Consumer goods

The South African market for consumer goods predominantly consists of food and beverages, clothing, furniture, and personal care. Representing 55 pct. of the average BOP household expenditure, it is by far the largest BOP market in South Africa, but it is also one of the more challenging to enter.

Private consumption by people living at the BOP in South Africa is centred on food. Maize flour, sugar, beans, sunflower oil, meat, vegetables, and sweets are typical products in basic basket. Also, beer and soft drinks are largely consumed by the South African BOP.

The market is already largely supplied by both national and international suppliers. However, there are still obvious business opportunities in the BOP food market – e.g. providing better low-priced food products, improving distribution and availability, as well as inputs for the agricultural sector.

The immediate challenges when entering the market is firstly the distribution to the small local shops, and secondly the evident consumer product loyalty. BOP consumers are generally very particular in taste and brand preferences. It can be difficult to introduce a new product without local assistance to facilitate distribution and promotion.

During the study of the BOP market in South Africa, the FABCOS Distribution Network was visited. The Network buys preferred consumer goods in large quantities from national or international suppliers, and distributes the goods directly to small shops in the townships using local trucks and drivers. The business model allows the Network to ensure affordable prices for the end-user and at the same time introduce new and better products in the market.

There is an obvious business opportunity for Danish companies in supplying food and beverages to the South African market. But a local partner is essential for achieving success.

Business opportunities

• Supplying high-quality low-priced food products
• Beverages at high quality
• Personal care and hygiene products
• Food processing machinery