The_New_Normal_for_Consumer_Goods_in_SubSaharan_Africa.pdf

THE “NEW NORMAL” FOR CONSUMER GOODS IN
SUB-SAHARAN AFRICA
January 2021

INTRODUCTION
RETAIL CONTEXT
PACKAGED FOOD
ALCOHOLIC DRINKS
TOBACCO
BEAUTY AND PERSONAL CARE
HOME CARE
CONSUMER HEALTH
CONCLUSION AND STRATEGIES TO
CONSIDER

© Euromonitor International PASSPORT 3
THE “NEW NORMAL” FOR CONSUMER GOODS IN SUB-SAHARAN AFRICA
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.
The COVID-19 pandemic has
disrupted the consumer goods
market in Sub-Saharan Africa,
with recovery expected to take
place over time. Consumers
expenditure has been negatively
affected, as value seeking
consumers shift to essential
products. The acceleration of e-
commerce penetration is
expected to continue over the
long-term as shifts in consumer
behaviour become part of the
‘New Normal’.
Scope
INTRODUCTION
▪ This report focuses on how consumer goods are being impacted by the
Coronavirus pandemic in various countries in Sub-Saharan Africa such as
South Africa, Nigeria and Kenya. To illustrate the impact, key industries have
been analysed and the report provides insights on how the crisis is changing
consumer behaviour in the region.
▪Packaged Food
▪Alcoholic Drinks
▪Tobacco
▪Beauty and Personal Care
▪Home Care
▪Consumer Health
▪ Forecast and scenario closing date: October 2020 is the latest update of data
in the analytics tool.
▪ Report closing date: 30 November 2020.

Key findings
INTRODUCTION
Value for money reigns
supreme as consumers
go “back to basics”
Consumers have become increasingly mindful of their expenditure and are
expected to persist in seeking value for money. Essential goods such as staple
foods, basic cleaning materials and vitamins and dietary supplements will take
priority as consumers mitigate the long-term economic impact of Coronavirus
(COVID-19) as they continue to feel the pressure of reduced disposable income.
Omnichannel retail
increasingly important
as consumers adapt to
new ways of shopping
post-pandemic
The pandemic further fast-tracked existing strong e-commerce growth. It is
expected to continue its strong growth trajectory, registering double-digit growth
over the long term. Heavily supported by m-commerce in a region where mobile
phones are the primary means of connected to the internet, the channel will be
critical in any marketing mix. However, consumers will continue to buy from
traditional channels such as open markets as they meet consumers’ need for value
in countries such as Nigeria and Kenya.
Permanent shifts in
occasion as
consumption habits
change
The shift in how and where especially professionals buy and consume goods, is
likely to lead to a permanent change in consumption occasions. Many consumers
are expected to continue to work from home, at least partially, leading to increased
hometainment and less in-store consumption. However, this creates strategic
opportunities across products and services.
Increased emphasis on
local production and
consumption
The increased emphasis on local consumption due to lockdown regulations is
expected to continue post-pandemic. Consumers are in part driving the shift as
they mindfully choose local over imported goods. Furthermore, government
legislation aimed at reviving and local economic stimulus coupled with the
increased cost of imported goods due to currency exchange volatility will also
boost local production and consumption.

Kenya
▪ GDP in 2020 is expected to grow by 1.7%
(5.4% in 2019).
▪ The country is not expected to enter
recession, but will see subdued growth
compared to pre-pandemic growth.
▪ Consumer expenditure will be more subdued
in 2020, despite tax relief measures such as
a reduction in the VAT rate to 14% from
16%.
South Africa
▪ GDP growth in 2020 is expected to decline
by -8.5% (0.2% in 2019).
▪ Already facing a recession pre-COVID-19,
the situation was worsened by the pandemic.
▪ Consumer spending will be impacted by
increased unemployment due to the long-
term economic impact, already reaching 31%
in 2020.
Nigeria
▪ GDP growth is expected to contract by -2.9% (2.2% in
2019) in 2020.
▪ Nigeria faces its worst recession since the 1980s. The
collapse in oil prices on which the local economy
heavily relies, with the combined impact of COVID-19
will negatively impact consumer expenditure and
disposable income. Currency devaluation has also led
to double-digit consumer inflation.
GDP growth heavily impacted while recovering over medium term
INTRODUCTION
GPD Growth % 2015-2025

▪ Consumers’ disposable income has been negatively affected by the COVID-19 pandemic, with growth
declining significantly in 2020. Consumers’ disposable income will regain its growth trajectory in 2021.
▪ However, disposable income per household will take longer to recover from the long-term economic fall-out
of the pandemic. The pressure on household income will encourage consumers to seek value for money
and reprioritise their spending patterns towards essential goods.
▪ Kenya’s disposable income has been least affected as the impact of the pandemic has been less severe
compared to South Africa and Nigeria. The country’s disposable income per household is expected to
continue its pre-COVID-19 upward trajectory.
Disposable income to regain growth over medium term
INTRODUCTION
Disposable Income Year-on-Year Growth
2015-2025
Disposable Income Per Household
2015-2025

Expenditure on ‘luxuries’ take back seat in favour of essentials
INTRODUCTION: CONSUMER EXPENDITURE

▪The retailing market size has been negatively
affected across the region, declining by 7.8% in
2020 to reach USD107.9 billion excluding sales tax
in 2020.
▪The overall retailing market will be slow to recover
as economic constraints are set to create a mindset
shift from sustainability to purpose as consumers
direct their spending more on essential, value for
money “needs” and less on “wants” as their
disposable income suffers.
▪However, e-commerce holds future opportunities as
it gained ground during the various lockdowns
imposed in the different countries as retailers had to
shift gear rapidly to meet consumers’ needs as they
shifted away from in-store shopping. This shift has
meant that retailers and manufacturers had to
quickly adapt to the increased demand.
▪The channel is expected to continue to show
double-digit growth in future due to habit
persistence and consumers adapting to the “New
Normal” over the long term, with more consumers
expected to use e-commerce more regularly.
E-commerce gains as overall retailing market shrinks
RETAIL CONTEXT
Market Size and Growth (Historic &
Forecast) 2015-2024

▪Value for money emerged as a key driver for packaged
food in South Africa during the pandemic. Consumers visit
stores less frequently, resulting in fewer impulse purchases
but bigger basket spend. E-commerce accelerated during
this time for packaged food items. The demand for private
label offerings and affordable brands increased.
▪Price will be the main factor consumers will consider when
making their food choices in 2021 and beyond followed by
taste and health benefits.
▪Wellness redefined will remain top of mind for consumers
as a more holistic approach to health and wellness through
food gain importance.
▪Food choices during the forecast period is not expected to
be less nutritious nor less diverse than before. It is
expected that consumers will continue to cook more from
home to save money. Experimentation with recipes found
online make part of home entertainment (“hometainment”)
and this trend is expected to continue into 2021.
▪Consumers will remain under financial pressure during the
forecast period and cut down on non-essential
spending. Consumers are expected to trade down to
affordable products or trade out of expensive categories.
Value for money offerings such as combo deals and
private label products will continue to show strong
performance.
0
2
4
6
8
10
12
14
2016 2017 2018 2019 2020 2021 2022 2023 2024
%
y-o-y
growth
The Evolution of Packaged Food in
South Africa in Retail Value Terms
2016-2024
Cooking Ingredients and Meals
Staple Foods
Dairy Products and Alternatives
Snacks
Impact on Packaged Food in South Africa
PACKAGED FOOD
Value for money to remain top priority

▪COVID-19 and the subsequent economic impact reduced
consumer spending power. Therefore, most consumers did
not have the financial ability to stockpile packaged food. The
financial outlook for 2021 remains bleak. Therefore, reduced
spending power is expected to continue into 2021.
▪Consumers will continue to turn to more affordable
substitutes for packaged food such as unpackaged,
unbranded products and fresh food. Categories
where substitution is not available such as stock cubes, stock
powders, noodles and dairy will benefit as consumers
continue to cook more at home.
▪Locally-produced staples such as rice and noodles (fortified)
will continue to be freely available. In contrast,
imported products will see low demand due to the price
inflation associated with these products. Hence,
products such as frozen meat and seafood, ice cream and
chocolate confectionery will remain unaffordable for most of
the population.
▪Open markets are widespread in Nigeria and continue to hold
great potential as a route to market for affordable, locally-
produced packaged food products.
▪It is expected that Nigeria's economy will rebound later in
2021 helping consumer income to improve which will lead to
a gradual improvement in the performance of packaged food.
Impact on Packaged Food in Nigeria
PACKAGED FOOD
Pandemic boosts local production
-15
-10
-5
0
5
10
15
20
25
30
2016 2017 2018 2019 2020 2021 2022 2023 2024
%
y-o-y
growth
Packaged Food: The Evolution of
the Nigerian Industry in Retail
Value Terms 2016-2024
Staple Foods
Snacks

▪The COVID-19 pandemic saw the demand for essential
packaged food increase with categories such as dairy,
cooking ingredients and staples benefit the most. In
contrast, impulse products such as savoury snacks and
ice cream were among the biggest losers as consumers
diverted their spending.
▪Packaged food is deemed expensive in Kenya.
Therefore, manufacturers will need to innovate to retain
customers. To alleviate high prices, brands are expected
to reduce unit prices of essential pantry items where
possible. In addition, brands will focus on smaller pack
sizes to cater to low-income earners most affected by the
pandemic.
▪Consumers turned to e-commerce to avoid a trip to
physical stores. Services such as Glovo, a courier
service that purchases, picks up, and delivers products
ordered through its mobile app are fast becoming
popular especially among middle-
income earners. Increased e-commerce is expected to
continue in 2021 and beyond thanks to the tech-savvy
nature of Kenyans.
▪Open markets hold great potential to reach more
consumers as these are widespread in Kenya.
▪The economic outlook for Kenya looks optimistic, which
will boost growth of packaged food in 2021 and onwards.
Impact on Packaged Food in Kenya
PACKAGED FOOD
Smaller pack sizes more affordable
0
2
4
6
8
10
12
14
16
2016 2017 2018 2019 2020 2021 2022 2023 2024
%
y-o-y
growth
Packaged Food: The Evolution of the
Kenyan Industry in Retail Value Terms
2016-2024
Staple Foods
Snacks

Implications for Sub-Saharan African Packaged food players
PACKAGED FOOD
Value for money to appeal to consumers under financial pressure
▪ Value for money will appeal to consumers due to reduced disposable income. Therefore, retailers and
manufacturers are expected to utilise price promotion to maintain their consumer base.
▪ Opportunities exist for private label expansion or other value-based goods as consumers remain cost
conscious and are less brand loyal and therefore open to switching and downtrading.
Increased local production and consumption expected
▪ Increased local production is expected as it is prioritised by governments to stimulate regional
economies.
▪ Due to local currencies devaluing against major currencies, imported products will remain expensive
favouring locally-produced products. Consumers are also showing a preference for local consumption
purely to stimulate local business.
▪ Opportunities therefore exist to increase local production, especially for essential product categories.
Innovation to lead to increased food fortification and packaging innovation
▪ Food fortification is expected to increase within the region. In addition, innovation that offer packaged
alternatives of traditional products will ensure food safety (eg Nigerian Minimie’s chinchin).
▪ Smaller pack sizes, already common in many traditional grocers and open markets, are expected to
expand.
Channel shifts to e-commerce and open markets expected to continue
▪ E-commerce has been significantly boosted during the pandemic, as consumers are confined to their
homes. In addition, consumers are expected to return to traditional retailers such as open markets, as
cost is expected to remain a driver of consumer choice.

▪ Nutriday with added zinc (aids
immunity) was launched as
consumer focus shifted to
functional products.
South Africa
▪ To alleviate high prices,
brands such as Kapa Oils Ltd
reduced their prices on cooking
oil, an essential pantry item.
Kenya
▪ A recent new launch is a
small pack size in flexible packs
of Quaker Oats (a hot cereal
brand), to enable greater
affordability.
Nigeria
Company reactions to the pandemic
PACKAGED FOOD
Source: Euromonitor International Source: Euromonitor International Source: https://www.jumia.co.ke/

▪Sales of alcohol were prohibited for over five months, thus
alcoholic drinks’ performance over the recent past was
completely eroded. The initial ban on alcohol sales was
estimated to have cost the state over ZAR12 billion in lost
duties and taxes. The road forward looks equally grim for the
alcohol industry, as the sector experienced heavy job losses,
with restrictions on marketing expected and craft breweries
losing their seat at the bar as they had to discard unused
beer.
▪Multinationals AB InBev and South African Breweries
cancelled or put invest projects on hold, while bottlers and
packaging companies such as Consol Glass also lost out on
millions as production came to a halt.
▪However, there were some winners, as low/non alcohol beer
managed to increase its presence, as grocery retailers started
placing such products in prime aisle locations. Smaller local
players such as Duchess Alcohol Free Gin and Tonic and
Devil’s Peak Zero also increased their market share as they
were given increased prominence by retailers, competing with
the likes of Heineken 0.0 and Savanna Lemon. These
beverage offerings can be expected to maintain a stronger
presence going forward.
▪Local and affordable products such as
economy lager and additional low/non
alcohol products will increase due to
consumers experimenting and
downtrading.
▪Overall growth fell from 2.9% in 2019 to a
decline of 30% estimated by year end
2020. Growth is anticipated to take two
years before returning to pre-COVID-19
levels.
Impact on Alcoholic Drinks in South Africa
ALCOHOLIC DRINKS
Increased presence of non-alcoholic offerings
%
y-o-y
growth

▪Since Nigerians like to drink socially, the closures of bars and
restaurants resulted in a strong reduction in on-trade sales,
notably in major cities where lockdowns were better
enforced.
▪Despite restrictions on movement, on-trade sales continued,
albeit slightly reduced as they remained open, but the number
of patrons was limited.
▪Overall volume declines were recorded at 16%. Ready-to-
drink offerings were the most heavily impacted, as declines of
over 26% were expected by year end. The decline is mainly
attributed to limited on-trade sales for this category.
▪Pre-lockdown, premium beer showed the strongest growth,
but this is expected to change as domestic lager and other
local brands are anticipated to outperform brands that are
imported or require major ingredients to be sourced from
outside Nigeria, as inflation due to currency devaluation
impacts imported goods and consumers continue to
downtrade.
▪Previous economic hardships, such as Nigeria’s 2016
recession, have shown that cash-strapped consumers tend to
move away from beer to cheaper drinks, such as home-made
spirits or traditionally home-brewed offerings.
▪It is expected that economy-priced
offerings, such as local economy beers
and low-priced spirits, will continue to be
more popular, trumping premium spirits,
premium beer and wine.
▪The market is expected to regain its
momentum by 2022.
Impact on Alcoholic Drinks in Nigeria
ALCOHOLIC DRINKS
Premium offerings take step back as consumers down
trade
%
y-o-y
growth

▪As bars and restaurants closed in a bid to combat the virus,
dusk-to-dawn curfews were imposed. The curfews had the
adverse effect of negatively impacting manufacturing as
workers’ travel was restricted and their normal working hours
were limited.
▪Online retail saw a major boost as home delivery apps
became popular. E-commerce sites such as Jumia with a
broad product range, similar to those in found in liquor stores,
saw strong growth. This trend is expected to continue.
▪Strong sales through the off-trade and e-commerce were not
that surprising, evident in a notice by the Ministry of
Industrialisation, Trade and Enterprise Development that
classified tobacco and alcoholic beverages as essential
products - more likely because of their contribution to taxes
over satisfying consumers’ smoking and drinking needs.
▪Due to strong demand, Kenya did not see the major declines
experienced in other countries such as South Africa and
Nigeria. However, going forward, premium offerings in beer,
spirits and wine are anticipated to take a slight knock, as
some consumers rather opt to purchase cases of economy
beer or entry level priced spirits.
▪Kenya showed resilience, as a mere 1%
volume decline was recorded in 2020, but
going forward growth is anticipated to
remain flat.
▪E-commerce growth shielded the blow
from a brief lockdown, as online orders
and home delivery quickly became
widespread and these are expected to
remain popular.
Impact on Alcoholic Drinks in Kenya
ALCOHOLIC DRINKS
Online sales saw a major boost and expected to grow
%
y-o-y
growth

Implications for Sub-Saharan African Alcoholic Drinks players
ALCOHOLIC DRINKS
Online sales growth set to continue
▪ Online sales in Kenya increased dramatically during the lockdown period. Products marketed on social media saw
a significant jump, with several bundle deals on offer, but brands remained limited. Similarly, e-commerce grew
faster post-lockdown in South Africa.
▪ Going forward, more players and brands could potentially identify which categories saw the most interest online,
such as economy-priced beer and wine, and subsequently push more advertising and sales of these categories
via online platforms.
Non alcoholic beverages set to grow as consumers redefine wellness
▪ Non alcoholic beverages was one of the few alcoholic offerings that gained during the lockdown. Health concerns,
exacerbated by the virus, led to more health-conscious consumers. This aided sales of non alcoholic drinks, with
the category set to grow further.
▪ As increased restrictions on advertising of alcoholic drinks are expected, the non alcoholic offerings perfectly
bridge that gap, as they can be sold freely anywhere and there are currently no limitations on advertising these
products.
Innovation key to success
▪ As on-trade sales were heavily restricted during lockdown, mobile applications were introduced to allow for online
deliveries and are set to remain popular.
▪ Smaller pack sizes, already common in many traditional grocers and open markets, are expected to expand.
▪ The increase in non alcoholic offerings, expanding from beers to ciders, is encouraging. Various local brands are
increasing their presence in this nascent category, where future advertising and distribution is less likely to be
impacted by legal restrictions.
Economy brands and categories to win at the expense of more premium offerings
▪ Value for money will be a key driver for cash-strapped consumers over the mid term. Categories such as economy
domestic lager are set to gain as consumers downtrade to more affordable brands.

DrinkUp mobile application Turning crisis into opportunity
▪ DrinkUp, a local alcohol door-to-door delivery firm
aligned itself almost perfectly in the face of the
pandemic and subsequent lockdown and curfew in
Kenya.
▪ Positioned as an online order and delivery service
for alcoholic beverages, it aimed to reduce
unnecessary movement in order to minimise risk of
infection.
▪ The firm was launched in February but picked up
operations in May and focused on alcoholic drinks
including wines, spirits and beer.
▪ For a delivery fee of KES100 (under USD1),
Kenyans living in and near Nairobi can order their
preferred beverages through a multi-vendor
platform, a phone call or an SMS and receive
delivery within 30 minutes.
▪ Going forward, these delivery services are
expected to increase their product offerings as
more brands aim to increase their presence online
and availability.
Kenya: order, deliver, drink
ALCOHOLIC DRINKS

▪While South Africans enjoyed a 2-week respite from the
alcohol ban, sales of cigarettes and tobacco-related products
saw a complete ban on sales for nearly five months.
▪All sales were banned, from supermarkets, forecourt retailers
to spaza shops. However, this did not stop sales of these
products in the illicit market, which boomed during this time,
with many arguing that irrefutable harm has been done in the
fight against illicit trade.
▪An estimated ZAR35 billion (USD212 million) in tax revenue
was lost by the end of the ban in mid-August. The biggest loss
to the industry, however, was the strengthening of the illicit
market which is likely to have a long-term impact.
▪The government took such as strong stance against smoking
in the face of the perceived respiratory dangers of COVID-19,
it can be expected that some consumers quit smoking or will
be more prone to switching to less harmful devices such as
heat not burn.
▪The government is also very likely to increase tobacco taxes
going forward, as it needs to regain losses caused by the
sales ban. This is likely to result in further trading down to
cheaper brands or continued purchases via illicit channels.
▪2020 is anticipated to see the single
largest recorded decline in sales in the
country’s history.
▪A decline of 40% in total retail volume is
to be expected by the end of 2020.
▪Going forward, the industry is anticipated
to face an uphill battle as the gains made
against illicit trade are all but lost and
more restrictive regulations are to be
expected.
▪Value offers are expected to perform will
as consumers trade down.
Impact on Tobacco in South Africa
TOBACCO
Over ZAR3.5 billion lost in tax revenue
%
y-o-y
growth

▪The Nigerian economy was already facing strain pre-COVID-
19. The depreciation of the naira increased tobacco taxation
in addition to the restrictions on movement and temporary
closures of channels heavily impacted the sales of cigarettes
further.
▪The closures of bars and restaurants weighed heavily on
sales, as smoking is often taken up while socialising.
▪Declining income levels are anticipated to stimulate the illicit
market and to lead to downtrading to other tobacco products
further. Although fine cut tobacco remains rare, pipe tobacco
wrapped in cigarette paper is becoming more popular based
on its affordability and this trend is expected to continue.
▪As closures of ports and airports were seen, imports took a
major knock. This could potentially stimulate increased local
production going into the forecast period, especially as the
prevailing oil crisis means less foreign exchange.
▪Given the state of the economy, exacerbated not only by the
pandemic but also the oil crisis, the government will be
desperate for additional revenue sources going forward - with
tobacco taxation most probably a high priority.
▪Although sales performance of cigarettes
has been in decline, the intermittent
closures of outlets are expected to result
in a total decline of 2.9% in 2020.
▪It will take the industry over three years to
reach volume sizes last seen in 2016.
Several unit price increases are expected
during this time to clawback declining
revenues.
Impact on Tobacco in Nigeria
TOBACCO
Increased downtrading and taxation expected
%
y-o-y
growth

▪Smoking prevalence has been in slow decline pre-
pandemic. COVID-19 is anticipated to further increase
the trend as smokers are increasingly concerned
about the dangers of smoking, especially in
combination with COVID-19. The government and the
private sector are increasingly urging smokers to quit.
▪Decreased production impacted producers’ ability to
export to markets in Eastern, Central and Southern
Africa as various borders were closed. The supply
chain was also negatively impacted as raw materials
could not be imported.
▪As the pandemic impacted income expenditure, it can
be expected that cash-strapped consumers will either
quit or look for cheaper offerings as the prices of
favourite brands increase as manufacturers pass
increased costs onto consumers.
▪Overall growth for the next two years is expected to
be heavily in decline, as the government continues to
highlight the dangers of smoking and is expected to
increase taxes.
▪Smokers that are cash strapped are
anticipated to trade down to economy brands
as affordability and value for money are set to
drive the market.
Impact on Tobacco in Kenya
TOBACCO
Value for money set to drive the market
%
y-o-y
growth

Implications for Sub-Saharan African Tobacco players
TOBACCO
Gains made against illicit tobacco trade up in smoke
▪ Several African countries continue to fight against sales in the illicit trade. Various commentators stated that
the total ban on sales of cigarettes in South Africa undid the gains made against the illicit trade. It also
highlighted the challenges faced by revenue services, as an estimated ZAR35 billion was lost in tax revenue.
▪ It is expected that governments will raise tobacco taxes, which will likely result in higher price points going
forward. Higher price points means consumers will be more willing to purchase either their favourite brands
via illicit channels for less, or to simply trade down to unregulated brands that are common in black market
channels.
Smokers soon to be paying more because of increased taxes
▪ As the pandemic heavily impacted sales of tobacco sales and the fact that it remains a major source of
taxable income, and as history has shown us, tax increases on tobacco products are usually a quick win for
governments. It can thus be expected that this trend will also be seen next year, in addition to price increases
of leading brands’ offerings.
▪ Nigerians could soon be charged more for their favourite brands from British American Tobacco and Philip
Morris as civil society organisations continue to pressure the federal government to increase excise taxes on
all tobacco products. The pandemic exacerbated the dangers of tobacco and the argument is expected to be
used by the anti-tobacco lobby.
Local manufacturing and cheap offerings heating up
▪ The future performance of local manufacturing hubs heavily depends on if they can successfully restart
operations and re-establish exports to neighbouring countries. This could also potentially be an opportunity
for economy brand offerings to increase their presence as cash-strapped smokers are likely to trade down to
cheaper offerings.
▪ It is realistic to expect that some smokers will quit or are looking at alternatives to smoking. Thus, offerings
such as heat not burn devices might have an opportunity to increase their presence in some markets such as
South Africa.

20% growth recorded in illicit trade Illegal operators position cemented
▪Expectations are that the illicit market will continue to
grow up until the end of 2022. By 2023, the gains
made will be lost, especially if the government is
successful in implementing its proposed track and
trace system.
▪Major players have been vocal in calling the
government to ratify the WHO Illicit Trade Protocol to
eradicate the sale of illegal cigarettes. The protocol
follows a track and trace system aimed at tracking
every packet sold.
▪Other players continue to argue that any increases in
excise on tobacco products, which can be expected
as the government will be desperate to claw back
some ZAR35 billion in lost taxes, will only aggravate
the control that illegal producers and distributors
currently enjoy.
▪Some consumers are expected to continue
purchasing via illicit channels, due to the ease of
access during lockdown and lower average unit
prices compared to formal channels that are
currently being seen.
South Africa: illicit cigarettes trade booming due to sales ban
TOBACCO
2019-2024
%
y-o-y
growth

▪Personal hygiene categories such as hand sanitisers quickly
flew off the shelves as soon as South Africa started
registering its first cases of COVID-19. An increase in prices
did not curb demand. On the contrary, new products
positioned as disinfectant started making their way onto the
market via social media.
▪Categories such as colour cosmetics and fragrances were
the most hard hit during lockdown, with sales being
restricted and slow demand due to reduced social
interactions.
▪In the medium term, consumers are expected to exercise
caution when purchasing non-essential products, either
downtrading to cheaper brands or cutting down on such
products entirely. Online retailers will continue to offer
aggressive price promotions on discretionary products as
seen currently with as much as 50% off fragrances, and
25% site-wide off colour cosmetics.
▪Macroeconomic factors such as high unemployment and
economic uncertainty, coupled with the “new normal” of
decreased importance attached to physical appearance and
self grooming, will place further pressure on demand.
▪Premium beauty and personal care brands
will be the hardest hit due to the pandemic
and economic woes in the mid term.
Access to the products during lockdown
and declining disposable income will
restrict demand. Brands offering value for
money will experience growth. Hygiene
categories such as DIY hair products and
self-care products will perform better in this
new normal.
Impact on Beauty and Personal Care in South Africa
Economy and competitively priced brands witnessing
sustained demand

▪Beauty and personal care products perceived as non-
essential are expected to see demand suffer as consumers
cut back on spending due to a reduction in disposable
income. Many have also opted to experiment at home, opting
for simpler grooming regimes during the crisis, as they spend
more time at home, putting additional pressure on demand.
▪Price sensitivity will continue to erode value sales for most
products as consumers seek value, while retailers seek to
maintain sales through discounting.
▪A shift in purchasing channels has been observed, with
consumers either moving online or going to convenience and
traditional stores to purchase essential personal care
products. With physical movement being restricted in the
country during lockdown, consumers had to seek options
closer to home. Social media platforms are increasingly being
used by independent sellers to sell their products, a trend that
is set to stay.
▪Disruptions to imports due to foreign currency shortages have
led to supply and distribution disruptions of beauty and
personal care products, which could pave the way for
increased local production and subsequent consumption.
▪Although the country has now removed
restrictions and resumed business
activities, recovery for non-essential
categories is only expected to start after
2021. Economic uncertainty and low
consumer confidence are likely to prevail
in the medium term, leading to
consumers exercising caution and only
sticking to essential beauty and personal
care categories.
Impact on Beauty and Personal Care in Nigeria
The pandemic adds additional pressure on a country
already facing other economic woes

▪ Essential beauty and personal care products experienced
some stockpiling at the beginning of lockdown, although this
was seen only among mid to high income consumers who
could afford to do so. With improved hygiene habits, products
such as soap and hand sanitisers will see sustained growth.
▪ Beauty products were affected by the pandemic as they are
viewed as a non-essential, even a luxury, especially among
income-constrained consumers. Economic uncertainty will
lead to more cautious spending patterns with consumers
focusing only on essential items such as food and drinks and
reduced spending on “nice-to-have” products.
▪ Limited social interaction and events such as weddings and
parties, has led to changing grooming patterns. Services of
professional make-up artists have been severely impacted by
the pandemic as their services are no longer required as
much as they used to be in the past. Some salons have as a
result had to close.
▪ New product launches have been slow and a shift in
advertising has been noticed. Products are increasingly being
advertised on social media such as Instagram and Facebook,
as opposed to traditional above-the-line marketing strategies.
This trend is expected to be part of the new normal.
▪Premium beauty and personal care has
been most affected as consumers trade
down to cheaper alternatives. This is in
turn leading to growth in mass beauty
and personal care products. Cross-
border and parallel imports, big
contributors to the supply of premium
products in Kenya, have now been
severely impacted due to travel
restrictions.
Impact on Beauty and Personal Care in Kenya
Economic uncertainties subdue market growth
prospects

Implications for Sub-Saharan African Beauty and Personal Care players
Price expected to be the main factor in purchasing decision
▪ With disposable incomes declining, price sensitivity is expected to remain among cash-strapped
consumers. Consumers are likely to downtrade to price-competitive brands that are known for their
efficiency. Premium categories will be most impacted, with essential mass products standing to gain.
▪ Retailers offering regular price promotions are likely to experience volume growth, especially in essential
personal care categories.
Traditional retailers and e-commerce show growth
▪ Despite e-commerce thriving across the region, not all consumers have access to online platforms.
Proximity, convenience and personal relationships play a determining role on where consumers shop.
Consumers shifted to convenience and traditional store formats closer to their home, especially during
lockdown when physical movement was restricted.
▪ Traditional retailers combined with technology such as WhatsApp or SMS orders, are common in Africa.
In Nigeria and Kenya, for example, store owners use motorcycles for delivery.
Economic uncertainty may lead to market contraction
▪ High unemployment and declining income will be the new economic reality for most consumers in the
region. South Africa and Nigeria were already experiencing an economic decline, worsened by the
pandemic. Store closures and brands exiting the market, have already been observed.
▪ Consumers will exercise caution when purchasing discretionary items such as beauty products and non-
essential categories will struggle due to constrained demand.

Internet opens new business opportunities
▪Paid online skin care consultation among high-
income urban consumers is now a new reality as the fear
of becoming infected remains high among consumers.
▪In South Africa, the forced closure of salons led
to a thriving underground for beauty services.
Beauty specialists were either offering their services
from their home or driving to their clients to meet
their beauty needs such as nail services, manicure
and pedicure.
▪Independent make-up artists are highly in demand
in Nigeria where they provide at-home services to
their clients with regard to make-up and hair dressing
needs. However, due to lockdown, they experienced
a decline in demand for their services as
consumers feared exposure to infection.
▪Make-up artists innovated their service offerings by going
virtual. Make-up and skin care consultations can be
booked through Skype and WhatsApp.
These professionals then advise their clients on either
how to use their personal make-up or what skin
care products to use.
Beauty consultation goes virtual

▪In South Africa, some categories have benefited
from the global health crisis. Demand for bleach in
South Africa almost doubled in response to COVID-
19. Growth was reinforced by its low-cost and multi-
purpose nature. It is used for cleaning surfaces and
toilets, sanitising and even laundry purposes.
▪Dishwashing, both hand and automatic, has also
received a sales boost, as consumers spent more
time indoors during lockdown. Furthermore, the
closure of restaurants and fast food outlets resulted
in increased home cooking and dishes.
Consumers, especially professional employees are
expected to spend more time at home in the mid
term which will bolster growth, while home cooking
persists.
▪Online sales, boosted by the lockdown, is still
hindered by limited confidence in e-commerce and
inaccessibility to many. However, the e-commerce
boost will fast-track digital distribution to meet the
increased consumer demand and the channel will
become increasingly important going forward.
▪Home care is expected to maintain strong sales
growth as consumers continue to focus on home
hygiene. Bleach, dishwashing, laundry and
surface care brands are set to benefit. However,
downtrading to cheaper brands and private label is
expected as consumers balance brand efficacy
and value for money in the new normal.
Impact on Home Care in South Africa
HOME CARE
Bleach growth almost doubles (in constant
value) as a result of COVID-19 preventative
health measures, to reach almost 2%
%
y-o-y
growth

▪Nigerian consumers are more value conscious since
the outbreak of COVID-19. Moreover, the pandemic
led to more hygiene occasions supporting growth of
multi-purpose products such as bleach and
disinfectants.
▪In dishwashing, some consumers have downtraded to
more affordable home-made products to save money.
▪Bleach, which is used for surface care, floor and toilet
care, performed well pre-pandemic. It benefited from
an increased focus on hygiene due to COVID-19.
Disinfectants, popular for surface care and personal
hygiene, are increasingly used for bathing and added
to laundry cycles to remove germs in an attempt to
curb the spread of the virus.
▪Laundry care maintained stable volume growth in
2020, despite its growth potential being hindered by
rising unemployment. Bar detergents are increasingly
preferred, as they are available in affordable pack
sizes making it more accessible to financially-
constrained consumers.
▪Mid-term, economic recovery is expected to restore
growth across home care. However, essential and
low-priced brands are expected to remain popular
among consumers as especially lower-income
consumers continue to demand value for money.
Impact on Home Care in Nigeria
HOME CARE
%
y-o-y
growth

▪The Kenyan home care industry is expected to
witness strong growth in 2020 fuelled by the
pandemic. Some categories such as bar detergents
and hand wash detergents performed especially well
as consumers are doing laundry more often to avoid
transmission of the virus.
▪Surface care experienced growth in 2020, as
consumers became more cautious about health and
hygiene. Home care disinfectants and multi-purpose
cleaners were the standout performers. Bleach sales
also grew due to its multifunctional nature, also being
used as a disinfectant. These categories should
maintain strong growth, as consumers endeavour to
keep their homes and surfaces clean.
▪In the past, consumers based their home care
purchases on perceived brand quality and trust.
However, consumers increasingly gravitate towards
brands offering efficacy and value for money due to
the financial impact of COVID-19.
▪To this end, consumers are shifting their attention to
multi-purpose products such as multi-purpose bar
soap used for bathing, laundry and dishwashing.
Well-performing brands include White Wash, Sunlight
Multipurpose Soap and Velvex. These products are
expected to remain popular in the mid term.
Impact on Home Care in Kenya
HOME CARE
▪A shift towards online shopping is evident.
Companies are tapping into the online space by
partnering with e-commerce retailers such as
Jumia and Glovo to sell their brands on their
online marketplaces. Some players are even
offering free delivery of home care products
bought online.
%
y-o-y
growth

Implications for Sub-Saharan African Home Care players
HOME CARE
Multi-purpose products gain traction among cash-strapped consumers
▪ Products that fulfil multiple purposes are seeing increased demand, especially among lower-income
households. Examples of this include bleach, which can be used for surface cleaning, disinfecting and
toilet care. Bar detergents are also performing particularly well in Nigeria and Kenya, a trend that is set to
persist.
Downtrading occurs across the region
▪ The economic impact of COVID-19 has led to substitution of trusted brands with cheaper, often lower-
quality brands. In Nigeria for example, consumers are switching to unbranded products, especially in
dishwashing where more affordable, home-made products are available. This affects home care industry
players across the supply chain and they are expected to compete strongly on price to remain
competitive, while introducing new, low-priced brands, including private label, that promise similar
efficacy.
From sustainability to brand efficacy and purpose
▪ Amidst the health crisis, the focus has shifted from brands claiming to be environmentally sustainable to
those that are effective. For example, the increased focus on health and hygiene has seen many brands
that claim to “kill 99.9% of germs” performing well. While COVID-19 remains a threat in the short to mid
term, consumers are expected to be drawn to brands that claim to improve hygiene and kill germs, while
“green” or sustainable brands are expected to take a backseat.
Shift to e-commerce boosted by COVID-19
▪ E-commerce has been significantly boosted during the pandemic, as consumers are confined to their
homes. Players such as Takealot, Bottles App and Checkers Sixty60 in South Africa, as well as Jumia
and Glovo in Nigeria and Kenya, respectively, have seen gains in 2020. The implication for
manufacturers is to improve their distribution to cater to these changing consumer preferences for online
shopping, which signal a long-term shift in consumer behaviour.

Multi-purpose soaps perform well during trying economic
times, as consumers use them for laundry and hand
washing purposes
▪Kenya’s Pwani Oil’s widely-known brands in the
home care industry include White Wash, Popco
and Ndume bar soap. It recently acquired the
popular Ushindi multi-purpose soap brand from PZ
Cussons, amidst rising demand for soap and influx
of cheap, imported detergents. Ushindi is a
heritage brand in Kenya and is used for both
personal and home care purposes.
▪Since the outbreak of COVID-19 began, Pwani Oil
has reduced the prices of some of its soap
products to ease the burden on low-income
earners, while offering products at different price
points and introducing smaller pack sizes, boosting
affordability.
▪The company has launched a new variant of the
Ushindi soap, Ushindi Antibacterial Bar Soap, as it
seeks to diversify its home care portfolio.
▪The brand has witnessed a surge in demand, given
the low-cost, multi-purpose nature of the product,
while also being a trusted brand in Kenyan
households.
Pwani Oil Kenya’s acquisition and pricing strategy boosts growth
HOME CARE
Source: dukkapu.com

▪COVID-19 resulted in a drastic shift in consumer purchasing
behaviour. The need for social distancing and shops limiting the
number of people in stores, while more consumers undertook
online shopping, supported growth in e-commerce.
▪Parapharmacies such as Dischem and Clicks were able to meet
the increase in demand through their pre-existing e-commerce
business with relative ease. Other players were forced to rapidly
upgrade their infrastructure to accommodate the rising demand.
Most big players registered very strong growth in online sales
during lockdown and this trend is likely to persist.
▪Immune boosters such as vitamin C experienced high growth,
with some players restricting the number of items per clients, to
ensure fair distribution of essential medications.
▪Although initially some categories such as vitamins and dietary
supplements experienced strong growth due to panic buying, the
long lockdown which saw people confined in their homes led to
fewer cases of cold and flu this year. As a result, categories such
as cold and flu medication experienced slower sales.
▪Sports nutrition was adversely impacted as a result of gyms
being closed and consumers decreasing their spending on non-
essentials.
▪Vitamins and dietary supplements stand to benefit from the
pandemic as consumers now focus more on their overall, mainly
preventative health and nutrition.
Impact on Consumer Health in South Africa
CONSUMER HEALTH

▪Robust growth was registered for vitamin C, analgesics and
cough and cold remedies as consumers feared contracting
COVID-19. When lockdown began, consumers stockpiled
supplements they believed would strengthen their immune
systems.
▪However, stockpiling was only affordable to consumers
across the mid to high income brackets as most Nigerians
were prioritising food and drink items. However, stockpiling
led to malpractices among some pharmacies which hiked
prices, taking advantage of rising demand and stock
shortages.
▪Stock outages due to supply chain disruptions were also
observed in some parts of Nigeria. In some cases, this led to
brand switching out of necessity, with some brands standing
to gain from this trend over the mid term. However, most
consumers preferred international brands compared to local
ones as they were seen as more trustworthy and efficient
due to the high incidence of counterfeit products.
▪Consumers reverted to basics as traditional remedies gained
popularity. For example, consumers turned to ginger tea,
honey and lemon to boost their immune systems or treat
early symptoms of flu.
▪Preventative health is expected to remain important to
consumers in the mid term and continue its growth
trajectory.
Impact on Consumer Health in Nigeria
CONSUMER HEALTH
2016-2022

▪A surge in demand for analgesics and immune boosters such
as vitamin C, primarily out of fear and panic buying, was
witnessed in the second quarter of 2020. However, sales
stabilised after the lockdown was eased.
▪Products were initially running out of stock quickly and
consumers were forced to buy whatever brand was available.
However, with stocks now being replenished, consumers have
a bigger choice of brands and usually opt for competitively-
priced international brands which are deemed trustworthy.
▪In terms of shopping behaviour, consumers are prioritising
convenience and shopping closer to home and retailers are
responding by widening their stock of basic medication.
Motorbike deliveries have gained popularity in the distribution
of basic necessities such as groceries and basic medication.
▪VAT has been reduced from 16% to 14% in Kenya to alleviate
the pressure of the pandemic. However, not all retailers have
passed on the benefit accruing from lower taxes to final
consumers. In some cases, retailers increased prices
drastically to profit from panic buying adding more pressure on
consumers.
▪Kenyans are being extra cautious with their spending and are
saving more, preparing for worsening economic prospects.
Although spending on consumer health has momentarily seen
a sharp increase, this increase is unlikely to be sustained in
the medium term across all income brackets.
Impact on Consumer Health in Kenya
CONSUMER HEALTH
▪Natural ingredients such as Kenyan
dark honey have seen increased
demand, as it is a common, affordable
substitute for cough syrup.
2015-2023
%
y-o-y
growth

Implications for Sub-Saharan African Consumer Health players
CONSUMER HEALTH
Value for money set to remain the key driver of consumer choice
▪ Although consumers have a focus on preventative health care, price and affordability determine which
brands are purchased as consumers’ disposable income has been negatively impacted by COVID-19.
▪ In addition, consumers heavily rely on their pharmacist for advice regarding medication to use as doctors’
visits are expensive. Pharmacists advise clients based on their needs but also affordability.
Omnichannel emerges as key to reaching consumers
▪ Convenience and traditional stores have started stocking basic medication to provide convenience and a
wider variety of essential items to their clients. Traditional stores are performing well as they are close to
their target market and offer credit facilities to their regular clients. Orders are regularly placed through
WhatsApp and then delivered to customers’ doors.
▪ Motorbike delivery services which previously focused on food deliveries, now deliver basic medication
such as painkillers. E-commerce is also performing well, although mainly among mid to high income
consumers and is expected to continue to grow.
Counterfeit/illicit products pose a threat to the legal market, with international brands most popular
▪ Supply chain disruptions in markets such as Nigeria have also impacted consumer health. Some
consumers turned to counterfeit consumer health products in the absence of branded goods. Cost is also
a driver towards the illicit market as these products are easily available at low cost.
▪ Consumers are not always aware that they are buying counterfeit brands, and manufacturers can impact
the trend by educating consumers about the dangers of illicit products.
▪ International brands are often seen as being more trustworthy than local competitors, which is an
opportunity for international brand manufacturers.

▪With restrictions on physical movements during lockdown in Kenya, the e-pharmacy, MyDawa, has stepped
up to meet the medical needs of consumers.
▪Apart from OTC medication, it assists in the supply of prescription medication by allowing clients to
send their prescription slips via WhatsApp.
▪The store appeals to consumers who are searching for convenience and additionally offers free delivery
in Nairobi, making it cost effective to order online.
▪Diversifying from essential medication, the e-pharmacy further provided PPE equipment such as face
masks, antibacterial soaps and sanitisers during lockdown and at the height of the pandemic.
MyDawa: Kenya’s only e-pharmacy
CONSUMER HEALTH
Online sales of consumer health products gaining traction among mid to high income consumers

Key findings
CONCLUSION AND STRATEGIES TO CONSIDER
Value for money reigns
supreme as consumers
go “back to basics”
Consumers have become increasingly mindful of their expenditure and are
expected to persist in seeking value for money. Essential goods such as staple
foods, basic cleaning materials and vitamins and dietary supplements will take
priority as consumers mitigate the long-term economic impact of Coronavirus
(COVID-19) as they continue to feel the pressure of reduced disposable income.
Omnichannel retail
increasingly important
as consumers adapt to
new ways of shopping
post-pandemic
The pandemic further fast-tracked existing strong e-commerce growth. It is
expected to continue its strong growth trajectory, registering double-digit growth
over the long term. Heavily supported by m-commerce in a region where mobile
phones are the primary means of connected to the internet, the channel will be
critical in any marketing mix. However, consumers will continue to buy from
traditional channels such as open markets as they meet consumers’ need for value
in countries such as Nigeria and Kenya.
Permanent shifts in
occasion as
consumption habits
change
The shift in how and where especially professionals buy and consume goods, is
likely to lead to a permanent change in consumption occasions. Many consumers
are expected to continue to work from home, at least partially, leading to increased
hometainment and less in-store consumption. However, this creates strategic
opportunities across products and services.
Increased emphasis on
local production and
consumption
The increased emphasis on local consumption due to lockdown regulations is
expected to continue post-pandemic. Consumers are in part driving the shift as
they mindfully choose local over imported goods. Furthermore, government
legislation aimed at reviving and local economic stimulus coupled with the
increased cost of imported goods due to currency exchange volatility will also
boost local production and consumption.

How to adapt to the “New Normal” beyond COVID-19
Understand today
Build scenarios with
expertise
Execute with confidence
▪ Where’s my toilet paper?: In
a new online landscape what
do pricing strategies,
assortment, and shortages
look like? Daily SKU tracking
can help.
▪ Check your new vitals: How
big is my category now? Who
is left? Who is thriving and
why? What do my consumers
want now?
▪ History lessons: How did
industries, economies and
governments react to SARS,
H1N1 and 2008 crisis and can
it inform my actions today?
▪ Best practice: How are other
countries and companies
responding to the crisis and
what lessons can be learned?
▪ A quarter-to-quarter
mindset: How to use growth
scenarios to survive now,
position for short-term success
and charge forward later this
year.
▪ I care about different things
now: Detailing the new
expectations for consumers
and channels.
▪ Strange partners: What
businesses are primed for
partnership?
▪ Capitalising on change:
Exploring paradigm shifts
versus short-term shocks and
what strategies allow for totally
new winners (and fading
giants) coming out of this
crisis.
▪ Emerging megatrends and
the new normal of virtual living,
contact-free interactions,
social commerce, sustainable
business models and more.
Discover how others
succeeded
time
ACT NOW
ACT LATER
WAIT AND SEE
Disruption
Evolution
Tomorrow

Winning strategies to consider in Sub-Saharan Africa
Value for money: Tap
into consumer needs
for essentials
▪Shift focus towards
value brands to reach
consumers that have
traded down.
▪Focus on essential,
multi-purpose and
preventative goods -
consumer needs before
wants.
▪Ensure pricing strategy
includes value deals
(eg 3 for 2 bundles),
other price promotions
and smaller pack sizes.
▪Consider private label
expansion.
Omnichannel retail:
Include all relevant
distribution channels
▪Tap into double-digit e-
commerce growth and
include in distribution
strategy. M-commerce
is particularly important
as it is the primary
means of accessing the
internet in the region.
▪Do not neglect
traditional or other
channels, as many
consumers prefer these
outlets due to trust,
proximity and
convenience.
Localisation: Essential
consideration for
production and brand mix
▪Expand local production to
minimise supply chain
disruptions and reduce
costs.
▪Identify local, “traditional”
products that can be
produced at scale
commercially to tap into
local consumer
preferences.
▪Localisation will also
foster long-term consumer
loyalty.
Innovation: Capitalise
on changing consumer
habits and needs
▪Consider offering products
in smaller pack sizes -
especially in traditional/
informal market.
▪Revisit product
formulation to reduce cost
(eg alcohol percentage) or
to meet consumers’ need
for nutrition (eg food
fortification).

FOR FURTHER INSIGHT PLEASE CONTACT
Thomas Verryn
Senior Research Manager, Cape Town
Thomas.verryn@Euromonitor.com
Contributing authors:
Anje Du Plessis, Analyst
Jacques Olivier, Senior Analyst
Peter Hirst, Analyst
Rubab Abdoolla, Senior Analyst

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