Ethiopia follows Nigeria as the second most populous nation in Africa, with 83 million people and two major ethnic groups that account for close to 60 percent of the population. In recent years, Ethiopia has emerged as one of the fastest growing economies in Africa with 10 percent GDP growth in 2010. Although the majority of the population is rural (82%), the urban population is growing twice as fast as the rural and over half of Ethiopia’s population is under 20 years old.
Through analysis into the retail infrastructure and comprehensive, on-the-ground survey research across urban and peri-urban Sub-Saharan Africa, Nielsen is taking an in-depth look at the behaviors and attitudes of the African consumer.
The streets of Addis Ababa, are the center of commerce and social interaction and where much of life takes place. Abede works as a banker, which is currently a small industry in Ethiopia. Only about 50 percent of the population currently holds a bank account, but Abede is hopeful that with expanding globalization, it will spread.
Ethiopians like Abede—young, university educated, and relatively wealthy—account for about one-third of the population. He is part of the 10 percent of households that control 25 percent of all income. While half of Ethiopian citizens live on less than 2,750 ETB (approx. $160 USD), there is a color television in almost every home, but only one-third own a refrigerator. Half of the population is employed in unskilled or semi-skilled work, and literacy levels are only around 36 percent.
Three major consumer segments account for close to 60 percent of Ethiopian survey respondents: Trendy Aspirants, Evolving Juniors and Balanced Seniors.
Consumers tend to shop at open markets and kiosks more often than other channels; supermarkets are popular with Trendy Aspirants and Progressive Affluents. In addition to the unorganized retail landscape, companies will have to navigate government–imposed price controls, which were a top concern among retailers interviewed in the study.
Food and grocery account for almost 40 percent of monthly household spending. Consumers tend to be habitual in the brands they buy and affordability is the largest purchase driver. Trendy Aspirants like Abede, and Progressive Affluents are more likely to try new products. Category penetration is much lower in Ethiopia compared other countries surveyed, providing an opportunity to introduce consumers to new categories, especially energy drinks, where interest to try is very high.
Among those surveyed, TV and radio are the most popular media (92% and 80% penetration, respectively). Dramas, sports and news are top programming content across both platforms. Ethiopian Television (ETV) is popular across all cities in Ethiopia, while radio is more regional in nature with each city having its own set of popular stations.
Print media and Internet are not prevalent, which may be explained by the low literacy rate (30%) . Nearly all Progressive Affluents read print publications and surf the Internet, while Trendy Aspirants are also much more likely to utilize these media than the rest of consumers in the country. And while over 70 percent of those surveyed own a cell phone, it is typically used for basic services, like text messaging.
When considering a new product launch in Ethiopia, spend time understanding not only Trendy Aspirants like Abede, but also the culture, people and traditions of all groups. A media campaign that focuses on national TV will achieve critical exposure.
Compared to other countries surveyed, CPG category penetration and consumer incomes are lower in Ethiopia. Low–cost products will help meet budget needs and introduce consumers to newer categories. Most importantly, demonstrate clear value to all citizens—those with money and those without—to attract and keep potential customers.
For more, download Nielsen's Emerging Market Insights spotlight on Ethiopia.
The Nielsen Emerging Market Insights Study provides an in-depth understanding of African markets and consumers. The study is based on face-to-face surveys from a sample of 5,000 urban and peri-urban residents between the ages of 15 and 45 across SEC groups A-E in and around key cities in seven Sub-Saharan African countries; Democratic Republic of Congo, Ethiopia, Kenya, Nigeria, Tanzania, Uganda, and Zambia. Five additional countries will be available mid-Q2 2012; Angola, Ghana, Mozambique, Namibia, and Zimbabwe. The individual country reports provide vital information into growth opportunities within the marketplace, insight into consumer attitudes that drive decisions on what African consumers watch and buy, and a fact-based understanding of how to reach consumers.
To learn more, download The Diverse People of Africa Report which provides a high level summary of the findings from Democratic Republic of Congo, Ethiopia, Kenya, Nigeria, Tanzania, Uganda, and Zambia.