The Coca-Cola Company (KO), Wal-Mart Stores, Inc. (WMT): Targeting Africa as the ‘New China’

Although very early in its plans for Africa expansion, and Massmart’s sales have indeed grown since the acquisition, Wal-Mart Stores, Inc. (NYSE:WMT)’s attempts at African growth have not met analysts’ expectations. And just last week, Massmart reported soft sales and expects a further slowing of sales growth for the rest of the year due to weakening South African consumer demand across Massmart’s retail segments.

Despite these short term troubles, Wal-Mart Stores, Inc. (NYSE:WMT) and Massmart continue full steam ahead with their expansion strategy. The two companies will open about 27 new stores by the end of the year, including more in South Africa, as well as Botswana and Mozambique (their next two largest African countries of operation).

Bottom line
While the African continent overall appears poised to become one of the next great success stories, there can be a very large disparity between the relative politically and economically stable nations, such as South Africa, and the more extreme poverty-stricken and war-torn nations. And with 54 countries, a few dozen European, Middle Eastern and African official country languages and a wealth of different cultures, histories and religions, Africa cannot be thought of as a single market (culturally or economically). But for companies with the ability and know-how to navigate through this beautifully diverse continent, Africa and its1 billion people present investors with a great opportunity for future growth.

The article Targeting Africa as the ‘New China’ originally appeared on Fool.com and is written by Matthew Luke.

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