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    FMCG Trends in South Africa 2024

    Stephen Timm | South Africa | 26 September 2024

    FMCG Trends in South Africa 2023

    Marthinus Havenga | South Africa | 20 January 2023

    FMCG Trends in South Africa 2021

    Louise Mitchell | South Africa | 15 April 2021

    Report Info

    Report Summary Table of Contents
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    Report Coverage

    This report on FMCG trends in South Africa is one of a series of Who Owns Whom trends reports, which examine trends in broad sectors that cover various industry segments. The FMCG trends report includes information on FMCG sales, prices, affordability, private labels, the shift to online, use of technology and spaza shops. There is also information on sustainability, healthy products, food waste and loss prevention, challenges and competition. Who Owns Whom’s trends reports differ from its standard industry report templates and do not include company profiles. These can be found in reports on underlying industries, which in the case of FMCG include manufacture, wholesale and retail of FMCG goods including food, groceries, books, tobacco, pharmaceuticals, and cosmetics. The list of related reports is provided in an appendix in the trends report.

    Introduction

    • The retail sector contributed almost R1.4bn in sales to South Africa’s economy in 2023, with the FMCG’s sector’s contribution estimated at R845.6bn, and growing from the previous year.\r\n
    • While retail sales have benefited as loadshedding eased in 2024, FMCG revenue continues to be affected by pressure on consumer spending. \r\n
    • Other challenges such as poor logistics and infrastructure and illicit trade have also held back growth in the sector. \r\n
    • Trends include consumers buying down the growing contribution of online sales and the increasing focus by retailers and producers on selling to informal traders. \r\n
    • FMCG companies are increasingly turning to technology solutions, to better understand consumers and to reduce costs.

    Trends

    • Buying down by consumers.
    • FMCG companies’ expansion into the continent has slowed.
    • Greater use of promotions by retailers.
    • Growing focus on sustainable retail.
    • Growth in private label brands is slowing.
    • Increased online sales.
    • Increased use of technology such as AI to better understand consumers and reduce costs.
    • Increasing demand for healthy products.
    • Inflation rates of all food product categories have declined since October 2023.

    Opportunities

    • Broadening FMCG exports to more countries.
    • Growing online sales.
    • Healthy foods and products.
    • Re-engineering products to reduce production costs.
    • Remodelling distribution to the informal market.
    • Retail promotions.
    • Sustainable retail practices, such as recyclable packaging.
    • Use of AI and other technologies to better manage stock, improve efficiencies and target consumers.

    Challenges

    • Consumer spending has been squeezed by poor economic growth and high inflation.
    • FMCG manufacture and retail is highly concentrated.
    • Illicit trade.
    • Loadshedding.
    • Opposition by unions to self-checkout.
    • Poor logistics.
    • Retail expansion into the rest of Africa has slowed due to logistics and currency challenges.
    • Trade measures by other countries against South Africa.

    Outlook

    • Consumer spending is under pressure due to low economic growth, high unemployment and cost of livings increases. \r\n
    • Retailers are pursuing a number of strategies to grow sales such as private label, online delivery, improving distribution to the informal sector and developing premium and discount store concepts.\r\n
    • A major retailer has forecast an improvement in consumer confidence, as wage growth aligns more with inflation and interest rates decline, and with no loadshedding having taken place in about six months. \r\n
    • The absence of loadshedding eliminates additional energy costs, and the two-pot retirement system could provide a small boost to consumer spending.

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    FMCG Trends in South Africa
    FMCG Trends in South Africa 2024

    Full Report

    R 20 000.00(ZAR) estimated $1134.15 (USD)*

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    Historical Reports

    FMCG Trends in South Africa 2023-01-20

    R 9 500.00(ZAR) estimated $538.72 (USD)*

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    FMCG Trends in South Africa 2021-04-15

    R 1 900.00(ZAR) estimated $107.74 (USD)*

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 3
    3. SIZE OF THE SECTOR 4
    4. Trade 8
    5. PRICES 16
    6. FMCG TRENDS 22
    7. CHALLENGES 32
    8. COMPETITIVE ENVIRONMENT 35
    8.1. Competition 35
    8.2. Ownership Structure of the Industry 36
    9. INDUSTRY SUMMARY 36
    10. OUTLOOK 37
    11. REFERENCES 38
    11.1. Publications 38
    11.2. Websites 39
    APPENDIX 1 40
    List of Sectors 40
    APPENDIX 2 41
    List of HS Codes Covered 41

    Report Coverage

    This report is part of a series of Who Owns Whom trends reports, and it expands on trends and developments highlighted in various FMCG-related reports produced by Who Owns Whom. This report covers the latest trends in South Africa including online trends, buying down, sustainability, waste and loss prevention, and Africa as a driver of growth.

    Introduction

    • The retail sales industry contributed more than R1tn in sales to South Africa’s economy in 2021, with FMCG accounting for more than 70%.\r\n
    • The sector is defensive, evident in the growth in sales at the height of the pandemic while non-FMCG products declined.\r\n
    • Consumers’ economic hardship is refocusing interest in private label products and buying down.\r\n
    • Sustainability and health consciousness have become increasingly important, while convenience is driving the e-retail market. \r\n
    • Other trends are changing shopping frequencies and basket sizes, the use of artificial intelligence and big data, Black Friday and pressure to buy local.\r\n
    • Challenges including a hostile economic environment, electricity constraints, logistics barriers and illicit trade.

    Selected Highlights


    • Over the last decade, sales of pharmaceutical goods, cosmetics and toiletries grew the fastest at an average of 3.1% per annum, followed by sales by general dealers at 1.6% and food, beverages and tobacco by specialised stores at 0.9%.\r\n• After the onset of the pandemic and the Russia-Ukraine war, high volatility in growth rates has been experienced, largely for statistical reasons and not an indication of higher rates of sales (or declines).\r\n• The channel with the largest number of stores was house shops(spazas or kiosks), with 52,913. Gauteng had the largest number of spaza shops at 22,802, two times more than KwaZulu-Natal and three times that of the Western Cape.\r\n• The Netherlands was the largest export destination, receiving FMCG worth R18.4bn (9.3% share of total), followed by the UK with R13.9bn (7.0%) and Botswana with R13.4bn (6.8%).\r\n• Most FMCG imports in 2021 were from India (R13.8bn), followed by Eswatini (R10.9bn), Germany (R8.7bn), France (R7.7bn) and the US (R7.5bn).\r\n• At R65.3bn, edible fruit and nuts were by far South Africa’s biggest FMCG export in 2021, more than three times bigger than beverages exports of R20.6bn, cereals (R14.8bn), animal or vegetable fats and oils (R10.7bn) and preparations of vegetables, fruit and nuts (R10.7bn).\r\n

    Outlook

    • The pandemic and the Russia-Ukraine war are still acting as catalysts for change in the industry. \r\n
    • Trading conditions will remain tough as low economic growth, unemployment and high interest rates inhibit consumers’ ability to spend. \r\n
    • The biggest challenge for retailers is to manage input and operating costs such as fuel, transport, electricity and labour costs. \r\n
    • A solution to the energy crisis is urgently needed.\r\n
    • The outlook remains positive, as facing and overcoming such challenges are in the DNA of FMCG retailers.

    Read More..
    FMCG Trends in South Africa
    FMCG Trends in South Africa 2023

    Full Report

    R 9 500.00(ZAR) estimated $538.72 (USD)*

    Buy Now +

    Historical Reports

    FMCG Trends in South Africa 2024-09-26

    R 20 000.00(ZAR) estimated $1134.15 (USD)*

    View Report Add to Cart

    FMCG Trends in South Africa 2021-04-15

    R 1 900.00(ZAR) estimated $107.74 (USD)*

    View Report Add to Cart

    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. THE FMCG MARKET 1
    2.1. General Market Description 1
    2.2. Industry Value Chain 3
    3. SIZE OF THE MARKET 4
    3.1. Total FMCG Retail Sector Size 4
    3.2. Number of SME Players in the FMCG Retail Sector 9
    4. FMCG CROSS-BORDER TRADE 11
    5. FMCG PRICES 21
    6. TRENDS IN THE FMCG SECTOR 27
    6.1. Private Label and Brand Loyalty 27
    6.2. A Shift to Online 28
    6.3. Buying Down 30
    6.4. Consumers Are More Informed 31
    6.5. Sustainability 31
    6.6. Healthy Products 32
    6.7. Africa as Driver of Retail Growth 33
    6.8. Food Waste and Loss Prevention 35
    6.9. Spaza Shops 36
    6.10. Other Trends 36
    7. CHALLENGES FACING THE FMCG SECTOR 37
    8. COMPETITION 42
    9. OUTLOOK 43
    10. REFERENCES 43
    10.1. Publications 43
    10.2. Websites 44
    APPENDIX 1 45
    List of Sectors 45
    APPENDIX 2 46
    List of HS Codes Covered 46

    Report Coverage

    The report focuses on South African FMCG markets as part of the retail and wholesale industry. Markets are segmented according to type of retailer: general dealers, including supermarkets and non-specialised stores selling FMCG; food, beverages and tobacco sold in non-specialised stores, pharmaceuticals and medical goods, cosmetics and toiletries; and all other retailers that also sell FMCG like stationery, FMCG sold online, and at craft markets. The report refers to 28 Who owns Whom sector reports on individual FMCG markets. In total, over 300 local and international companies are profiled in these reports.

    Introduction

    South Africa’s fast-moving consumer goods (FMCG) markets have diversified sales channels that are used by numerous local and international suppliers of wide ranges of local and imported products. Omnichannel retail increased during the lockdown and created opportunities for expansion of online trading. Disruptors are the 2019 recommendations of the Competition Commission following its grocery retail market inquiry, and the coronavirus pandemic that started in 2020. Drivers of FMCG market trends include consumers who prefer food and personal care products with healthy and sustainably sourced ingredients, business disruptions caused by the coronavirus pandemic, digitalisation, regulatory changes, climate change and sustainable business practices. \r\n\r\nRetailers are trading in challenging conditions that worsened in 2020 when the lockdown was imposed, but overall FMCG retail sales increased at the end of 2020 after the downturn during the lockdown. The biggest sales growth of 8.2% from November 2020 to January 2021 was seen in pharmaceuticals and medical goods, which was driven by demand for goods like masks, sanitisers and vitamins. Sales of food, beverages and tobacco in specialised stores declined by 6.6% over the same period as consumers spent less on luxuries after job losses and salary cuts during the lockdown. Total exports of FMCG products increased year-on-year by 27.6% to R163.4bn in 2020. Imports of pharmaceutical products in 2020, valued at R23.9bn, were a year-on-year increase of 21.3%. Some food and pharmaceutical retailers are disinvesting from African countries mainly due to erosion of their profits by devaluing exchange rates, while others like Pick n Pay and Spar are investing and trying out different business models. The majority of investments in South African FMCG markets are taking place in the pharmaceutical sector where overseas companies are acquiring local players. \r\n

    Selected Highlights

    Expansion of Operational Capacity
    \r\n• Aspen opened a new high-containment facility (where there is a high risk of infection or release of microbiological organisms) in Gqeberha in 2018 at an estimated cost of R1bn \r\n• RCL Foods opened a R123m pet food plant in Randfontein, Gauteng, in 2019, which is one of the largest facilities of its kind in Africa\r\n• Dis-Chem Pharmacies opened 18 new stores in its 2020 financial year to end-February, at a cost of R224m. From 1 March to 15 August 2020, it opened another 11 stores\r\n• In its 2020 financial year, Pick n Pay Stores invested R545m in 160 new stores of which 157 are in South Africa and three in Zimbabwe\r\n• Shoprite Holdings spent R403m to open 149 new stores in its 2020 financial year\r\n• Clicks Group opened 39 new stores in its 2020 financial year\r\n

    Outlook

    Commentators see the current trends continuing in the short term, but the pandemic and the lockdown will still be drivers of change in FMCG markets. Economists do not see trading conditions improving in the next four to five years. Lifestyle changes that the pandemic is bringing about will affect the business models of retailers. E-commerce as a retail channel should continue to increase in popularity even when the pandemic ends. Role players expect consumer demand for fresh produce to continue growing. Fresh food supply volumes are hoped to be sufficient as favourable weather conditions are expected. Adequate supply should keep price increases lower while the Competition Commission keeps an eye on the pricing behaviour of retailers. FMCG market players are expected to continue their focus on sustainability and product innovation to meet the wellness demands of consumers.

    Read More..
    FMCG Trends in South Africa
    FMCG Trends in South Africa 2021

    Full Report

    R 1 900.00(ZAR) estimated $107.74 (USD)*

    Buy Now +

    Historical Reports

    FMCG Trends in South Africa 2024-09-26

    R 20 000.00(ZAR) estimated $1134.15 (USD)*

    View Report Add to Cart

    FMCG Trends in South Africa 2023-01-20

    R 9 500.00(ZAR) estimated $538.72 (USD)*

    View Report Add to Cart

    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE MARKETS 1
    2.1. Industry Value Chain 3
    3. SIZE OF THE MARKETS 4
    4. COMPETITION 6
    5. STATE OF THE MARKETS 8
    5.1. Coronavirus 9
    5.2. Trade 10
    5.3. Corporate Actions 11
    5.4. African Markets 12
    6. TRENDS 14
    6.1. Innovation 14
    6.2. Digitalisation 17
    6.3. Price Increases 18
    6.4. Investments and Disinvestments 21
    6.4.1. Direct Investments 21
    6.4.2. Disinvestments 23
    7. PESTLE ANALYSIS 24
    8. OUTLOOK 26
    9. REFERENCES 27
    9.1. Publications 27
    9.2. Websites 27
    APPENDIX 1 28
    List of Sectors Covered 28

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