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To enter and be successful in marketing and selling products to [these] invisible markets the trick is to minimise the risk of investment through knowledge and information.
Sadly, there are no research documents from esteemed universities or surveys by market researchers, so business people need to do this the old-fashioned way – grab a taxi, shay’iround (visiting places), get their shoes dirty treading the dusty streets of ekasi and emalalini (villages) or maybe paddle down the Tugela to talk to dagga growers.
It is with the dagga lesson in mind that I approach the launch of Parmalat Individually Wrapped Cheese Slices first in the Soweto market and later throughout Southern Africa.
This is a premium product, a slice of processed cheese wrapped in a plastic sleeve, and not the kind of product one would expect would gain any traction in the lower end retail sector, let alone in the informal spaza sector.
Who could imagine that we could create an entire product category now worth approximately R1bn in South Africa?
Launching this improbable product into the township takeaway market allowed Parmalat to generate hundreds of millions of rand in sales in an invisible market, a market which is now hotly contested by all the dairy industry players in the business.
Today it seems as if everyone is falling over themselves to get their cheese slice into a kota or ?a vetkoek.
John Dube (not his real name) has a tiny shack shop with a metre square hole in the wall in Orlando East, a suburb close to Vilakazi Street in Orlando West, Soweto. Vilakazi Street was home to Nelson Mandela and Desmond Tutu, both Nobel Peace Prize winners and neighbours in this famous street.
John has just bought a beautiful Jeep Grand Cherokee.
“Nice car,” I comment.
“Thanks,” he says. “I am so happy to have it but, yo, I struggled to get it.”
“Ja, they are expensive.” I imagine him saving forever for his dream car.
“No, not the price. I had over R500 000 with me when I went to Jeep, but they wouldn’t take my money. Some Fica or such-such thing, they asked me to fill in a form saying where I got my money. Ja, so I filled in the form and where it asked where did the money come from, I filled in amaKota. So the salesman says, what’s a kota, looking at me like it’s a drug. I explain, and he shakes his head. I call the black guy washing the Jeeps. Tshela umlungu wakho, what is a kota?” Tell your white man what is a kota.
The kota is a hollowed out quarter loaf of bread, hence the name, filled with different ingredients, slap chips, polony slices, fried egg, atchar, tomato sauce. This is the burger of the Gauteng townships where there is a kota outlet on practically every street, school yard and taxi rank.
“And this white man says, suka, go away, you can’t make this money from selling these kota thingies. So I had to ask my friend who has a business in town to pay for the Jeep and I paid him. Hayi, you white people, so ignorant of the township!”
The kota, this township burger, is so popular that John’s little outlet on its own has 600 loaves of unsliced bread delivered each day to be cut into 2 400 kotas. His staff peel 80 bags of potatoes to make the slap chips. Yep, 80 bags of potatoes a day, six days a week. That’s ?2 400 kotas a day at one outlet making a profit of around R12 000 a day for the owner. And there are kota outlets everywhere, even if they are not as big as John’s.
Do the maths.
It’s massive and seemingly invisible, yet it’s not invisible, it’s there when you know what to look for in the informal sector.
The cheese slices alone which go into this sector are conservatively estimated to be worth R400m a year in sales.
But wait, that’s not all.
This is an excerpt from an article that originally appeared in the 14 January 2016 edition of finweek. For more buy and download the magazine here.
