Sess14 2 etienne_th5_abs104

Addressing the changing consumer behaviour in the South

African market

Etienne Booyens

Challenging economic climate

• Household consumption expenditure - slower that anticipated(Household consumption expenditure increased by only 3.5% year-on-yearin 2012);

• High unemployment levels are contributing to the pressure on consumers’ spending

(2012 unemployment remained high at 24.5%);• Substantial household debt and low savings

(SA has just below 20 million credit active consumers, of which a significant 47% have impaired credit records);

• Rising inflation(From February 2011 to February 2013 (i.e. over two years) the CPI increased by 12.3%);

Source: NAMC Food Price Monitor

SA EXPENDITURE ON FOOD

25.0

27.0

29.0

31.0

33.0

35.0

37.0

39.0

41.0Ju

l‐08

Sep‐08

Nov‐08

Jan‐09

Mar‐09

May‐09

Jul‐0

9Se

p‐09

Nov‐09

Jan‐10

Mar‐10

May‐10

Jul‐10

Sep‐10

Nov‐10

Jan‐11

Mar‐11

May‐11

Jul‐11

Sep‐11

Nov‐11

Jan‐12

Mar‐12

May‐12

Jul‐12

Sep‐12

Nov‐12

Jan‐13

The cost of a basic food basket expressed as a share of the average monthly income of the  poorest 30 % of the population

2.0

2.2

2.4

2.6

2.8

3.0

3.2

Jul‐0

8Se

p‐08

Nov‐08

Jan‐09

Mar‐09

May‐09

Jul‐0

9Se

p‐09

Nov‐09

Jan‐10

Mar‐10

May‐10

Jul‐10

Sep‐10

Nov‐10

Jan‐11

Mar‐11

May‐11

Jul‐11

Sep‐11

Nov‐11

Jan‐12

Mar‐12

May‐12

Jul‐12

Sep‐12

Nov‐12

Jan‐13

The cost of a basic food basket expressed as a share of the average monthly income of the wealthiest 30 % of the population

29 %

40.4 %

2.3 %

3.2 %

The impact of these economic conditions on the consumer

• Strong focus on good value;• More price sensitive;• Better planned consumer spending (less impulsive purchases);• More attention to sales / promotions;• Focus on convenient (and often nearby) location of retailers;• Focus on ‘tried and trusted’ products;• Increased focus on home-prepared meals;• Availability of high quality fresh produce; and• Products delivering health and safety at an affordable price.

4

The good news…….Living Standard Measures (LSM®)

5

6Source: Stats SA, 2013.

Expenditure patterns

0

10

20

30

40

Lower 2 3 4 5 6 7 8 9 Upper Total

Percen

tage

Income decilesFood and non‐alcoholic beveragesAlcoholic beverages and tobaccoClothing and footwearHousing, water, electricity, gas and other fuelsFurnishings, househould equipment and routine maintenance of the dwellingHealthTransportCommunicationRecreation and cultureEducationRestaurants and hotels

Private consumption expenditure on food

7

0

20000

40000

60000

80000

100000

120000

140000

160000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Million Ra

nd

  MEATBREAD & GRAIN  SUGARMILK & MILK PRODUCTS  OILS & FATS POTATOES FRUIT&VEG  OTHERCOFFEE, TEA

Source: DAFF, 2013.

Food affordability in South Africa: Price remains important

8

Cost  of  NAMC  Food  Basket  in  2010, 2011  and  2012  prices  for  each item 

Sources: For 2001 from Jacobs, 2009. StatsSA & AC Nielsen (2005, 2013)

Food groups and items 2010 2011 2012Bread and cerealsLoaf of brown bread 700g 7.06 7.70 8.45Loaf of white bread 700g 7.88 8.65 9.46Maize special 5kg 16.64 17.71 26.95Rice 2kg 21.41 20.42 21.51Beef brisket - fresh per kg 45.26 51.34 57.55Whole chicken - fresh per kg 28.29 29.37 32.20Fish (excl tuna) - tinned 425g 12.12 11.33 12.08Dairy and eggsFull cream milk - fresh 1ℓ 8.55 6.78 9.38Eggs 2.5 dozen 34.45 33.58 35.79FruitApples - fresh per kg 12.13 13.28 13.55Bananas - fresh per kg 9.69 10.27 11.00Oranges - fresh per kg 7.39 7.14 7.87VegetablesPotatoes - fresh per kg 9.25 9.87 9.03Tomatoes - fresh per kg 14.73 9.15 9.86NAMC food basket 396.43 418.82 451.08

How do we create consumer awareness of potatoes?

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NUTRITION TABLE FOR LABELLING PURPOSES

Allowed claims for general potatoes

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Potato cultivar classification system

11

Price and income is simple to measure. However the

impact of awareness on SA consumers can only be

measured over an extended period

Measuring marketing results

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15

16

Potatoes and sport

17

The Comrades Marathon

• Approximately 20 000 runners

• 90 km endurance race

• Potato South African (11 potato fuel stations along the route)

• Potatoes has become known for preferred carbo-loading food for endurance races

• Also involved in other endurance sport e.g. soccer and cycling.

Comrades

19

21

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