Every JSE-listed food retailer and manufacturer has reported a drop in the volume of products sold in their most recent financial periods, most covering the second half of 2023. Food producers predict further “soft consumer demand”.
The consistently lower volumes of food sold poses the question: are South Africans eating less?
Sasfin retail analyst Alec Abraham told Business Day: “I think the conclusion that South Africans are eating less or buying fewer groceries is correct.”
He said the trend was also suggested by Stats SA data that showed the rate of growth in the category “general dealers”, which records food and household product sales at retailers, has been lower than population growth rate for at least the past year.
One would expect the rate of growth in food sales at retail stores to follow population growth.
Shoprite is SA’s best performing listed retailer by far, and it has stolen market share from peers for almost five years, but even it is selling lower volumes when one excludes new store growth.
Lower food sales “is confirmed by the negative volumes reported by even the retail stalwart Shoprite in their recent results”, said Abraham.
Shoprite’s like-for-like SA supermarket growth in the six months to end-December, which strips out all new stores, reached 6.3% with selling price inflation of 7.7%. That means it sold 1.4% less in items or volumes.
Similarly, in the six months to December 24, Woolworths’ food division, saw sales rise 8.4% and same-store sales grow 7.2%. This was below price increases of 9.1%, indicating slightly lower sales volumes.
Pick n Pay sales in the 47 weeks to January 21 saw some stores, including its successful clothing outlets, grow 2.7%. If an estimated price inflation of 7% is added, the entire business is also selling lower volumes. Pick n Pay-branded grocery stores are also selling less, without price inflation taken into account.
Researcher Julie Smith from the Pietermaritzburg Economic Justice and Dignity NGO, which tracks food affordability, thinks people are not eating less but rather buying cheaper foods.
“People are probably sticking to a very limited diet. What a limited diet means differs between lower class and middle class,” she said. But “lunch, dinner and breakfast are not as exciting as they used to be”, with less focus on what adds flavour. This would lead to a feeling of deprivation.
There would definitely be fewer “nice to have products at home” but demand would remain high for basics such as maize, oil, sugar and peanut butter, she said.
As consumers buy down, they could also be buying more goods in the informal retail sector and unlisted supermarkets.
The declining purchase of meat by consumers has seen poultry producers trying to cut back on how much chicken is put in the market.
Astral, SA’s largest chicken producer, with brands such as County Fair and Goldi, said in January it was reducing the number of chickens it slaughtered on “depressed consumer spending”. It said it had excess frozen chicken supply in 2023.
Skipping meals to save money is also common.
Mamapudi Nkgadima, MD of research firm African Response which assisted in research for the Nedbank Finhealth Monitor in 2023, found that as a way of “cutting back”, one in four consumers skipped or reduced the size of meals to make their money stretch.
The data was based on a nationally representative sample of 1,503 South Africans.
“Worrying about running out of money and not being able to buy food is the top reason for their finance-related stress,” said Nkgadima.
It is not just retailers reporting lower volumes, but food producers too.
RFG, with brands including Rhodes canned vegetables, Bull Brand canned meat, Hinds spices and Squish baby food, said it sold 5.7% lower volumes in SA in the five months to end-February.
RCL, whose brands include 5 Star maize, Yum Yum peanut butter, Ouma Rusks and Mageu fermented drinks, also reported volume drops in some of its food and drink categories in the last six months of 2023.
RCL said earlier in March that consumer demand was likely to remain soft in the coming months as cost pressures persist.
Tiger Brands, which sells Tastic rice, Jungle Oats, Beacon sweets, Koo canned goods and Fattis & Monis pasta, recorded volume declines of 8% in the four months to end-January.
Tiger Brands said in February that higher food inflation meant consumers were “buying more on promotion and limiting their spend to essentials”.
Food producer Libstar, which targets a higher-end consumer with Lancewood dairy brands, ready-made meals, salad dressings, honey and dried fruit, reported 4.8% lower volumes in the year to end-December.
In short, South Africans are buying less food from the formal grocery sectorand are probably eating more of the basics.
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