By Gerrit Thiart, Global Route to Market & Strategy Manager at Danone Southern Africa

The South African fast-moving consumer goods (FMCG) sector grew by 13% last year, yet in the current fiscal year the momentum is expected to ease at around 9%. This anticipated slowdown stems mainly from cost pressures on consumers and a shift towards more cautious spending and a tightening food basket, particularly in organic produce. Despite these headwinds, the market’s allure remains lucrative – worth R452-billion in annual sales – for manufacturers, this presents a compelling challenge and opportunity; not only to pioneer inventive strategies that provide sustainable growth but also to amplify growth in this vibrant and evolving sector.

Take the snacking category, for example, which includes products like yoghurt. This segment has seen significant inflation, exceeding 14%, largely because these items are considered non-essential. Additionally, consumer preferences and brand choices are heavily influenced by the perceived value of the product’s contents relative to its packaging size. Given these factors and the broader economic context, manufacturers must develop strategies to build resilience against market fluctuations. Streamlining production processes and accelerating product innovation while maintaining high-quality standards are essential steps.

Process engineering plays a pivotal role in achieving these goals. It not only enhances systems, production and logistics efficiencies but also ensures higher quality products and identifies opportunities for innovation. In a thriving market, process engineering ensures consistency through standardised processes and unified quality assurances. In a challenging market like the current one, it can be the deciding factor between gaining or losing market share and revenue. By optimising production processes, costs can be reduced and efficiency improved, which is vital in the yoghurt sector, where market size growth across Africa over the next five years is expected to be a modest 6%. Competitive pricing, high-quality standards and education are crucial to meet consumer demands.

To stay competitive, it is essential to ensure rapid market entry, keep shelves stocked and maintain high demand while continuously innovating with new flavours and focussing on translating nutritional fortification. Although this may seem like a topline task, it fundamentally starts at the production level. By applying tried and tested process engineering principles, the time to market for existing product lines can be accelerated, as can the testing and implementation of new innovations. This is particularly important in the FMCG sector, where 27% of dairy product consumers are early adopters of new products, with a 39% increase in dairy consumption among South Africans. Optimising development cycles, integrating new techniques, and designing efficient processes allows a swift response to changing market demands without compromising quality.

Moreover, FMCG success and revenue generation are intrinsically linked to cost optimisation. Improving product quality and reducing waste can lower production costs and reduce the environmental impact. Managing the complexity of change processes is challenging. Regional variations in resource availability and legislation necessitate local adaptations in process engineering; along with an understanding of local market conditions. Danone has introduced centres of excellence, where internal specialists gather best practices from various regions and share them globally, standardising processes and improving efficiency across different markets.

To optimise the route to market strategy, processes need to be simplified by eliminating non-value-adding steps and continuously scrutinising workflows to enhance productivity. Standardising processes to reduce variability and waste is critical, especially as sustainability becomes a fundamental pillar of operations. By optimising resource use, reducing waste and focusing on energy efficiency, carbon footprints can be significantly reduced while supporting sustainability goals – which is non-negotiable for Danone.

In an AI and technology-driven world, the benefits of process engineering are limitless. Embracing these principles within the FMCG sector can enhance competitiveness, grow market share and positively impact on the bottom line and brand reputation over time.