The business model of drinking water in urban Ghana

In Accra, Ghana, packaging potable water into single serve sachets for the mass market (the prepaid economy) is a business model that has evolved extremely rapidly in response to customer demand and purchasing power.

Bottled mineral water for the elite trickled down in quantity and form until the man on the street can buy a glassful for pennies. From the article The cost of pure water:

“I think we’ve seen almost an entire product life cycle in just a decade,” Stoler said. “Initially it was more of the autocrats drinking sachets. Very quickly, within a few years, it seems to have shifted to lower income and the poorest of the poor… You don’t go to a conference or symposium and get served sachet water.”

Stoler believes the “warp-speed evolution” of the industry has quickly made the product better and cleaner. Due to the enormous demand, bigger producers like Voltic have stepped in and are using the same water they put in bottles, sold to the rich, in the sachets sold to the lower and middle classes. And with lots of competition in most areas, and billions of bags being consumed each year, the customer base is quickly becoming more discerning about what they buy.

“This is one of those weirder examples of almost pure capitalism,” Stoler said. “You have this gap in supply, so the private sector steps in and fills the demand. Customers start to understand that there’s differentiation in product quality. Better quality producers rise to the top, the market incentives produce better quality products, and without tons of over-regulation, the market has ended up with a pretty good product.”

His work shows that the intelligent Ghanaian customer base has helped evolve the experimental, and perhaps unhealthy, product that Osei sampled into a cleaner one. In a recent study focusing on two poorer neighbourhoods of Accra, Old Fadama and Old Tulaku, Stoler found no faecal contamination in any sachet sample.

Reading the article further, you’ll note that this service is typical of the way the informal sector quickly senses an opportunity to be satisfied.

This entry was posted in African Consumer Market, Business Models, Consumer Behaviour, Design, Distribution, Ghana, Informal & Flexible, Marketing, Prepaid Economy & Informal Sector, Produits de grande consommation (FMCG), Strategy, Technology, urban and tagged , , , , , . Bookmark the permalink. Trackbacks are closed, but you can post a comment.

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