During this period, the demand for sports drinks improved the most and females are the drivers of this
Like majority of the industries in the country, the beverage industry in South Africa faced a huge blow when inflation hit the country. According to trading economics, South Africa's annual inflation rate accelerated to an over 13-year high of 7.8% in July of 2022, from 7.4% in June, above market expectations of 7.7% and the upper limit of the South African Reserve Bank's target range of 3%-6%.
Kasi Insight’s retail demand index measures consumer demand for retail category and provides insights on how consumer habits impacted demand for various categories. The index ranges from + 0.25 to -0.25. An index level close to 0.25 means demand is high as more consumers are looking to purchase while an index level close to -0.25 means demand is low. This measure is an effective tool for demand planning.
Demand for beverages dropped significantly due to inflation
According to the retail demand index in July 2021, the category with the highest demand was coffee at 0.178, followed by milk at 0.173 then fruit juice at 0.170. During the period, the lowest demand was seen in the sports drink category at 0.143.
Towards the holiday season of 2021, overall demand for beverages in the country declined. This could be attributed to the fact that people were spending more on alcoholic beverages that had an average demand index of 0.168. Interestingly the highest demand was seen in tea at 0.098 while the lowest was energy drinks at 0.056.
In the beginning of the year (2022), demand for beverages was the highest at 0.204 on average. Categorically, the highest demand was in regular soft drinks at 0.213 while the least demand was in tea at 0.193. This demand for beverages was short-lived as demand for the beverage industry dipped to -0.07 in June 2022. This is highly attributed to the high inflation rate in the country. Though this average demand was low, the highest was seen in the sports drinks category at 0.06.
Demand for sports drink improves the most while that of tea drops in early 2022
The demand for sports drinks improved the most during the period while that of tea dropped the most. Across gender, females are demanding more sport drinks compared to males; Females 0.152 while males 0.122.
Across age groups, the younger generations are driving the demand for sport drinks. Baby Boomers 0.118, Gen X 0.116, Millennials 0.148 and Gen Z 0.158. Across income levels; the low-income earners are demanding more of sport drinks. Low-income earners 0.139 and High-income earners 0.109.
On the other hand, demand for tea is driven by Baby Boomers at 0.13, Gen Xers follow at 0.11, Millennials at 0.09 and Gen Zers at 0.07. Across income levels; the high-income earners are demanding more of tea products. Low-income earners 0.09 and High-income earners 0.13.
Sport drinks brands need to broaden their advertising channels to leverage the older consumer segment
For Baby Boomers and Gen Xers, their top three advertising channels that they prefer is Magazines, TV and Billboard ads. For sport drink brands to leverage this consumer segment, they should consider using these channels.
To improve market share of their products, soft drink brands should consider female and low-income earning consumers. These segments prefer Magazines and Brand Ambassador as advertising Channels.
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