Food retail in Africa: ‘Opportunities far outweigh challenges’

2013-11-06 14:31

As formal food retail grows its footprint on the African continent, it will begin to capture more of the bucks spent on informal food retail.

This is according to Bruze Layzell, general manager for new African markets at Yum! International Brands. Yum! houses popular global brands such as KFC, Pizza Hut and Taco Bell.

Layzell was speaking at the World Retail Congress Africa in Johannesburg, and said while entering food retail on the continent was challenging, the opportunities far outweighed the challenges.

But he cautioned that price was a huge factor, particularly when taking into account the effect of the informal food retail sector.

“Africa is a longterm play and companies have to be prepared to put money down. It’s impossible to expect the same kind of margins as in the developed world, so if you follow a cost-plus model you will price yourself out of the market,” said Layzell.

Layzell maintains the aim is not to turn Africa into the West, but provide Africans with access to global brands.

He said while informal food retail was not a threat, intellectual property infringement has been an issue. Layzell said the KFC brand was especially prone to being copied. While clothing manufacturers have acceded to rip-offs of their brand because it has made the genuine product aspirational for consumers, Layzell said this was not acceptable with a food brand.

“You can’t let people abuse your brand and it’s in our shareholders’ interests to make sure they are shut down. Turning a blind eye to the intellectual property infringements is really not helping anyone,” he said.

And, when informal retailers lose customers because of bigger, more formal retail entering the same area, Layzell said those informal retailers should be assisted in the form of corporate social investment programmes around the community by the big guys.

There has been a move by various African countries to formalise the informal retail market in an effort to bring them more into the mainstream economy, with varying degrees of success.

This has not come without conflict between authorities and vendors; similar to the upheaval in Johannesburg in the past few weeks as the city embarks on a clean-up of unlicenced hawkers.

However, more African countries are providing incentives and encouraging unlicenced vendors to be registered.

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