Tag Archives: Business Oportunity

Bottom of the Pyramid

I said I would be discussing the Bottom of the Pyramid model and how it can apply to poverty alleviation in Africa. I am writing what I have come to understand from some reading and browsing and do it because I suspect we are not yet using the international learning in this area in Africa.

A GOOGLE search for “Bottom of the Pyramid” yields 160 000 links internationally but only 550 in South Africa, 5 in Uganda and 4 in Botswana.

Basically the concept is based on the fact that the total buying power of the poor still represents a large total value mainly because of the large numbers. Women and children can apply for the WIC program, here is a wic food list on what you can get with WIC. This large turnover can be addressed as a new market by business looking to expand its turnover. However, novel products and novel approaches are necessary to penetrate this market.

A recent report by the World Resources Institute has provided new quanittaive information in this market and elaborated on the BOP business Model in a number of sectors including Food & Agriculture.

 

The Next 4 Billion_ Market Size and Business Strategy at the Base of the Pyramid | World Resources Institute.jpg

 

from: World Resources Institute
(click image for full story online)

 

The report notes that

the 4 billion people at the base of the economic pyramid (BOP)—all those with incomes below $3,000 in local purchasing power—live in relative poverty. Their incomes in current U.S. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India. Yet together constitutes a $5 trillion global consumer market.
The wealthier mid-market population segment, the 1.4 billion people with per capita incomes between $3,000 and $20,000, represents a $12.5 trillion market globally. This market is largely urban, already relatively well served, and extremely competitive.

There are four processes that are necessary to be able to address the BOP market

• Focusing on the BOP with unique products, unique services, or unique technologies that are appropriate to BOP needs and that require completely reimagining the business. Examples portion packaging, healthier products, local tastes
• Localizing value creation through franchising, through agent strategies that involve building local ecosystems of vendors or suppliers.
• Enabling access to goods or services—financially (through single-use or other packaging strategies that lower purchase barriers, prepaid or other innovative business models that achieve the same result, or financing approaches) or physically (through novel distribution strategies or deployment of low-cost technologies).
• Unconventional partnering with governments, NGOs, or groups of multiple stakeholders to bring the necessary capabilities to the table.

These are not all unique and different and show that the essence lies very simply in fully understanding the needs of the market and developing products and services that really suit this particular consumer.

This is presumably where the difficulty lies – just as one can simply say “a business depends on generating more income than it spends” but still see many business failures, the difference between words and actions is enormous. My feeling is that the biggest difficulty is to really and truly understand the circumstance and needs of the BOP consumer and be prepared to start from scratch rather than modify existing approaches.

The full report is available online at http://archive.wri.org/publication_detail.cfm?pubid=4142 in low and high resolution versions, divided into chapters and in presentations.

I would be interested to hear from anyone who has views on this – I will be following up with further comments and maybe some comments on what I have done at the BOP without knowing.

some links:

How to do Business at the BoP

Taking a BoP Venture to Scale, Part 1

World Bank’s Private Sector Development Blog

Trends in Processed Foods – In Africa?

I regularly get access to articles like the one illustrated below which give a view of what the trends in foods for the “Western Market”

Food Science Central - Ten trends to watch in packaged goods in 2008.jpg

 

This is always interesting but not really of direct applicability to any but a small part of the African market. I find this list interesting in that it hardly covers an issue that links to actually liking and enjoying the food but rather links to health and fitness issues.

To the entrepreneur it maybe gives an idea of what may happen in the future and at least keeps him thinking and in touch with what’s possible. It doesn’t really help in exporting as practically no cutting edge secondary products are exported from Africa.

What would be interesting is what are the food product needs and trends of the African consumer. I am not sure that this is available and would really ask that anyone who has such an article discuss it in the comments

If this article is of interest but you would prefer to get it via email than having to download it email me by clicking hereand I will send it to you by return email.

One of the items on the above top 10 is Out of Africa which is described as

Out of Africa

In a world that is getting smaller by the minute, the continent of Africa remains a mystery for most. That could be changing. We are just beginning to see an influx of African ingredients like shea butter and baobab oil into new non-food items like skin creams and cosmetics. For foods, hot peppers like African birds eye chili – also known as Peri-Peri – are beginning to appear in new sauces and condiments. And flavours from North Africa like couscous, for instance, are also gaining ground.

Besides the fact that I thought couscous was a cereal food and not a flavour, I am very interested in this. I have pushed attempts at commercialising indigenous foods for some time with little success. But maybe the time is now coming – there are after all more curry take aways in England than Fish & Chip shops! and its not just a mirror of immigration.

Africa’s Indigenous Fruit

A report, by the National Research Council of America, the third in a series by the council called ‘Lost Crops of Africa’, appears to promote the domestication of the indigenous fruits of Africa as a solution to nutritional, environmental and economic needs!

Lost African fruits would benefit from technology, says report.jpg

 

I wonder how real this is? Many areas of Africa have abundant fruit, indigenous and other. But this only during the harvest, when in fact excesses develop because the production exceeds consumption. Fruit is of course much more perishable and more difficult to stabilise and store than cereals and tubers. This means that the household use of fruit is somewhat limited and that the industrial processing for conservation tends to be expensive.

To me this indicates that the opportunity is rather in the economic sector where products from Africa can address Western food and medicinal trends such as super fruits, natural products, herbal extracts etc

An example is the Marula tree, which has become the base of one massive (Amarula Cream) and one significant (marula oil in cosmetics) new industry in addition to the traditional industry (Marula Beer) but still hasn’t required domestication of the marula – possibly because there are sufficient wild trees or that there is an attemt to keep cash flowing to harvesters.

What do you think? The blog allows you to respond easily so please make your input.

Karoo Lamb

This morning on AgriTV, Dr Kirsten from the University of Pretoria spoke about there investigation into the potential of using the Geographic Indication (GI) approach to adding additional value to mutton products from the Karoo.

Clipboard.jpg

Unfortunately, Dr Krsten’s part of the information is in Afrikaans, but is mainly a general discussion of the potential of GI, which can certify that foods have certain qualities or enjoy certain reputations, due to their geographical origin. He also identified the need for work to establish whether the Karoo Lamb is really a distinct product.

The second half of the article is in English and outlines the techniques used by Christine Leighton of ARC to prove that Karoo Lamb does in fact have a unique taste. This is hypothesised to be a result of the Karoo bush the sheep graze. In fact attempts to find differences between different breeds of sheep and between sheep from different areas outside the Karoo.

I was wandering what the opportunities there are within Africa? Is anyone active with surveying the opportunities?

Free – Publicising Business Opportunities In Africa

SAFPP is offering entrepreneurs who sell business opportunities in Africa free publicity. Short articles describing the business, its cost, its market and giving contact details are prepared by myself and published by Food Processing Africa in their magazine and on their website.

The two excerpts below are examples of articles that have been published, to give an idea of what is required.

Email me with with your idea or whatever information you have and we can work together on getting an article prepared for publication.

The only limitation is that it is a real idea, not some dream that needs research – I would also like to hear of opportunities which aren’t necessarily only in food – the website focusses on related fields like energy, forest products, utilities and water.