Kenya has posted one of Africa’s fastest growing domestic consumption rates, buoying the Fast Moving Consumer Goods (FMCG) market. Data compiled by Stratlink shows that the country’s domestic consumption grew by 33.6 per cent over the last 10 years, ranking fourth in Africa behind Angola, Egypt and Libya.
Companies dealing in fast moving consumer goods are set to enjoy improved fortunes this year driven by growing domestic consumption, research firm Stratlink Africa says. Businesses in the fast moving consumer goods sector can expect to see some of the gains rub off on their market performance this year according to the researcher’s January market update. There is an improved market driven by a growing middle class with higher spending power.
Fast-moving consumer goods or consumer packaged goods are products that are sold quickly and at relatively low cost. These goods have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Examples include non-durable goods such as soft drinks, toiletries, over-the-counter drugs, toys, processed foods and many other consumables.
Some fast moving consumer goods – such as meat, fruits and vegetables, dairy products, and baked goods—are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover rates.
Though the profit margin made on fast moving consumer products is relatively small (more so for retailers than the producers/suppliers), the goods are generally sold in large quantities; thus, the cumulative profit on such products can be substantial. Fast moving consumer goods is probably the most classic case of low margin and high volume business.
A large number of borrowers on MYC4 run businesses that deal with the sale of fast moving consumer goods. There has been an increase in loans for funding from December when demand for fast moving consumer goods is high. The high demand has continued this month of January as entrepreneurs predict that 2015 will be a good year to be in the consumer goods business.