Inflation nation 

NielsenIQ analysis of its South African Retailer Measurement Service data has revealed that almost 60% of the top consumer goods product categories experienced price increases ahead of Consumer Price Inflation (CPI) during Quarter 4, 2021. 

Furthermore, 48% of the top consumer goods categories that generate more than 80% of NielsenIQ tracked sales saw an average pack price increase of between 5% and 11% (Q4, 2021 vs. Q4, 2020) while 9% of those categories saw an increase well beyond 11%. 

Liquor and tobacco fight their way back 

Total Basket Sales of R517-Billion (to end December 2021) represent 11.7% year-on-year value growth with all Supergroup product categories seeing growth. 

Liquor and tobacco continue to drive top-line growth off the back of unprecedented liquor bans restrictions during 2020 and 2021 followed by restricted trading hours.

However, it will be interesting to see the effects of the announcement by Finance Minister Enoch Godongwana during his 2022 Budget Speech that the South African government will increase excise duties on alcohol and tobacco products by 4.5% to 6.5%. 

Product winners and losers 

Cooking oils saw one of the highest increases in sales largely driven by inflation with the product displaying the highest price increase (25%) amongst all the sub-categories analyzed due to issues such as drought and other key input costs. Despite this, it has only seen a marginal drop in volume sales despite its steep price increase pointing to the extent to which cooking oil is a necessity. 

Of the top 20 categories, only sugar has seen declines in both 12MM and 3MM comparative sales. 

Traditional trade – grassroots growth 

Traditional trade refers to non-branded outlets, superettes, kiosks, hawkers, open market traders and wholesalers, and  is seeing strong growth, +17.5% 12mm, +16.8% 6MM & +15.4% 3MM. This is being driven by an increase in liquor and tobacco sales but even when excluding liquor and tobacco, traditional trade is only lagging Hyper Store types in terms of value growth. 

Energy drinks have seen two strong years of growth in the market, specifically in traditional trade. This has been achieved by low price inflation of only 1% in the last year off the back of 0.6% price inflation the previous year, (significantly lower than CPI) and resulted in year-on-year growth of 27%. 

Bread has seen sales growth of 27%. This is being driven by increased sales at urban counter service stores which saw specific growth of 34% in the latest 13 weeks and makes up 75% of total TT growth for bread for the last 12 months. 

Key insight  

“It is clear is that we have returned to a time of austerity shopping, much like that experienced during and after the second world war, with South African shoppers becoming the masters of mindful shopping and restraint. This behaviour will be exacerbated by the negative knock on effects of the conflict in Ukraine and the next three to six months will therefore be a critical time for manufacturers and retailers to have tactics in place for price and promotional plans across an extended time horizon.” NielsenIQ MD Ged Nooy 

Sources:

Consumer Outlook Report Part 1 & 2 (January & March 2022) 

StatsSA (January 2022) 

NielsenIQ Market Size and Growth Report (February 2022) 

NielsenIQ ShopperGraphics Report (February 2022) 

NielsenIQ Market Pulse Report (March 2022