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Brimore: A Case Study of Egypt’s Freelance Small Holder Manufacturing Marketing Program

9 Mins read

Abstract

The fast-moving consumer goods industry is facing a major upheaval. With FMCG experts incessantly discussing the meteoric rise of Amazon and applauding the initiation of new business models such as meal-kit deliveries and subscription services, could this be pronouncing the end of an era of the brands we know? What does it mean for brick-and-mortar retail, especially for growing markets like Egypt? The case study will be analyzing Egypt’s FMCG industry, intending to provide the right market distribution strategy for its small local manufacturers. 

Introduction   

A marketing sales strategy begins the moment manufacturers place a price on a product, which they can only term successful when a customer completes the purchase. The shifting shopper influences are continuously changing how consumers are making purchase decisions. Freelance social media in Dubai for example, is fast becoming a useful tool for marketing local products and services since shoppers can get tailored deals matching their local needs. Consumers in Egypt are no exception to the dynamics, where they have made several purchase decision changes after the nation’s currency devaluation in 2016. 

Manufacturers and retailers are trying to keep up with the transformations through a mix of innovation strategies, including introducing e-commerce metrics as well as price and promotional offers in the fast-moving consumer goods industry, also known as FMCG. Some have to hire freelance sales teams to ensure local market penetration and boost revenue. The Egyptian FMCG expenditure continued growing throughout 2018, recording double value increases thanks to inflation. 

Challenges in the Egyptian FMCG Marketing

While consumer spending is increasing, how are manufacturers and retailers leveraging their sales strategies to reach the customer effectively? Nielsen, a measurement and data analytics firm worldwide, recently organized an event in Egypt with participation from industry players across several categories. The event showcased several areas where sales strategies in the country’s market need attention. 

The FMCG market in Egypt is growing at an average rate of 17% for high-selling products. However, the growth still sees small scale manufacturers losing considerably in wasted opportunities in the pricing, distribution, promotion, and on-shelf. The losses keep diverting from their sales strategy.  

The retail landscape in Egypt remains traditional trade heavy. Some of the districts record significantly more sales than others, which presents various challenges, especially in in-store sales strategies. Nielsen’s event shared some insights on the reality of events in the Egyptian market. 

Pricing is the only element in Egypt’s marketing mix that gives revenue, with many other areas, including inventory, assortment and shelving, and distribution accounting for lost opportunities and wasted effort. Statistics indicate that nearly 67% of promotions across the world do not break even. 

Trade promotions often fail than they succeed, leading to billions of dollars in losses for the industry every year. While trade promotion management isn’t a new thing, many local manufacturers are yet to realize the efficiency they seek. In the meantime, higher trade spends ROI intensifies with stalled FMCG growth. As a result, the local manufacturer industry keeps facing more pressure due to retailer price wars. 

Several common but costly mistakes that local manufacturers should avoid include:

  • Not coming up with the best average price before initiating a promotion
  • Assuming that national strategies will be effective at the local level 
  • Determining prices at the brand level
  • Lack of knowledge for your price thresholds
  • Ignoring national competition 
  • Lacking the right tools

The above common product distribution mistakes contribute to the prevailing situation in the industry. Few local manufacturers and retailers have overcome the effect of these mistakes, which continue derailing their promotion and pricing strategies. The good news is you can avoid these mistakes once you detect them. However, the challenge is that recognizing the blunders is not enough. Local manufacturers and retailers should commit to altering practices and approaches for the long term. 

Distributing A Product And Reaching The Consumer In Egypt

With a 2.38% growth rate, the Egyptian population was approximately 99 million in 2018, according to its Government website. The same source shows a 1.86% annual urbanization rate, with about 42.7% of the people living in cities. Nearly 95% of the population is found in the narrow Nile River strip because most of the nation is desert. 

Market Analysis in Egypt

Wet markets and traditional grocers largely dominate the retail market in Egypt, with nearly 115,041 personal grocery stores across the nation, according to Euromonitor. The two categories account for 97% of the country’s retail groceries and 70% of the total sales, which have a loyal neighborhood consumer base because they are easy to access and often provide credit to the local customers. On the other hand, growth rates for modern retailers concerning sales and outlets were favorable in 2017. 

1. Retail Sector

According to the Ministry of Trade and Industry, Egypt is the most diverse economy in the MENA with the largest retail consumer market. Small and private stores dominate the retail sector despite the economic slowdown resulting from the regime changes of 2011 and 2013. The short-term adjustment notwithstanding, analysts still expect an improvement in purchasing power and economic growth in the coming years.  News outlets have opened in the nation since 2014 with a focus on lower-income consumers.  

Hypermarkets doubled food sales by the end of 2018 from the 2011 statistics, while supermarkets had steady growth. An increase in sales follows the tremendous growth in small-scale outlets. Despite the rapid growth, modern supermarkets represent about 25% of the total sales. 

The hypermarket section is still small, with 37 operational outlets in the nation in 2017, according to Santander. The outlets represent about 4.9% of total sales in the retail segment. Similar statistics indicate growth in retail sales among convenience stores, recording a 21.5% increase in 2016. 

2. Purchasing Power

Egypt’s last Gross Domestic Product per capita was recorded in 2017 at 2785.37 US dollars, representing 22% of the world’s average, according to the latest records from the State Information Service. The country’s GDP per capita was averagely 1542.04 USD between 1960 and 2017. The figure reached an all-time high of $2,785.37 in 2017. 

Egypt’s median salary is EGP 6,000 every month, with an EGP 22,883 per capita disposable income in 2014. Consumer spending went down to EGP 880 billion in 2018s second quarter, from EGP 896 billion in the first quarter of the same year. The average consumer spending in Egypt was EGP 314.12 billion between 2001 and 2018, with an EGP 1,026 billion all-time high in the 3rd quarter of 2017 and an EGP 63 billion records low during 2002s 2nd quarter. 

When the central bank floated the Egyptian pound in 2016 to secure a $12 billion IMF loan to accelerate economic growth, the currency lost half the value, resulting in record-high commodity prices. The EGP went from an 8.8 peg to the US dollar to about 17.7 currently. Consumers have had to change their spending habits to reflect their incomes and savings that were slashed in half.  

The table below shows Egypt’s purchasing power parity between 2017 and 2021

Purchasing Power Parity

2017

2018

2019

2020 (e)

2021 (e)

Purchasing Power Parity (Local Currency Unit per USD)

2.89

3.43

3.83

4.12

4.32

Source: IMF – World Economic Outlook Database

3. Market Share

Large numbers of small stores run by families dominate the retail market. Mass product distribution represents a new trend in Egypt, catering to a slight percentage of consumers with access to sufficient earnings. Plenty of private mini-markets such as Metro, Sunny Supermarket, and ABC, with larger storage spaces exceeding 100M2, are opening. Besides, numerous supermarkets are burgeoning in the nation, with the Carrefour Group’s five outlets dominating the sector. Concerning the market share, small family-owned stores represent 70% of retail sales compared to 30% for the hypermarkets and supermarkets.  

4. Consumer Behavior

According to Nielsen’s 2017 survey, consumer behavior in Egypt has changed significantly owing to the currency devaluation and long-term economic recession. The study reports consumers;

  • Saving on gas and electricity 
  • Reducing out-of-home entertainment
  • Cutting down on apparel purchases

Price, which has always been a vital factor in making purchase decisions, still comes first over other criteria, resulting in lower sales for branded products and luxury items at supermarkets. The study by Nielsen shows;

  • 35% of Egyptians shopping less often
  • 71% of consumers looking for promotions
  • 17% of consumers reducing the quantities of grocery shopping

Besides, survey participants reported consuming more local products because they are less costly than imported merchandise. Myriad financial challenges such as high inflation and devalued currency continue influencing consumer confidence, hence household spending. 

Sector

Percentage

Food and Non-Alcoholic Beverages

34.4%

Alcoholic Beverages, Tobacco and Narcotics

4.7%

Clothing and Footwear

5.6%

Housing, Water, Electricity, Gas and other Fuels

17.5%

Health

10.0%

Transport

6.3%

Recreation and Culture

2.1%

A table showing Egypt’s household consumption expenditure. Source: State Information System, 2018

The following table compares Egypt’s household final consumption expenditure between 2016 and 2018. 

Household Final Consumption Expenditure

2016

2017

2018

Household Final Consumption Expenditure
(Million USD, Constant Price 2000)

213,459

222,401

224,852

Household Final Consumption Expenditure
(Annual Growth, %)

4.7

4.2

1.1

Household Final Consumption Expenditure per Capita
(USD, Constant Price 2000)

2,260

2,306

2,285

Household Final Consumption Expenditure
(% of GDP)

82.7

86.8

n/a

Source: World Bank

According to the State Information System, the following table represents Egypt’s consumption expenditure by product between 2012 and 2013. 

Consumption Expenditure By Product Category as % of Total Expenditure

2012-2013

Transports

5.8%

Services and health care

9.8%

Miscellaneous goods and services

3.3%

Housing

18.6%

Hotels and restaurants

3.6%

Furniture, domestic equipment, and maintenance

4.3%

Food and drink

36.0%

Entertainment and culture

2.0%

Education

3.7%

Communication

2.7%

Clothing, textiles, and footwear

5.7%

Beverages and tobacco

3.3%


5. Direct-Selling

According to Euromonitor, direct selling for local products remained popular among consumers in 2018. Egyptians often trust word of mouth recommendations from family and friends. Direct-selling brands are also arranging for better payment formulas, including paying through installments. 

A majority of industry players are targeting housewives and students for their sales teams. The freelance sales strategy is effective since the teams find direct selling a critical source of extra income. The groups can also directly market products at local levels by selling to immediate relatives and friends. The companies are now embracing technology by expanding into social media marketing and providing personalized apps. Also, in 2016, the Ministry of Trade and Industry Egypt put in place import controls in a protectionist move to improve local manufacturing. A similar strategy is working elsewhere in Africa. Freelance social media in Dubai is helping to run marketing campaigns in local languages. These campaigns often target the majority of non-English speaking users on the internet.  

The Best Sales Strategy For Small Local Manufacturers in Egypt

Fast-moving consumer goods companies are looking to be on target to reach the right consumers, accounting for the majority of sales. Also, retailers want to be on the shelf at the correct prices. In this way, customers can find what they need at enticing rates and promotions. 

Small local manufacturers set channel distributions aiming for perfection in ensuring their in-store execution results in improved sales. Besides, they do not want to allow poor execution and out-of-stocks to ruin performance. Regardless of whether the key is in availability, assortment, price, distribution, or display, the solution lies in the numbers. 

Therefore, while the perfect sales strategy may depend on individual categories and products, this is not according to Brimore, a direct-selling distribution network based in Cairo. The company has raised an $800,000 seed-funding amount. Through a statement to MENAbytes, the company confirmed that two of the country’s prominent VCs Endure Capital and Algebra Ventures co-led the fundraiser, along with participation from Flat6Labs, 500 Startups, as well as other angel investors. 

Where’s The Innovation?

Three co-founders with extensive knowledge in distribution management, FMCGs, and direct selling established the initiative in 2017. Through enabling technology Mahmoud Refaay, Mohamed Abdulaziz, and Ahmed Sheikha started the direct selling distribution platform; Brimore, to assist local manufacturers to list their merchandise in the market. Since then, the initiative continues helping small local manufacturers increase access to consumer markets directly, via a network of freelance sales agents. 

Brimore employs an Avon-like model that incentivizes sales agents. The distributors create the first market for the merchandise by consuming the products themselves. Also, they could sell the same to their colleagues, neighbors, and relatives, including displaying the items for sale in small stores within their neighborhoods. 

Through the above model, Brimore creates an entirely new marketing and distribution network using social networks and data analytics. The channels go as far as rural Egypt. Industry players applaud the initiative as an ingenious idea that empowers manufacturers to reach market segments they previously didn’t have access to for various reasons. At the same time, the platform enables the freelance distributors, most of whom are women, make extra cash by selling products to individuals they already know. 

According to the Chief Brand Officer and Co-founder, Ahmed Sheikha, the brand has bundled sales, marketing, and distribution in a single transaction. For that reason, women looking for high-value jobs and the work from home formula make 92% of distributors. The company now embarks on a mission to support its distributors by offering continuous training and economic empowerment. Even though this initiative started in Egypt, Brimore aims to grow in other upcoming markets, especially in Africa. 

Plenty of local manufacturers and products have collapsed by adopting expensive distribution channels, which are better suited for the more established corporations. Brimore leverages the power of social connections and people to find a solution for market access among SMEs in Egypt. The new formula is disrupting the traditional models of distribution that have seen the demise of vibrant small manufacturers and their merchandise.  

In a reply, the managing partner at Algebra Ventures, Tarek Assaad, expressed a fascination for the Brimore team’s approach to solving a complicated and costly problem. Tarek believes the new initiative is going to transform how small and medium manufacturers are selling products to the large Egyptian consumer base.  

The network currently works with more than 20 local manufacturers selling different category products. Technology powers the retail distribution platform, allowing direct access to local consumers by small and medium manufacturers. In this way, the local communities can both promote and consume the products. According to Brimore, this platform, unlike other marketing models, builds significant efficiencies for local manufacturers through;

  • radical optimization of their branding and distribution costs
  • offering better demand visibility 
  • allowing utilization improvement

For that reason, the company will be channeling the seed funding investment to build its network’s manufacturing technology and enhancing its tech platform.

Conclusion

Brimore offers the best sales distribution network for small local manufacturers in Egypt for various reasons. The use of freelance marketers is becoming an effective strategy, especially for local manufacturers in Africa. In the UAE, a study by KPMG and Google projects the numbers of Arabic speakers using the internet to grow by approximately 18% annually. Also, nearly 99% of users will be accessing the internet over mobile phones. For brands manufacturing fast-moving consumer goods, this is a huge opportunity to leverage freelance social media in Dubai to attract the new wave of customers.  

Likewise, in Egypt, manufacturers can hire freelance sales teams with a local market reach. Small family-run outlets already dominate the retail sector with 70% of total sales, making the freelance marketing strategy effective in that country. Brimore’s approach allows the sales team to display products in the local outlets, including setting consumer-friendly prices. Also, the strategy boosts sales for local products because Egyptians tend to trust in local referrals. The current wave by consumers going for local products over imports owing to price wars, as well as the 2016 import control bill by the government, seems to favor Brimore’s model. 

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