Hope Rises as the Second Wave ends and Jobs Return

• Vaccine progress raises hope in SA. The economy is reporting signs of recovery with almost half of jobs lost during lockdown regained. The recent budget address reports much-needed income tax relief for consumers, however sin taxes continue to rise
• Food sales are up in formal retail versus LY, indicating that consumers continue eating at home more than last year
• In February, growth was seen across many food categories. Consumers are still looking for ways to treat themselves and baking at home continues, as seen in the Ice Cream, Flour and Sugar performance. Freezers and pantries were also restocked, driving strong performance on Frozen Meat and commodities

– In 2020, CPG in Top End Retail saw value growth of 3%. The panic buying in March was followed by muted sales, as full pantries were emptied. Signs of economic recovery are present in Q4, as jobs and industry reopened
– Social distancing and economic constraints drove Black Friday’s decline of 5%. Consumers shifted some spend back into the week between Christmas and New Year, performing strongly at 18%. This contrasted with last year, when Black Friday outsold the festive week
– Shoppers reduced spend on Vitamins and Medicinal, as the 2nd wave of infections slowed, however they are maintaining hygiene standards, as reflected in Sanitizers and Wipes performance. We can expect these categories to continue seeing growth in anticipation of the 3rd wave
– Apart from the growth in the above health and hygiene categories, we are spending less on beauty categories, such as Fragrances, Deodorants and Cosmetics, as working from home and the wearing of masks reduces the demand for these products. Efficient assortment and optimal pricing strategies become even more important for categories that are currently in less demand
– All alcohol categories benefitted when dry liquor cabinets were restocked. Following the lifting of the ban, Brandy and Gin were stand outs in both high and low LSM groups. The recently announced increase in sin tax will likely impact volumes in the medium term
– Convenience foods and baking categories indicate the eat-at-home trend persisted for much of 2020.

• Here’s a statistic you should know regarding IRI’s commitment to operational excellence. In 2020, we exceeded our On Time and Correct (OTC) target of 96%, by achieving an annual average of 97.8% for all client deliveries. Considering the impact of Covid-19, we would call that impressive!
• IRI US report entitled “Year-End 2020 Trends, 2021 Emerging Growth Pockets” highlights growth areas for the 2020 year and provides CPG predictions for 2021 across both the manufacturing and retail industries

Download full report HERE