HAVING weathered the financial crisis better than developed economies, emerging markets including South Africa are receiving increased attention, says Standa Vecera, vice-president of Procter & Gamble’s (P&G’s) Southern and East African operations.
The US consumer goods group, which in the past decade has grown its African business more than tenfold, plans to build a R1.6bn multicategory manufacturing plant in South Africa‚ in line with its aim of making the country the manufacturing hub for P&G’s Southern and East African markets.
The new plant, the location of which has yet to be decided, is expected to create more than 500 additional jobs at P&G.
"Emerging markets offer higher returns than developed markets today because their gross domestic product (GDP) is still growing (and) their overall economies are improving," Mr Vecera said on Monday.
"Sub-Saharan Africa is one of the fastest-growing regions in the world, so we have to be present and we are very positive about SA and Africa overall."
A swelling middle class and untapped consumer spending potential are making sub-Saharan Africa a key investment opportunity, a report from Euromonitor said in June.
"Kenya, Ethiopia, Ghana, Tanzania and Cameroon stand out for their population sizes, the relative maturity of their economies and growth prospects. Despite risks, these frontier markets will offer attractive long-term investment potential," the research firm said.
In 2009‚ P&G invested R500m in a manufacturing plant for Pampers nappies in Kempton Park. It has two facilities in Ibadan‚ Nigeria‚ and is building a manufacturing plant in Lagos.
In May, P&G, whose brands include Gillette, Pantene, Duracell and Oral-B, launched its flagship laundry brand, Ariel, in South Africa. The products, which include hand-washing powder, machine washing powder, washing liquid and innovation machine powder capsules go head-to-head with Unilever’s Omo, an icon in South Africa.
"The response so far has been very positive. What we’re seeing is that the total category is actually growing, which is good for the market as a whole. Competition is good for the end consumer. For Ariel, we’re taking a long-term view. We aim to be a strong number two, on the way to being number one, over the next 10 to 15 years in South Africa," Mr Vecera said.
The Ariel brand has done well in Kenya, where according to a March survey carried out by Consumer Insight Africa, it controls 25% of the market, while Unilever’s two detergents, Omo and Sunlight, hold 18% and 17%, respectively. "Increasing our investments on the continent means more contribution to local economies and serving the underserved," Mr Vecera said.