1. Africa: Tapping into the Untapped
Growing Consumer Demand Driving Mega Growth Opportunities
Surfactants HPC, Dubai
20-21 March 2012
20-

2. Agenda
1. Frost & Sullivan - Introduction
2. Mega Trends - How do we define it and why does it really matter?
3. Mega Trends in Africa and its Impact on Various Sectors
4. 4W - What, When, Where and Why of the Mega Trends on Key Sectors
– Home and Personal care
– Future outlook
– Demand and supply projections
5. Conclusions - Is Africa the Next Frontier ?
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2

3. The Frost & Sullivan Story
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& Technology Research with Clients Visionary Innovation
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&
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Minerals & Mining Chemicals, Materials Electronics & Industrial Automation
& Food Security & Process Control
4

5. Our Services
GIL Global Community
Growth Partnership GIL University
Services
Growth Consulting Events
5

6. Our Global Footprint 40+ Offices
Scanning the Globe for Opportunities and Innovation
6

7. 2. Mega Trends - How do we define it and
why does it really matter?
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8. Mega Trends - Definition
Definition of a Mega Trend
What is a Mega Trend? Impact of Mega Trends on Key
• Mega trends are global, sustained, and macro economic Organizational Functions
forces of development that impact business,
economy, society, cultures, and personal lives, thereby
defining our future world and its increasing pace of change.
Marketing
Why Do Mega Trends Matter?
• Mega trends have diverse meanings and impacts for
different industries, companies, and individuals.
Analysis of these mega trends and their implications forms
R&D
an important component of a company’s future Innovation
Budget
strategy, development, and innovation process, and impacts Scouting Spending
product and technology planning.
• The following document sets the stage for visionary thinking
by identifying the most important African mega
trends, potential scenarios of specific trends in 2020,
and their implications in transforming society, markets,
and cultures. These mega trends can be used as a basis for
strategic decision-making by understanding their impact on Product
organizational functions such as marketing, Research and Technology
Planning and
Planning
Development (R&D), budget spending, product planning and Development
development, human resource management, technology
planning, and innovation scouting.
Source: Frost & Sullivan analysis.
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9. Global Mega Trends Driving Growth
URBANIZATION
ENERGY
SMART
FACTORY
E-MOBILITY
SOCIAL
GLOBAL MEGA INFRASTRUCTURE
TRENDS - 2020
BUSINESS
ECONOMY
HEALTH &
WELLNESS
TECHNOLOGY
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10. African Mega Trends
Regional Renewable Energy
Integration
Urbanisation
Innovating to Zero
The Responsible
Revolution
Connecting the
Unconnected
New Business Models Future Infrastructure
Source: Frost & Sullivan analysis.
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11. Mega Trends relevant to Chemicals, Materials and Food
Difference between what & why of customer wants , responding to opportunities & threats
Sustainable Increasing
Health & Safety Urbanisation
Development
Visionary
Innovation
&
Market
Public / Private
Sector Vanguard
Infrastructure
Investment to
Development
Drive Industry
Development
Rebuilding War Torn Countries
11

12. 3. Mega Trends in Africa and its Impact on
Various Sectors
12

13. Mega Trends and the application sector matrix
Sectors
Renewable Energy
Water Treatment
and Sanitation
Infrastructure
Construction
Mega Trends
Consumer
Oil and Gas
Agriculture
Products
Materials
Mining
Increasing Urbanisation
Public/Private Sector Investment to Drive
Industry Development
Sustainable Development
Infrastructure Development
Health and Safety
Rebuilding War-torn Countries
13

14. Africa – The Summary of Opportunities across sectors
Manufacturing: Energy: $800
$204 billion billion
Manufacturing, food packaging Electricity infrastructure,
and fortification. renewable energy,
rehabilitation of existing
Infrastructure Development: structures
>US$400 billion Agriculture:
Transport infrastructure and
rehabilitation, housing, ICT, building US$50 billion
and other materials, construction Includes fertilizers, crop
and PPE protection, animal health, feed
and additive products, and plant
biotechnology.
Oil & Gas: US$3.6 trillion
Infrastructure, extraction
chemicals, and rehabilitation
Water: US$700 billion
Includes sanitation,
water infrastructure
and chemicals,
renewable water,
and water and
wastewater
treatment.
14

15. Key Mega Trends to Drive Home and Personal Care
Sectors
Most Relevant Increasing Urbanisation
African Mega Trends • By 2020, 43 per cent of the people living in
to Surfactants
Africa will live in urban areas. This presents a
1. Increasing urbanisation
growth opportunity for FMCG manufacturers
2. Infrastructure development - and their suppliers in the home and personal
3. Rebuilding war-torn countries - care market, as increased usage is forecasted.
4. Public/private sector
investment to drive industry - Sustainable Development
development • This refers to using sustainable and
environmentally-friendly raw materials and
5. Sustainable development
processes in the production of home care and
6. Health and safety personal care products. Resources are limited.
2050
Fast Facts about Africa: Health and Safety
2010 • To protect employees, consumers, and the
1990 environment during the manufacturing and
consuming of home care and personal care
Urban population in Africa products.
(millions): 205 400 1,230 Source: Frost & Sullivan analysis.
15

16. Cities & Mega Regions - Not Countries Will Drive Wealth Creation In the
Coming Years
Fast Forward City Facts: Did You Know?.....
• Over 60% of Worlds Population to Live in Cities by 2020
• Cities like Seoul account for 50% of the country’s GDP; Budapest (Hungary)
and Brussels (Belgium) each for roughly 45%.
• Gauteng will contribute 40% of South Africa’s GDP and 12% of Africa
What are the Micro Implications ?
• High Economic Power With 85% of Scientific and Technology Innovation
from These Cities
• Hub and Spoke Business Model will evolve with
Logistics, Healthcare, FMCG/Retail and many other industries
• New Mobility Solutions like bike and car sharing, EV adoption, Tolling
• The extension of transit lines to the suburbs will move businesses out of
the central downtown to the suburbs
• Social Polarization: High Gap Between Rich and Poor
• A highly diverse socio-economic-cultural mix
• Techno savvy and connected citizens with high speed broadband, 4G
technologies and free Wi-fi to enable connectivity 24X7.

17. African Cities will Increase by 25% by 2025 at an Average Growth Rate
of 3.4%; 60% of Africa’s Population will be Urbanised by 2050
Population Growth Rate in Select Algiers Urban Populations, Africa, 2025
Cities, Africa, 2010–2025 3.6 million Alexandria
Casablanca 5.6 million
4.1 million
Addis Ababa
Dakar 4.7 million
4.3 million
Abidjan
6.3million Ibadan Nairobi
Accra 3.2 million 6.2 million
3.5 million Douala
3.1 million
Luanda remains the Luanda Dar es Salaam
8 million 6.2 million
most expensive city for
expatriates across
Africa and globally
Johannesburg/
Pretoria/
Ekurhuleni
Cape Town 8 million
3.8 million Durban
Migration City with population > 5 million, 2025 Urban Population, 2025 3.2 million
Source: Africa Progress Report, 2010, Frost &Sullivan
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18. The Middle Bulge: Middle Class Will Account for 52% of Global
Population in 2020. Over 65% of the Middle Class Population are from Africa, China
and India in 2020
Percent of Global Percent of Global
Middle Class Across Break-Up of Middle Class by Race, South Africa, 2020 Middle Class Across
Regions in 2010 Regions in 2020
Africa
7000 Africa
India Upper middle class
ME 6000
Population in Thousands
Middle class
Rest of India
Asia
5000
Lower middle class
LA 4000
ME
3000 Rest of
Asia
CEE
2000
LA
1000 CEE
China
0
White diamonds Black Diamonds Coloured Indian Diamonds China
Diamonds
The Black Middle Class Called the Black Diamonds will Increase to
5,970,000 in 2020 in South Africa Alone
Note: The Middle Class in the graph are defined as people with Incomes between
$6,000 and $30,000. However, this definition differs marginally from country.
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19. 4. 4W - What, When, Where and Why of the
Mega Trends on Key Sectors
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20. Unlocking the Opportunities presented by Mega Trends
How can you
adapt your
strategies to tap
Why is Africa into this massive
the next big opportunity
opportunity for Africa presents?
Where are the home and
key personal care
opportunities suppliers?
When can you
that would
What are the expect to see
manifest in
key mega the impact of
Africa by 2020?
trends that micro trends on
would drive the business
business for environment?
home and
personal care
companies in
Africa ?
Source: Frost & Sullivan analysis.
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21. The Impact of Micro Trends on the Home and Personal
Care Surfactant Business in Africa
Driver / Restraint Micro Trends 1-2 years 3-5 years 6-10 years
Growth of the consumer market is being
spurred on by:
• economic growth
Driver • retail expansion
• growth of the middle-income class
• high population growth
• demand for commodities
Limited availability of alternatives
Driver
(significant active ingredients)
Limited downstream manufacturing
Restraint
(reliance on importing finished products)
Increased contract manufacturing due to
Restraint
increasing manufacturing costs
Restraint Environmental and health concerns
Multi-functional products and poverty
Restraint (3-in-1 bar soaps for very price-sensitive
consumers)
Impact: High Medium Low Source: Frost & Sullivan analysis.
21

22. Snapshot of South Africa
Supply Side Demand Side
• Two local manufacturers produce 97.5 per cent • In 2010, the South African home care and
of the anionic surfactants used in South Africa. personal care markets were worth $114 million
and $28.5 million, respectively.
• Raw materials used in local manufacturing are
imported. • Major driver for demand: growing consumer
income.
• Other surfactant types rely largely on imports.
• As a result, some consumers are more willing to
• The level of competition is moderate.
pay higher prices for quality products.
• Supplier differentiation: blending and formulation
if they do not have manufacturing capacity.
• Future market share of anionic surfactants will Total Home and Personal Care Surfactants
Market, South Africa, 2011
decrease as non-ionic surfactants are being
4.8% 3.8%
preferred due to their performance and 20.4% Anionic
environmental benefits. Non-ionic
71.0% Cationic
Amphoteric
Source: Frost & Sullivan analysis.
22

23. Future Outlook for Surfactants in South Africa
Total Home and Personal Care Surfactants Market: Revenue Forecasts,
South Africa, 2007-2015
180.0 4.5%
Revenue Growth Rate (%)
4.0%
Revenues ($ Million)
150.0
3.5%
120.0 3.0%
2.5%
90.0
2.0%
60.0 1.5%
1.0%
30.0
0.5%
0.0 0.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015
HPC Surfactant Revenue 135.7 141.2 142.5 144.8 148.9 153.7 158.9 164.3 170.0
Revenue Growth Rate (%) 4.1% 0.9% 1.6% 2.8% 3.2% 3.4% 3.4% 3.5%
• In 2011, the South African home and personal care surfactant market generated revenues of $148.9
million with 2.8 per cent growth year on year.
• The South African home and personal care surfactant market is expected to generate revenues worth
$170 million in 2015.
Source: Frost & Sullivan analysis.
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24. Snapshot of Kenya
Supply Side Demand Side
• Local manufacture: 41 per cent of anionic • An emerging trend: men and women are taking
surfactants; the remaining 59 per cent is more pride in their appearance. Therefore hair
imported. This is largely due to the inconsistent and skin care markets are showing growth rates
quality of local SLES production. as high as 10 to 15 per cent.
• Kenyan government has used a tax limit to • Home care products: Kenyans are switching from
protect and encourage the local industry. laundry soap bars to toilet soap bars and
synthetic detergent powders.
• Contract manufacturing is common and on the
rise. This enables economies of scale and • Detergent powders are restrained by the lack of
competitiveness, as manufacturing prices soar. washing machines (the appliance is expensive
and the price of electricity is high).
Total Anionic Surfactant Volume • Limited consumer purchasing power, therefore
Split, Kenya, 2011
FMCG manufacturers require cost-effective
28% anionic surfactants for economical products.
Home Care
72%
Personal Care
Source: Frost & Sullivan analysis.
24

25. Future Outlook for Anionic Surfactants in Kenya
Total Home and Personal Care Anionic Surfactants Market: Revenue and Volume
Forecasts, Kenya, 2007-2015
50.0
45.0 34 000
32 000
Revenue ($ Million)
40.0
Volume (Tonnes)
35.0 30 000
30.0 28 000
25.0 26 000
20.0
24 000
15.0
10.0 22 000
5.0 20 000
0.0 18 000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Anionic Surfactant Revenue 22.8 27.8 29.9 31.2 34.3 36.8 39.6 42.4 45.7
Volume (Tonnes) 20 098 20 420 20 959 22 123 23 513 25 184 27 084 29 104 31 312
• In 2011, the Kenyan home and personal care anionic surfactant market generated revenues of $34.3
million with volumes of 23,513 tonnes.
• The Kenyan home and personal care anionic surfactant market is expected to generate revenues worth
$45.7 million in 2015.
Source: Frost & Sullivan analysis.
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26. Snapshot of Nigeria
Supply Side Demand Side
• Tariffs on imported manufactured goods have • Revenues in the Nigerian personal and home
supported the growth of local manufacturing of care sector were valued at $1.09 billion in 2010.
home and personal care products.
• Relatively high economic growth along with the
• However, cost of production is high due to high steady growth of the middle class have been key
energy costs and importing raw materials for drivers for this market.
manufacturing.
• Of the over 150 million people living in Nigeria, a
• A mark-up of at least 40.0% is implemented to large proportion use only bar soaps, mostly multi-
avoid revenue loss due to high production costs. purpose, for home and personal care.
• More than 63% of the home and personal care Home and Personal Care Market Revenue
market is catered for by multi-nationals who use Split, Nigeria, 2010
Hair Care
complex formulations as a means of 6.5% 5.7%
Skin Care
differentiation. 34.9%
19.9% Fabric Care
• Local manufacturers produce products with very
limited properties by using basic formulations. 33.1% Dish Care
All Purpose
Source: Frost & Sullivan analysis. Cleaners
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27. Future Outlook for Surfactants in Nigeria
Total Home and Personal Care Surfactants Market: Revenue Forecasts,
Nigeria, 2007-2015
60.0 10.0%
Revenue Growth (%)
50.0
Revenue ($ Million)
8.0%
40.0
6.0%
30.0
4.0%
20.0
10.0 2.0%
0.0 0.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015
HPC Surfactant Revenue 30.8 32.2 32.8 34.0 36.7 40.2 43.7 47.6 51.4
Revenue Growth % 4.5% 1.9% 3.7% 7.9% 9.7% 8.7% 8.9% 7.9%
• A significant amount of home and personal care final products are imported into Nigeria, thus despite a
population of over 150 million, surfactant revenues are lower than, for instance, South Africa.
• The Nigerian home and personal care surfactant market is expected to generate revenues worth $51.4
million in 2015.
Source: Frost & Sullivan analysis.
27

28. Supply chain overview – An example in Nigeria
Total Home and Personal Care Market, Overview of the Value Chain (Nigeria), 2010
Supply Side (top 70%) Demand Side (top 70%)
Local Manufacturers
Imports 90% 70%
for Home and Personal
• Rhodia (Solvay) • Unilever
• Cognis (BASF) • Procter and Gamble
• Henkel • PZ Cussons
• Clariant • Johnsons Wax Nigeria Ltd
• Huntsman • Reckitt Beckniser
30% •
• Aqualon (Ashland) Distributors
.
Cormart
• Akzo Nobel • Doyin Soaps and Detergent
• Nigerian German Chemicals
• European Soaps and Detergents.
Local • Comart Laboratories
Manufacturers of 10% • Orkila Chemicals
Chemical Raw • Cordwell Limited
• Biochemical Derivatives
Materials • Ulysses Chemicals
• Doyin Soaps and Detergent • Advantage Laboratories
(surfactants)
• European Soaps and
Detergents
• Nasco
Source: Frost & Sullivan
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29. 5. Conclusions - Is Africa the Next Frontier?
29

30. Mega Trends and the Home and Personal Care Markets
Increased Urbanisation • Economic growth
• Retail expansion
• Growth of the middle-income
Sustainable Development class
• High population growth
• Demand for commodities
Health and Safety
`
Growth in Local Growth in
Production Imports
Opportunity for Growth
30

31. The Value of Emerging Markets – Are you ready ?
Emerging markets offer significant growth
opportunity, as mature markets stagnate.
Africa could be the most promising.
Why Africa?
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• Total population: 1.28 billion by 2020
• Spending from the top 18 cities: Key Concepts:
$1.3 trillion by 2020 • Find the unmet, distinctive needs
• African middle class: 360 million by 2020 • Target the correct consumer segment
• Africans living in urban areas:
43% by 2020
• Sub-Saharan Africa is one of the fastest-
• Understand your consumers, their
preferences, and how to conduct
business with them
.
growing regions globally. • First-mover advantage
Sources: UN Department of Economic and Social Affairs; Frost & Sullivan analysis.

32. Contact For Additional Information
Mani James
Regional Director – Frost & Sullivan
Africa
Tel: +27 21 680 3208
Email: mani.james@frost.com
http://www.frost.com
Vishnu Shankar
Industry Manager – Frost & Sullivan
Middle East & North Africa
Tel: +971.4.4331882
Email: vshankar@frost.com