18 Oct 2012 Tapping into South Africa’s largest liquor market
“Typically, we see consumers continuing to buy alcohol through recessionary periods. However, the way in which they interact differs – with movement from premium alcohol types (spirits) to more affordable options,” comments Sharon Peskin, consumer insights group manager at South African Breweries (SAB).
Having a drink or two after a busy week still seems to be the social norm across South Africa, whether it is at a neighbourhood pub, upper class nightclub or shebeen next door. It’s just the number and choice of drink that may now, more than ever, be limited to the weight of your wallet.
As most brands have come to realise, it is in creating an experience associated with a specific product that creates consumer loyalty. Take beer as a prime example. If we’re to believe the TV adverts, drinking Castle Lager is all about being proudly South African, Hansa Pilsener is the drink for entrepreneurs (Vuyo’s Wors), and Castle Lite is trendy and cool – as American rapper, Vanilla Ice will tell you.
Out of Home (OOH) Media company, Provantage, has come to realise that creating that experience is absolutely crucial for brands to gain traction in the very competitive market of township taverns. Director, Vaughan Berry says there are three different environments to be aware of in this market: The local drinking hole, venues for guys and girls from the suburbs to party and then the tourist spots. These three segments are actually rather new, having largely been created in the last five years or so.
“When we started doing work in the townships, it was generally quite a low LSM type of market but in the last five years, we have noticed a growing middle class,” comments Floris Kotzé, implementation manager and tavern media at Provantage. He says on weekends especially, middle to high LSM consumers who now live in the suburbs come back to the townships to visit family, to shop and to party.
“Young people are now going home to party – and they’ve dictated how taverns must look. It’s a status thing. They want their tavern to look like a News Café,” adds Berry.
According to Siwe Nyuswa, director of consumer insights company, Ntshona Intelligence, more and more township residents are converting their houses into taverns, shebeens and restaurants specialising in African cuisine, which offers more of a social hangout for young aspirant individuals looking to reconnect with old friends over a drink.
Drink of choice is also very much related to status. Suné van der Merwe, Distell’s SA category manager of wine, says there is a trend across the country where consumers may not always purchase for home consumption what they drink in public.
“Flagship brands are sometimes consumed publicly, while more modest brands may be chosen for consuming in an environment where status is less important.”
The 2010 FIFA World Cup has also had a profound impact on the general image of South African townships. “A year before the World Cup, other South Africans realised that they too could visit the townships, feel safe and enjoy a unique experience,” comments Kotzé.
Small businesses in the townships got clever and took advantage of this new trend. “Take Sakhumzi Restaurant in Soweto, for example. It started out in a small house in Vilakazi Street – now it’s a proper tourist destination.”
More bang for your booze
According to van der Merwe, there has definitely been a growing acceptance for bag-in-box formats because of the savings they offer to consumers.
This is not only true in the wine category, which has a variety of box pack sizes – 2-litre, 3-litre and 5-litre. The flavoured alcoholic beverages (FABs) category has seen a lot of innovation on this front in the last year or so. BMI Research includes ciders, wine-based fruit ales, spirit coolers and premixed products in this category.
According to the report, the FABs market declined by 3.6% between 2010 and 2011. In terms of value, however, the FABs market grew significantly.
“The increase in pricing necessitated by changes in the country’s tax structures and packaging innovations prevented the volume decline from translating into a category value decline,” reads the report.
The ‘bag in box’ packaging concept was introduced into the market during this period, with attractive packaging and relatively economical pricing options. These easily packed, carried and dispensed containers of high quality cocktail premixes have taken off, with other players introducing similar mixes in foil packs. Some of the brands playing in this space include Mainstay, Ciao, Smirnoff and Malibu.
Notes the report: “While the growth in these volumes comes from a small base, these innovative products should be watched and emulated in coming years.”…..
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