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The Growing Demand for Dairy in West Africa

Danny Bowles, International Insights & Planning Specialist

Dairy Ingredients in Africa Source.PNG

In recent years we have seen strong growth in the value of Irish exports of dairy ingredients to West Africa, where Irish suppliers hold a strong presence in the dairy ingredients market. This has been driven by exports of fat-filled milk powder (FFMP). To understand the trends in the region better, Bord Bia Thinking House, supported by the Bord Bia office in Lagos, conducted research in Ghana, Cote d’Ivoire and Senegal, three of the most significant markets for dairy ingredients in the region. In these three markets, imports of FFMP and Whole Milk Powder (WMP) combined have grown by 10.5% (Senegal), 7.9% (Cote d’Ivoire) and 4.2% (Ghana) per annum on average, since 2010 (Bord Bia, 2021). However, all of this growth has been driven by FFMP, with imports of WMP in decline. There has been a clear FFMP boom, as demand for the more affordable dairy products increases across the markets.

There are a number of key factors driving this increase in demand for dairy products:

  1. There is strong population growth of over 2% annually across Ghana, Senegal and Cote d'Ivoire (Brian McNulty, 2021).
  2. Africans are migrating from rural areas to urban areas faster than anywhere else in the world, which is facilitating economic growth but also makes the population more accessible. Street sales, through rickshaws, street sellers and kiosks, as well as the growth of modern retail, has allowed dairy products to penetrate deeper into these societies.
  3. Economic growth and rising incomes means West Africans have greater capacity to afford imported dairy products. Ghana, Côte d’Ivoire and Senegal are among the wealthier large countries in West Africa based on GDP per capita. While such incomes don’t yet appear to support mass market demand for premium WMP, FFMP is increasingly affordable for many.

There is still a large traditional/informal market of dairy ingredients in West Africa. This is the network of businesses that distribute and sell powder for sale as loose powder or for processing by artisan processors into local products like lait caille and thiakry. The size of this market segment, means much FFMP is bought in unbranded bags, which poses hygiene risks and risks of adulteration. It is fully expected that the influence of the informal market will decline in the coming years as the market matures. This will be driven by consumer demand for a safer, more quality, but affordable, product, as West Africa continues its urbanisation and economic and population growth.

Major international brands have recognised this shift in the market by introducing branded FFMP product into the market. Taking Senegal as the example, there has been a considerable increase in international branded product packed in the local market. As tastes and demands become more premium, consumers will look for recognised, trusted brands. This globalisation of the consumer-facing dairy market in West Africa is expected to continue, and presents an opportunity for Irish brands to introduce consumer-facing brands, and drive preference for high quality Irish product. We do note in the research that there is difficulty in differentiating high and low quality FFMP, so having more branded product with information on provenance and specifications can support the differentiation of our quality product.

While the rate of growth in dairy demand may moderate, growth in demand is going to continue in the region. But there will be a natural fragmentation of the market, as consumers look for new types of dairy products, set higher expectations, but still seek affordability. We will also see a globalisation of the market, with more international brands being consumer-facing. This will bring about a further maturing of the market in the coming years, and should improve local ability to differentiate high and low quality product, meaning Irish product can achieve a higher price.

Please get in touch with Bord Bia’s Lagos office for any support in West Africa or for more information on market activities.

For more information on this research please get in touch with me at danny.bowles@bordbia.ie.

 

Sources:

Bord Bia, Trends in Dairy Ingredients: Senegal, Ghana and Cote d’Ivoire, 2021

McNulty, Brian, The Africa Dairy Market: Companies Products Markets, 2021