Value, volume, and the 'boujification' of sports in Africa

Many sports brands see Africa as a vast and untapped potential audience (which it is).

It’s also a misunderstood market.

Many brands want to court the continent’s well-educated, fashionable, and internationally-mobile top-end.

This makes for good optics—but not necessarily good business.

Sports brands that want to build mass followings in Africa would be much better off targeting consumers lower down the income ladder. This is where the biggest opportunities lie.

Africa—home to the sports fan of the future

Demographics are a core part of the argument for investing in Africa.

Whilst developed markets such as Europe are seeing their populations ageing and shrinking, Africa’s consumer market is set to continue growing for decades.

Africa is already home to 28% of the world’s population under 16.

Put another way—there are likely five times as many young sports fans in Africa than in Europe.

Africa is about volume, not value

Africa has a huge population, but the individual values of those users is very low.

Consumer spending in the major African economies is around $1,500 per person per year (South Africa is slightly higher).

A Brit spends, on average, as much as 20 Nigerians.

The “rule of 20”

ّIf you want to find out how much people will pay for something, the above ratios can give you an initial estimate.

It’s crude and imprecise, but dividing the UK price by 20, for example, gives a reasonable ballpark for ticket prices, transport fares, or football jerseys in Nigeria.

Individually, customer values in Africa remain comparatively tiny

The difference in acquisition costs for sports betting companies are even more stark.

Most bookmakers in Sub-Saharan Africa need to acquire customers at less than $10 each to be sustainable.

Acquisition costs in Western Europe or the United States can be 100x what they are in countries like Nigeria or Kenya.

The key takeaway:

What about Africa’s upwardly-mobile rising middle class?

If you are a mass-market sport (football, basketball, MMA, etc) and want to generate tens of millions of dollars in revenue in Africa, then focusing on the higher-end* of the income spectrum is not going to provide the scale you need.

*for context, anyone who spends $600+ a month is in the top 1% of African spenders.

South Africa excepted, the number of Sub-Saharan Africans who can regularly afford Western luxuries such as designer clothing and global travel is smaller than the population of Scotland, and scattered across nearly 50 diverse nations and a landmass twice the size of Europe.

It’s great to have these consumers on board, but they are too disparate to build a huge brand around.

“Fortune at the middle of the pyramid”

DFS Lab encourages African tech companies to target consumers with spending power of $4-8 a day.

The same should apply to sports brands.

The bulk of consumer spending power is in the ‘middle class', which is somewhere around $100-800 per month in income.

Don’t focus on the high earners…

Targeting Africa’s ‘bourgeoisie’ is sexy.

But it’s a small market.

And when it comes to sport, my experience tells me those are not your fanatics. You will struggle to create loyal, or loud, adherents from this tiny segment of people.

Amazon Prime is a case in point—having waltzed into Nigeria on red carpets dressed in designer clothing and flanked by celebrities, they are now gone, having failed to resonate with the population-at-large.

…Instead focus your efforts lower down the income scale

International brands looking to enter the market would be better off looking at the success of the sports betting brands, and targeting those at lower income bands.

Specifically, think of an end-user that:

• Earns between $150 to $800 per month

• Uses an android smartphone costing $200 or less (likely manufactured by Transsion)

• Consumes internet primarily through simple, data-lite portals such as Whatsapp, Facebook, or Opera.

• Watches live sports in a communal viewing centre (as opposed to at home via PayTV).

This is your volume play—individually these people may not be hugely wealthy, but in aggregate they have far more spending power than the well-heeled, internationally mobile, higher earners.

And you will not reach mass-market status without them.