FMCG Trends in South Africa in South Africa 2023

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

Outlook

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

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.

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%. 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). 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. 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%). 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). 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).