FMCG Distribution in Tanzania

A. General Overview: 

Africa attracts an increasing number of investors each year. The continent attracts investors for a pack of reasons; including its fast-growing economy, young and urban population, and growing middle class. Despite its population of over 1.2 billion people, Africa is still neglected by FMCG companies.

Tanzania’s wholesale, retail, and repair sector accounts for roughly 9.0% of GDP on average, with a 10.3% annual growth rate from 2015 to 2020. (Source: National Bureau of Statistics, TZ). 

Tanzania is a diverse country in terms of food and nutrition trends. Higher-income households eat healthier foods and are more likely to buy packaged goods like snacks and confectionery. There’s a large disparity between urban and rural populations. Residents of rural areas are more likely to grow their own vegetables and fruits.

B. Key Challenges Facing FMCG Distribution in Tanzania

Although the market is enormous in Tanzania, Fast Moving Consumer Goods (FMCG) is one industry that could be affected by several challenges as explained below.

  1. Informal Supply Chain

In Tanzania and Sub-Saharan Africa, retail is very informal. The informal retail channels are doing well due to their accessibility to the customers. In Tanzania, it is quicker to walk down the street several times a day than it is to ride a bike or take a car to a supermarket for a single item. Informal retailers are important entities in communities because they are embedded in neighbourhoods. This makes it prone to multiple layers of non-value-adding intermediaries.

  1. Data Availability and Information Gap

One of the most difficult aspects of doing FMCG business in Tanzania is obtaining trustworthy data for developing a marketing strategy and establishing the market size for your products or services. This is especially true for huge corporations that rely on field data for their investments. There is a need to bridge a data gap to increase decision-making efficiencies for players across the FMCG channels.

  1. Financial Infrastructure

As the market is still informal in Tanzania, it makes it difficult to credit rank players without adequate data. This makes it hard for channel players to be bankable

C. DMG’s Value Proposition

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Image: DMG Distribution Vans

In tackling the challenges DMG came up with different propositions.

  1. Pushing product availability. Bespoke demand-driven route to market to help manufacturers/brands reach last-mile players backed by relevant data. 
  2. Driving choices. Secondly by providing channel players with a wide assortment of FMCG goods under one truck with efficient delivery lead times and transparent pricing.
  3. Driving Adequacy in working capital. Provide financial institutions with accurate data on the credibility of channel players (resellers)

D. DMG’s Growth Projection

DMG has achieved 2020-2021 y-o-y growth of over 3500% in revenue. Our midterm targets are to grow revenue by 420% in 2022, 333% in 2023 and 280% in 2024. In terms of regional expansion, DMG projects to spread in a total of 4 regions that are Dar es Salaam, Mwanza, Arusha, and Dodoma by 2024. DMG Trading is fully equipped with experienced personnel, IT infrastructure, warehousing facilities, and vehicles.

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