Penetration is king for South African brands

The first year of insights from our household panel in South Africa, the largest in Africa, has revealed trends that echo those we are seeing in the global environment. Looking at five of the country’s most successful brands, across a selection of categories – Simba (salty snacks), Coca-Cola, Sasko (sliced bread), Cadbury and Sunlight – enables us to identify the factors in their success, and the levers that other brands need to apply on their own path to leadership.

Every brand in South Africa must deal with significant churn, because of relatively low consumer loyalty and shoppers switching to other brands to manage their spend. Even the strongest brands loose up to half of their shoppers each quarter; it is a constantly leaking bucket. Therefore, it’s vital to focus on boosting penetration.

How do these successful brands attract so many shoppers?

1. They guarantee shopper satisfaction. This is non-negotiable in South Africa; a must-have rather than a game-changer. Products must meet expectations – and the evidence of this is the repeat purchase rate enjoyed by our five category leaders.
   
   
2. They reach shoppers in all channels. The easier shoppers can access a brand, the better.
   
   
3. They attract more shoppers – month after month. To retain a high level of penetration, brands need to win over the same number of new consumers on a consistent basis. This demands regular, year-round activation.
   
   
4. They fulfil all types of needs and occasions. The market leaders all have large product ranges, including different pack sizes and formats. This makes them attractive to all types of households – from small to large, from premium to economy buyers – and protects the brand if consumers reduce the volume they purchase.

These levers have worked exceptionally well over the last year. But what happens as inflation squeezes harder?

Brands in South Africa are facing the same economic headwinds as the rest of the world, with inflation squeezing shoppers’ budgets. Almost half of households (46%) say they are struggling, and 63% are extremely concerned about the economic situation. FMCG prices have increased dramatically, though currently shoppers are absorbing these increases by making cuts in other areas of spending.

Thus far, FMCG has proved extremely resilient – and historically, globally, shoppers have at least maintained FMCG spend even during times of crisis.

The at-risk categories

So far, South African consumers have found ways of continuing to buy key categories by adjusting their spend, reducing volume, or choosing different brands.

We uncovered the at-risk categories as well as other insights of our first year working with our consumer panel in South Africa. Our experts can help you understand the dynamics within your category, and how the retail landscape will change as inflation pushes shoppers to adjust their behaviour. Please get in touch if you would like to learn more.