South African Consumers Love Established Brands

In South Africa, 83% of consumers believe that established brands are the best, compared with an average of 38% of consumers in developed markets, and 67% in Africa.   This is according to a report by The Boston Consulting Group (BCG), Understanding Consumers in the “Many Africas”, which explored the current and expected future spending patterns in a number of African countries, including South Africa.

Stefano Niavas, partner at BCG and co-author of the report, says the African focus on established brands often surprises clients who don’t know the continent, but it is good news because, if a company can defend a brand, it means that it can also defend a price premium.

The report is the culmination of a survey that was conducted among 10 000 consumers in urban areas in Algeria, Angola, Egypt, Ghana, Kenya, Morocco, Nigeria and South Africa (roughly 1 200 South Africans participated in the survey), between May and July last year.  These countries account for around 60% of the GDP of the continent.

The respondents prefer a mix of local and global brands. These brands are popular because of their quality, performance and familiarity to the consumer.  The reality is that people who do not have a lot of money only have one chance to buy a product that will meet their demands, because they cannot afford to buy another if the brand doesn’t live up to expectations.

Niavas says that if a consumer only has $20 (R215) to spend, he or she had better spend it on something that they know will work, as opposed to using it for a cheaper new brand that could disappoint.  The research also indicates that South Africans plan to increase spending across a broad range of product categories over the next year.

More significant increases in spending were planned on clothing, cars, baby products and mobile electronics, which are status symbols.  Niavas says that there is a saying in West Africa that “you cannot travel around with your house”. But everyone can see the car your drive, the clothes you wear, your accessories and how your children are dressed.

This is probably also true in SA, he says.  The organized retail sector in SA cannot be compared with that of any other country on the continent.  Niavas says that between 50% and 60% of groceries in South Africa are sold through organised retail channels, for example, Pick n Pay and Shoprite.  In the rest of the continent, 5% is probably a high number.

Copyright The Citizen 2014