29 May 2023 SA’s premium juice sector squeezes out R7.9bn in annual sales despite consumer cutbacks
The South African 100% pure juice market grew by 9.5% in the 12 months to the end of March 2023 and is now worth R7.9-billion in annual sales, according to new data analysis by NIQ.
Speaking at the global 2023 IFU conference hosted recently by the South African Juice Association (SAFJA) in Somerset West near Cape Town, NIQ Sub-Sahara Commercial Lead Advanced Analytics Kobus Eksteen said; “Still fruit juice continues to dominate the segment with a 75% share of the category, a share that is relatively stable year on year.
“Interestingly, the still water category has seen significant sales gains driven by load shedding, and its inflation is well below average, whereas the still juice segment saw double digit inflation while carbonated soft drinks and energy drink inflation was far lower at 5-6%. They have seemingly been able to absorb their producer/production costs and have been able to reap the resultant volume rewards.
This research covers: Non-carbonated, alcohol-free beverages that are 100% pure fruit juice, inc fresh fruit or ambient (long life) that have been concentrated and reconstituted. Inc combos of fruit and vegetable products. Exc fruit drinks, nectars, squashes and cordials.
“In comparison, fruit juice is one of the most price-sensitive beverage categories and is seen as a luxury premium price item for the higher LSM consumers who are feeling the financial squeeze. That said, our data indicates that this segment has the potential to optimise promotions more, which will help ease some of the high-inflation volume loss pressure.”
Adding to this point, Eksteen said that NIQ’s benchmark household panel data also showed that, in terms of ubiquity, carbonated soft drinks are present in nine out of every 10 homes, while long life juice is in two out of three homes and short life juice is often consumed out of home.
Traditional retail gains
In terms of key consumption channels, grocers account for 77% of juice sales, and traditional trade for 17%. However, traditional trade delivered 35% of the growth in the latest year and is gaining importance.
Eksteen explained; “This is a new era for traditional trade in South Africa and is being driven by these outlets’ enhanced price competitiveness.
“For the first time, traditional trade is priced the same or even cheaper than mainstream trade on a lot of important items, creating a far more competitive value proposition for consumers.
“In addition, consumers don’t have to travel for these cost gains which also reduces their transport cost burden. Consumers are therefore shopping more frequently at traditional trade outlets such as spaza shops as they attempt to stay closer to home.”
Looking at the physical consumption of juice in terms of pack sizes, NIQ data shows that small packs (<1L) account for 38.3% of total sales and are driving value growth.
When it comes to taste preferences, South Africans’ favourite flavours account for a disproportionate number of sales, including Apple, Tropical and Breakfast Blend, while more than 190 other flavour combinations make up a small percentage of sales.
Astonishing SKUs and innovation
In terms of product selection and variety, Eksteen reported that the juice category currently has 2 225 active SKUs in the market that are fighting for shelf space. Of those, 340 SKUs or 15% account for 80% of total juice value sales, while 1 885 or 85% account for the remaining 20% in sales.
The category is also home to significant product innovation, with 165 new items launched in the last year, which accounts for 7.4% of available products but they contributed more than 13% of the category’s incremental growth for the year.
Eksteen said; “This indicates that manufacturers carried out highly effective, new product due diligence, resulting in consumer-aligned product launches that delivered great results.”
He added that this is key as new launches are a critical part of growing a category’s sales and importance over time.
Source: NIQ (formerly Nielsen IQ), the world’s leading consumer intelligence company. For more information, visit www.NIQ.com