With the changing dynamics within South Africa and the growing interest from both South African businesses looking at export opportunities and UK based Food and Drink businesses targeting the market for strategic growth led to me spending time immersed in the Cape Town Grocery market earlier this year. Such a fascinating experience and exciting food focused market i have already committed to present and attend the African Food Show powered by Gulfood later this year. Here are some of the insights from the trip and initial thoughts on how to win in this market
Firstly, it’s important to understand how the retailers meet the wide customer needs of the market, it’s a market of 2 distinct halves at retail premium grocer’s vs the discounters each playing an important role in serving the diverse population. With the main opportunities in the traditional grocery sector that’s the focus on this blog
Globally Woolworths are recognised as a premium food retailer leading innovation across both products and the instore experience underpinned with clear responsible sourcing strategies, very comparable to the UK’s leading premium food retail Marks & Spencers, a high level of success likely to be attributed to long term supplier partnerships.
Amongst the other retailers targeting a similar customer group, Checkers really stood out, especially the hypermarket format and the new stores. Well, established Private Label products alongside leading local or international brands, Private Label differentiation delivering quality and value influencing where consumers choose to shop. Rapid delivery is growing quickly in the market and Checker Sixty60 appearing to be the market leader.
Other retailers to consider include Food lovers Market a growing chain traditionally focused of fresh foods and hot food to go, expanding their grocery offer to increase basket spend and profitability. Really deliver that Market experience with abundant fresh produce displays and expansive meat offer, prepacked or through the in-store butchers.
PickNPay another leading Grocery chain and a major competitor to Checkers, had a well-established Private label portfolio alongside the leading brands. From the stores visited appeared to be more focused on traditional grocery aisles that the instore preparation or serve over counters.
The growing focus on the pharmacy / wellness chains being led Clicks and DisChem, with well established Private Label offers across wellness products, limited food or health snacking ranges and trialling a meal deal program. With this sector a clear destination for the categories (carrying a stronger offer than the grocery stores) it could be interesting for brands and products that align with the wellness or beauty focused customer.
Makro South Africa Part of Walmart offer an expansive range of food and non-food targeting the membership program and larger product size
The convenience sector with smaller format or neighbourhood stores demonstrated a strong presence from SPAR, and the Petrol & Convenience sector trialling formats to drive food and drink sales to fuel focused customers. A sector to watch closely as it evolves and creates opportunities for those brands offering innovation in the food to go categories.
Top line considerations
What is the opportunity for UK Food & Drink businesses targeting growth in South Africa?
The Private Label Market
This is experiencing significant growth, presenting Food, Drink or Non-Food manufacturers with opportunities to expand their businesses. Competing on high volume lines where you can offer efficiencies through procurement, automation or volume remains a key opportunity as retailers continue to source internationally to access better commercial performance, innovation and invest in price. Additionally, understanding the growth channels, trends and innovation requirements of the market enable UK manufacturers to offer access to turnkey innovation under the retailer’s Private Label offer with products proven in other international markets that can be easily adapted to the South Africa palate or consumer.
The Branded Opportunity
This is also experiencing growth as new brands rapidly enter the market to fill the innovation gap as consumer needs change, having the flexibility of a start-up and ability to innovate with agility giving them an advantage versus the major local brands driven on cost control and operational efficiency. Recognising the innovation within the UK Food and Drink sector this translates to an exciting opportunity for established UK businesses that operate a portfolio of brands and are innovating to gain market share in other highly competitive markets. Understanding the competitive landscape is critical to unlock these opportunities through the identification of product or range gaps and marketing messages that really resonate with consumers.
Key Growth categories include: –
In an increasingly competitive market being ready or prepared is essential before approaching one of the key retailers. Understanding the competitive landscape, regulatory compliance, supply chain requirements, marketing strategy and how to support the new business effectively are some of the key strategic questions to consider prior to any approach.
Prof Consulting Group
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