has 20 different products selling in Kenya, Rwanda and Uganda

• They produce approximately 500 tonnes of snacks a year.

• The flavours have been developed through trial, error and lots of research to appeal to Kenyan taste buds.

• The local vibe is also present in the packaging that features Nairobi skyline

The packaging of Urban Bites is designed by Creative Edge, a Kenyan design and branding agency. The theme of the design “draws its inspiration from every day urban expressions found in art, fashion, music and freestyle”. The result, a matte package featuring Nairobi skyline in the background has proven to be a great success.

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Click hereto visitwebsite

Dairy Products

• Kenya’s milk consumption levels are among the highest in the developing world.

– 4.2 billion litres annually, growing at around 2% per year

– Milk sold in supermarkets in Kenya is mostlypasteurized and homogenized fresh milk, butUHT milk is also available

– Most of milk is consumed with other beveragessuch as tea

• Dairy products come mostly from local companies, but there is a growing market for imported dairyproducts, e.g. cheeses

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Premiumisation and healthy indulgence: there has been an emergence of products targeting the middle class: yoghurts, low fat products, cheeseConvenience: Dairy industry has the opportunity to expand the formats of its products to the eat-as-you-go market; small packs of ready-for-consumption products and snacksAffordability: lower priced packaging formats such as plastic pouches, longer shelf life products, smaller pack sizes

Trends and opportunities

Superfoods, Dietary Nutrition, DietarySupplements

• Health spending increases as people become wealthier and life-style diseases become more common

• Newspapers and magazines have lifestyle and healthsections

• Organic food products are gaining popularity. They aremarketed as the healthy option.

• Health blogs have lots of followers and offer e.g. cookingcourses

• There are small health stores connected to gyms and healthcenters, as well as health sections in grocery stores in Kenya

• Healthy U health stores have outlets in the biggest malls in Nairobi, and an online store. They also offer nutritionalconsultation online.

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Opportunities: superfoods such as fiber, northernsuperberries, oat products

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China in 90’s

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China in 2000’s

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Mainontaa paikallisittain: Case Guinness

• Guinness vetosi kongolaisiin kuluttajiin suunnittelemalla mainoksen, joka osoitti paikallisen kuluttajan ymmärrystä: riippumatta siitä, missä olosuhteissa eletään, tahtoo kongolainen tuntea itsensä erityiseksi ja nauttia elämän hyvistä puolista.

• Katso mainos täältä

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Yhteystiedot

• Esa Rantanen

– esa.rantanen@finpro.fi

– esajuhani.rantanen@outlook.com

– +254 716 546 168 (kenia)

– +358 400 936 428

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