According to market research firm NielsenIQ, cash-strapped South Africans are driving bread sales growth as rising inflation forces them to cut back on expensive protein options.
According to NielsenIQ’s latest State of the Retail Nation Report, bread value sales increased 33% in the four weeks to July 8 compared to the previous month, despite the category experiencing 14% inflation.
“This is the third month in a row that bread sales have increased significantly, indicating that consumers are continuing to forego more expensive protein options in favour of cheaper staples,” Nooy said.
According to NieslenIQ, the uptick in bread sales is reflected in its Top 20 Manufacturer ranking, which shows a 31% increase in sales at Premier Foods, which produces Blue Ribbon and Bakers Pride bread as well as Snowflake flour.
It discovered that price increases continue to be a source of concern for consumers, with NielsinIQ’s overall basket inflation standing at 8.1%. The company calculates inflation by calculating the difference between rand value sales growth and unit sales growth.
“…many of the Living Standards Measure groups have already cut back so much that they have no more leeway,” Nooy said of the inflation outlook.
“It will thus be interesting to see the cost-cutting strategies shoppers employ to overcome these constraints,” Nooy said.
Cooking oil, frozen chicken, and laundry detergents were among the products with the highest year-on-year inflation rates, according to the report.
Cooking oil inflation reached 45% due to raw material price increases during the period. Despite this, sales increased by 43% while unit sales decreased by 2%.
Frozen chicken prices increased by 17% as a result of the avian flu outbreaks that occurred primarily last year.
Increases in raw material caused 17% inflation in laundry detergent, 14% inflation in bread, and 12% inflation in maize meal.
As cost pressures mount, consumers are paying more for less rather than buying more. According to the report, they are also shopping less frequently and visiting fewer retailers.
“We’ve also seen increased price sensitivity across multiple categories, with disloyalty growing when it comes to brand preference versus the lowest available price,” Nooy explained.
“South Africa is already one of the world’s most price sensitive countries, so it will be interesting to assess the role of promotions, for example, within this new shopping environment,” Nooy said.
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