The Changing FMCG Landscape in Addis Ababa

Over time, Addis Ababa’s retail landscape has changed dramatically. The city’s bold corridor development initiatives have physically reshaped its commercial landscape. Many of the traditional souks (informal shops), which once accounted for an estimated 65% of Fast-Moving Consumer Goods (FMCG) volume, have been demolished. The remainder of the market used to be divided between 20% wholesale players (including Merkato) and 15% modern trade like supermarkets and institutional buyers.

These changes have brought about a complete reconfiguration of the city’s market geography.

It’s important to pause and recognize the modernization vision Addis Ababa is pursuing. The city’s ambitious infrastructure overhaul, through corridor developments, is visibly transforming its layout, transport systems, and urban potential. Roads have improved. Structured residential and commercial zones are emerging. This transformation reflects a long-term commitment to modernity, organization, and livability.

However, such a change has not come without cost.

Longstanding communities were displaced. Traditional markets were dismantled. In the process, social fabrics have been disrupted, and informal market ecosystems once critical to the city’s daily life and economic activity were abruptly cut off or relocated without sufficient support. This has affected not just livelihoods, but the cultural and economic continuity that gave neighborhoods their identity.

So while the modernization effort is bold, necessary, and praiseworthy, it also calls for compassionate urban planning, inclusive economic policies, and intentional efforts to support displaced entrepreneurs and low-income communities navigating this transition.

New Settlements, New Challenges

Following the demolition, new settlements have rapidly emerged across the outskirts of Addis Ababa. These neighborhoods are primarily organized in condominium and apartment setups, introducing a new layer of complexity and opportunity to the market.

This shift has unintentionally created a default traditional setup in new forms. Souks have reappeared out of necessity, shaped by the high cost of rental space, rising FMCG product prices, and limited consumer affordability. Many of these new communities are underserved by structured distribution networks, leaving a vacuum that informal setups are once again filling.

Where Businesses Are Falling Behind

On the other hand, many manufacturers and distributors are still operating with passive, outdated distribution models. Their reliance on informal networks and weak selling systems continues to burden them financially, especially in a city undergoing such a profound transformation.

The cost of these inefficiencies is rising, affecting everything from market coverage and brand visibility to margin pressure and overall business sustainability.

In my recent corporate leadership role at Aqua Addis Bottled Water, where I served as Corporate Sales and Marketing Director across multiple brands, I witnessed firsthand how the corridor developments diminished major retail zones and disrupted product flow throughout the city.

The Market’s Future: Modern Trade & Financing Barriers

Today, the market is steadily gravitating toward modern formats hypermarkets, marts, supermarkets, and mini markets. But this transition is not without its challenges. High rental costs, thin profit margins, inflationary pressure, unpredictable tax systems, and low purchasing power have discouraged many from expanding or investing in modern retail.

A further challenge is access to financing. SACCOs and other micro-finance institutions were meant to support SMEs. But long procedures, limited capital, and the high setup costs for distribution and retail outlets have become major hurdles. As a result, the transition from informal to formal market structures is stalling, despite physical infrastructure changing rapidly.

What’s Needed Now: Market Segmentation & Systems Thinking

Still, the market will continue to evolve, shaped by the natural demands of both B2B and B2C platforms. From my continued involvement, now as a strategic advisor and consultant, I’ve seen one truth remain constant:

Market segmentation is the bloodstream of sustainable growth. It helps brands find the right consumer fit, navigate complexity craft effective strategies for both retail and institutional sales. However, many businesses remain trapped in a passive sales mindset, relying on individual sellers instead of building strong internal systems, nurturing talent, or establishing organizational discipline. This results in two common (and mostly painful) outcomes: businesses either become unsustainable and quietly disappear, or they bleed cash without scale and no return on their efforts.

Grounded, Practical Strategic Support

To keep FMCG companies resilient and competitive, whether large or small, there’s a clear need for deeper diagnostics and forward-looking strategy. This is where professional competence as a strategic advisor and consultant plays a major role. Years of field-tested experience and market-aware thinking can help companies conduct actionable market assessments, design Go-to-Market (RTM) and Route-to-Market (RTM) strategies, build sales and distribution capability, and shift from personality-led to system-led operations.

Let’s Build Stronger, Smarter Market Players

Whether you're designing a go-to-market blueprint or restructuring your sales approach, the door is open to anyone who believes in doing business with intention, insight, and long-term impact.

Since 2016, I’ve been directly engaged in developing RTM and Route-to-Consumer (RTC) strategies. These aren’t theoretical exercises; they’re built from the ground up, shaped by hands-on experience, local observation, and field-based insights gained through years of supporting businesses under real market conditions.

From what I’ve observed and experienced, executing RTM, RTC, and GTM strategies is both resource-intensive and highly rewarding when done right. Especially in cities like Addis Ababa and other regional hubs, these efforts have traditionally been implemented by multinational companies such as Coca-Cola, Heineken, and the late Diageo, which possessed the infrastructure, systems, and capital to scale effectively.

But the need is even more pressing for local FMCG manufacturers and distributors, who often lack such institutional setups but carry equal if not greater potential for growth and impact.