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Guinea distribution

July 1, 2009

iStock_000004486775XSmallGuinea Conakry has seen better days. Political instability and an uncertain economic outlook have not helped consumer confidence in this West African country. I have spent the last two weeks assessing a FMCG company’s distribution capability. The data tell an interesting story.

Wholesalers – like most of markets in Africa, FMCG companies rely heavily on wholesalers for distribution capability. The market is extremely fragmented with no clear dominant player. Key accounts and organized distribution is limited. Warehouse space is limited with no clear layout principles.

Outlet base – with the current political instability, the outlet base has been on the decline. Once thriving wet markets have seen a visible decrease in traffic and sales. Informal outlets are closing down as merchants are returning to the country side.  The economic upside of living in the city does not hold the same allure anymore.

Transportation – delivery in the city revolves around low cost distribution such as pushcarts with a few Chinese tricycles roaming the street. Tricycles also are being used for ice distribution (e.g. fish and beverages) and some tricycles even act as ambulances.

Pushcart operators – most wholesalers have limited interaction with their customer base and rely exclusively on independent pushcart operators to distribute their products.  Pushcart operators visit the same outlets every day and are not necessary in close proximity to the wholesaler. None of the wholesalers I visited have any outlet information.  As one wholesaler put it, “You better have a good relationship with your pushcart operators, because if they go, so does your outlet base.”

SKU complexity – All sales are conventional selling, with pushcart operators only carrying the SKUs that they think will sell. Carrying low yielding SKUs simply takes “too much energy” and launching a new brand can be a challenging undertaking.  A few companies are starting to explore pre-selling.

Cash collection – pushcart operators handle all transactions and normally have to provide some security prior to doing business with the wholesalers. Family members and friends often assist in this regard. Cash is normally collected at the end of the day and is, in effect, one day credit.

Electricity – Conakry is suffering from chronic power outages that make refrigeration limited and the cold chain challenging at best.  In the words of one FMCG supervisor “When the power goes on at home, I iron all my shirts at once. Delaying my ironing duties can be a fatal mistake.”

However through all the difficulty, companies are launching new brands and an increasing number of suppliers are looking for ways to improve distribution. Guineans have a fighting spirit with hospitality unmatched by many in the region.

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2 Comments leave one →
  1. July 2, 2009 5:38 am

    A truly fair assessment of the market climate in Guinea Conakry. I really enjoyed reading this succint, high level market analysis of the Guinean (Conakry) market. It is right on target. I also concur that the country has seen better days.

    However, there are tremendous economic opportunities in Guinea Conakry to use as a base starting point, then expanding throughout the region. I was there recently and noticed similar market phenomena and so it all as tremendous opportunity.
    The whole market is there for the taking and so many “needs” or “demand” for goods and services. Successive governments have been consistently inefficient at stimulating economic growth and the private sector has consistently lacked adequate “infusion of cash” to build viable models. You name it, its needed. It is almost like landing in the 18th century with 21st century know-how. “If you build it, they will come”. All sectors can be easily innovated, this will alleviate pent up demand as well as virtually attract “good services and good product starved citizenry”. Keeping in mind that key capitals are just few ours away, it definitely represents an excellent nexus, pivotal location for any profit conscious firm.

    There is pent up demand, cash is there as a good percentage of Guineans, especially professionals have to fly to 6 hours north to France for annual shopping. Products can be brought closer to them; a small fleet of trucks/minivans can sustain logistics or transportation; Introduce supermarket/mall concept and use software and computers to track SKU, Innovate cash collection; Build appropriate warehouses with such affordable labor force; Businesses to organize, band together to increase security…

    Inherent creative workforce is affordable and very easy to train. A population that is quite open to international firms… In addition, most of these pushcart operators are millionnaires in US Dollars. Because, typically illerate, they just lack the vision to scale up operations and see a larger picture.. They play it safe by keeping operations small. If they could put their model into a simple Excel matrix or better yet, an ERP busines modeling tool, they’d see the potential of what they truly could realize in profit.
    Thus, they bring the market “down”, “down”, “down” to their level. This process needs to be reversed pronto in not only the private sector, (but also in the public sector in the long run…).

    Nevertheless, various industries have tuned into this and so have certain venture capitalist groups (especially in the UK); the hope is they’d actively redirect resources to match these opportunities. I wish US firms will also seize these opportunities as well. Such countries seem a bit sheltered from this global economic downturn. There is pent up demand in almost every sector. More firms implies more jobs, less poverty and thus increased security and exponential economic growth (..and the birds will be singing, the violin playing, folks dancing in the wind..). But seriously, this is thr trend!

    In the very (“short”) long run, only private sector initiatives can pull Guinean (Conakry) market out of its morass…

  2. July 5, 2009 6:44 pm

    Thanks for your feedback. I agree, even in the current economic climate, opportunities remain.

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