Skip to main content

BMi Research report on flavoured alcoholic beverages in South Africa

| Research tools

Recent findings released by BMi Research have revealed that flavoured alcoholic beverages saw a decline in 2015. This was followed by a further contraction in volumes in 2016. The category's value increase for 2016 was attributed exclusively to an increase in the average product pricing rather than an increase in volume.

 
Click to view the report
Click to view the report
 

The recent erosion in category volumes may be attributed to consumer traffic from flavoured alcoholic beverages to more affordable alcoholic drinks, such as home-brewed products. Congruent with this dynamic, there appears to be a general feeling in the industry that depleted consumer spending on luxury products is undermining category growth. The above-average price increases for flavoured alcoholic beverages continue to make the category a less attractive option for consumers. These price increases, for imported products in particular, have been driven by fluctuations in the rand value on international markets. The average industry selling price for this category grew at a higher rate than the CPI index in 2016.

However, the 2016 difference was limited compared to the significant CPI (Consumer Price Index) versus ISP (Industry Selling Price) differences seen in previous years. The smaller difference in 2016 may be attributed to stiff competition amongst brands and players, who kept price increases conservative in an attempt to gain share. 

The off-consumption channel continued to gain volume share within this category from traditional on-consumption outlets. It is believed that an increase in the number of retail or wholesale liquor outlets, as well as a decrease in consumers, frequenting on-consumption outlets eroded the relative on-consumption channel share. The on-consumption channel accounted for 65.8% of the total volume sold in 2016, compared to 66.6% sold in 2015. This channel is losing share to sectors such as retail and wholesale as customers are believed to be purchasing the product to drink at a later stage. Gauteng remained the largest region in terms of volume sold in 2016. Most of the players are situated in this region and it is more profitable for them to distribute locally, thus volumes are promoted and distributed in this area. 

In addition volumes packed in smaller denominations saw decline during 2016. It is believed that given the ongoing annual price increases for flavoured alcoholic beverages, consumers looked for better value-for-money offerings; this benefit was found in larger volume packs. Glass and bag-in-box pack formats noted lower declines in volume demand compared to smaller glass and can packs. 

Related Articles

Checkers smashes Pick n Pay in home delivery pr...

By: Myles Illidge - MyBroadband It is cheaper to shop using Checkers’ Sixty60 grocery delivery app for everyday grocery items than to use Pick n Pay’s asap! service, a MyBroadband analysis has revealed.

More than 30% of income for minimum wage earner...

By: IOL The cost of a “survival basket” of food in South Africa at the beginning of 2024 is R1 503, which is 6.07% more than last year, and will see minimum wage earners spend 34.5% of their earnings to buy food.

Three-day weekends ahead? South Africa’s four-d...

By: Xolile Mtembu - IOL The results for the South African trial of the four-day work week model are out and they show a resounding success among companies who participated.

Checkers killing Pick n Pay in home delivery

Daily Investor Pick n Pay CEO Sean Summers said they started home delivery two decades ago but that Checkers took the lead through their Sixty60 service.

How much money cashiers, trolley collectors, an...

Employment and Labour Minister Thulas Nxesi gazetted the new sectoral determinations for workers in South Africa’s wholesale and retail sectors in the first quarter of the year, which reveals the minimum baseline wage for workers in the sector for...