In order to examine how consumers are planning for 2019’s holiday season, GeoPoll conducted our annual holiday season survey in Kenya, Ghana, and South Africa. The survey was administered by SMS in October 2019. Findings demonstrate how consumers are planning for the holidays, what they feel about their country’s economy and their own personal finances, and whether they see advertisements as an important factor in making holiday purchasing decisions.

See a dashboard of key results below and further analysis below. Contact us if you’re interested in purchasing the full dataset.

Perceptions of the Economy in Ghana, Kenya, and South Africa

Results around personal financial stability and perceptions towards each country’s economy show the disparity between different segments of the population; While levels of personal financial stability are relatively split between moderately stable, somewhat stable, and not stable at all, overall respondents rate their economies as either average or poor, with just 12% in Ghana, 4% in Kenya, and 14% in South Africa rating their country’s economy as either good or excellent.

In Kenya and South Africa, a higher percentage reported being not stable financially compared to 2018; In Kenya, 35% reported being not stable, compared to 31% in 2018, and in South Africa 27% reported being not stable financially in 2019, versus 21% who said the same in 2018. In Ghana, however, the percent who are not stable financially decreased from 24% in 2018 to 19% in 2019.

Despite the fact that respondents were unlikely to report being very stable financially, most respondents still predict that their holiday spending will increase this year compared to last year.  In Ghana and Kenya, 43% and 42% respectively reported that their holiday spending will increase, in line with the percentage who reported the same in 2018. Only in South Africa do more respondents believe their holiday spending will decrease than increase; 33% expect their spending to increase, while 39% expect it to decrease.

When we examined why holiday spending may decrease this year, we found making less money and having less savings to be the most-cited reasons across countries, although in Ghana and South Africa respondents were more likely to have less savings, while in Kenya a higher percentage of respondents (47%) report making less money than those who have less savings (39%). For those who expect their holiday spending to increase this year, the most common reason was items being more expensive in Ghana and Kenya, while in South Africa the largest portion of those who expect their spending to increase cited having more savings to spend on the holidays.

In terms of where they expect to get money for holiday spending, the largest group of respondents in each country, 36% overall, plan to use savings, while working more jobs (30%) and reducing other spending (26%) were the second and third most common options.

Africa Holiday Shopping Predictions for 2019

Despite reports of online shopping growing throughout sub-Saharan Africa, including around holiday events such as Black Friday, our study finds that most holiday shopping is still done offline. Overall just 12% report that they will do most of their shopping online, with the highest online shopping numbers being in Ghana, where 14% report that they will shop mostly online, and the lowest in South Africa. While certain purchases may be made online, we find that local markets are the most popular place for holiday shopping in Kenya and Ghana, at 57% each, while in South Africa responses are more split between supermarkets (39%), local markets (27%), and chain retail store (27%).

We also examined the factors that contribute to making holiday purchase decisions, finding that although financial stability is moderate to low, product quality remains a priority over product price. Overall 41% list price as an attribute that is important to them when shopping for others over the holidays, while 52% list quality as an important attribute. Brand name is a less important factor, with only 9% listing this as a consideration when shopping.

While gift purchases are often a focus of retailers around the holidays, GeoPoll’s study finds that the majority of money spent around the holidays goes towards food and drink for entertaining, rather than gifts for others or themselves, general socializing, or travel expenses. Overall 42% report spending the most on supplies for entertaining, with this number being highest in South Africa, at 48%. Ghanaians are the most likely to spend the majority of their money on gifts for traveling, while South Africans also are more likely to spend on travel.

The Impact of Advertisements on Holiday Spending

Advertising spend increases globally around the holidays, and digital media in particular been growing as an important source for retailers looking to reach their target audiences with news of sales and product announcements. Digital ad spend has been increasing not only in the US, where $6 billion was spent over the period from Black Friday to Cyber Monday, but also in Africa and the Middle East, where expenditures on social media and other digital advertising channels are increasing.

To find out the impact of all these advertisements on consumers, we asked respondents how often they pay attention to product advertisements when looking for holiday gifts, finding that most respondents, 37% ‘sometimes’ pay attention to advertisements. Overall 22% report that they always pay attention to advertisements for holiday spending, with the highest proportion of those respondents coming from South Africa and the lowest from Ghana, while 17% say they often pay attention. A combined total of 24% say they never or rarely pay attention to advertisements, demonstrating that more people are paying some attention to advertisements than those who do not take them into account at all while shopping.

Illustrating the growing importance of digital media, we find that social media is a strong second behind TV as the biggest source of advertisements for holiday products: While 35% say they most often see holiday ads on TV, 29% report that social media platforms are the biggest source of holiday advertisements and 9% report that they most often see ads on online news sites. Radio, traditionally one of the widest-reaching mediums for advertisements in Africa, was listed by only 12% as the medium where they most often see holiday advertisements.

Gather Data on Holiday Plans with GeoPoll

Using GeoPoll’s database of respondents throughout emerging markets and mobile survey platform, you can conduct custom research on how consumers plan to shop and entertain this holiday season. In addition, GeoPoll Audience Measurement provides advertisers with the most up to date data available on the best timeslots to reach your target audience. If you’re interested in conducting your own research with GeoPoll, please contact us today.

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The hyper-competitive world of fast-moving consumer goods (FMCG) —goods that are easily produced, packaged, sold, and consumed (i.e., food, beverages, snacks, toiletries, etc.) — relies on narrow profit margins, competitive branding, and global reach. Since most FMCG companies produce and ship similar products, the majority of their profit margin is driven by either branding or scope.

For many companies, the latter (scope) is one of the quickest and most viable ways to boost profit lines without significant infrastructure or marketing investments. But, as globalization takes heed and new, fresh markets are slowly dripping away, trying to position your products to new customers can be difficult.

Today, we’re going to look at how FMCG brands fare in the African market and why it may be the most significant driver of international FMCG profits in the coming years.

Understanding the African FMCG Market

For an FMCG brand to thrive in a region, it must have one or more of the following key attributes.

1. A dense population
2. The spending power to purchase cheap goods
3. An understanding of their brand competition
4. Supporting infrastructure to facilitate sales

Looking at Africa as a region for FMCG investment, it’s crucial that we take these attributes into account.

Africa’s Population Density and Infrastructure

Since FMCG brands operate on a narrow profit margin, they rely on heavy consumption to turn a profit. This means that any FMCG brand is going to need to know that they are expanding to an area that’s both growing and dense enough to accommodate their products.

According to McKinsey, by 2025 Africa is expected to have over 100 cities of 1 million or more people, and by 2030 Africa’s population (currently estimated at 1.1 billion) will double, with 80% of that growth happening in cities. While Africa, as a whole, is still a more rural continent than North America, Latin America, and Europe, as youth move out of the countryside and into cities, many countries in Africa are becoming increasingly urbanized. This is especially the case in cities like Lagos, whose population has increased by 100X since the 1960s and is expected to become the world’s largest metro area by 2100.

From these figures it is clear that urbanization is on the rise in Africa, and therefore zones of urban consumption are rising heavily across Africa.

Africa’s Spending Power

Africa is in a prime position to dominate the FMCG market: 2/3 of Africa’s $1.4 trillion retail spending in 2016 was on FMCG goods – which dominate almost all of Africa’s household expenses. In addition, with the Economist Intelligence Unit expects this FMCG spending will continue and increase in viability through 2030, and Africa is probably the single most profitable sector for FMCG spending expansion bar East Asia.

Now, let’s look at branding competition, which can be extremely difficult to measure. The first, and most complicated, issue to note is the dominance of informal outlets for consumer goods in Africa. In fact, Africa’s speedy growth in the FMCG area is far higher than predicted, since most FMCG spending still occurs in informal settings which can be extremely difficult to measure using traditional research methods. This presents both a challenge and an opportunity for FMCG brands. The challenge is that brands must overcome significant infrastructure and bureaucratic barriers to create a significant brand presence in Africa. However, if brands are able to successfully root themselves in the African market, there are opportunities to build strong brand loyalty, as competition is often thinner than in more developed markets.

One example of this is the alcoholic beverage industry in Africa, which has recently been rising. Local authorities in Nigeria have been removing many local breweries and home-grown liquor producers from the supply source of Africa over the last few years, and because of this, Nigerian Breweries and Guinness Nigeria have been able to dominate the market with a combined market capitalization of over $8.4 trillion. Across the continent, multinationals including SABMiller, Diageo, and Heineken have been making large investments into growing their African portfolios, and are now some of the highest valued corporations in markets such as Kenya.

FMCG Research in Africa

Infrastructure and regulatory barriers, along with a lack of information on brand loyalty, product preference, and consumption through informal markets are friction points for introducing FMCG goods into the market, but when overcome brands can build strong customer bases in areas with little competition. While it has traditionally been difficult to gather up-to-date research on FMCG goods consumption and brand affinity in Africa, using GeoPoll’s mobile survey methods it is possible to gather accurate data on the FMCG market throughout the continent.

GeoPoll works with leading FMCG brands to help them track product and brand preference, test new concepts or marketing messaging, and much more. In addition, GeoPoll can reach market traders in order to gather data on the informal trade markets that make up a large portion of African spending. Africa already has dense urban populations and a growing consumer class, and by leveraging GeoPoll’s market research services FMCG brands can gather the information they need to make informed decisions regarding their growth. If your brand is interested in exploring expansion in Africa, please contact us today to learn how we can help you explore growth throughout East, West, and Southern Africa.

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