This article first appeared in Strategy Marketing for Africa / Issue 2 2022.
Private wealth in Africa is expected to rise by 38% over the next 10 years, according to the latest 2022 Africa Wealth Report, published in May by Henley & Partners together with New World Wealth. This is despite the global havoc wrecked by Covid 19, though the impact of exponential rises in oil and food prices following the Russian invasion of the Ukraine, remain to be seen.
This expected growth, even if somewhat tempered, combined with continued expansion of the middle class is positively impacting the retail channel, including liquor retail, in many African countries. The demand for retail growth (and increased sophistication) is fuelled by urbanisation and wealth creation, as well as consumer and shopper demand as the metaverse exposes them to what they may be missing out on.
Luxury & premium fashion brands have been investing in African markets for some time, creating shop-in-shop concepts within larger retailers to cater to the growing demand for experiences equivalent to those enjoyed by shoppers in New York, Cape Town, or Paris. Levi’s®, for example has 21 standalone stores across Africa (excluding shop-in-shops) vs 16 in South Africa.
Supermarket groups Pick ‘n Pay and Spar have followed in the footsteps of Shoprite Checkers by expanding into African territories, and despite some store closures in the wake of the pandemic, all groups opened more stores than they closed or sold in Africa during 2021.
South African supermarket groups have demonstrated a strategic focus on extending their African footprint, though to date most of this expansion has been in Southern Africa, as well as Ghana and Nigeria, and primarily through their grocery stores with limited dedicated liquor outlets. According to its 2021 Annual Financial Statements, the Shoprite group has 181 stores with 23 liquor stores In Africa (outside of South Africa), with a stated intent to expand. In many markets liquor sales are permitted inside supermarkets, so that independent liquor stores have not been deemed necessary.
In addition, looking at the total number of stores falling under the Shoprite umbrella in South Africa (2,219 of which 537 are Liquor Stores), the African opportunity becomes even more evident. Pick ‘n Pay’s African footprint (excl. South Africa) increased from 154 to 163 stores in 2021, including its partnership with TM Supermarkets in Nigeria where it has 61 stores. In their Annual Financial Report, Pick ‘n Pay appear cautiously optimistic about continued expansion into Africa in the wake of Covid, stating “While short-term prospects remain constrained, the Group is committed to driving long-term sustainable growth in the rest of Africa, at acceptable levels of risk, and without compromising core South African operations.”
For many years, South African and indeed international liquor companies invested in the on-trade in African markets with bespoke solutions for where their brands were enjoyed – with even the likes of locally produced beers such as Meta (from Meta Breweries in Ethiopia) creating experiential “Meta Houses”.
Investment in liquor retail was historically limited to Duty-Free shops in international airports in various countries – a very competitive space where displays and activations must be booked well in advance due to limited space and high demand.
We have however started to see an increase in international liquor suppliers spending much more aggressively in retail, including supermarket groups where alcohol is sold, and where the importance of building customer experiences is understood. This shift in spend was most likely driven by the Covid pandemic and the resultant limitation of access to the on-trade to reach consumers. This has highlighted the opportunities at retail for liquor brands, so the fight is on!
Liquor suppliers should act swiftly so as not to be left behind – permanent bespoke shopfitting solutions are already being rolled out by high end brands, limiting remaining available space. Now is the time to collaborate with liquor retailers and for luxury and premium alcohol brands to take cues from what they have executed successfully in Duty-Free stores. It is also worth reviewing what luxury fashion brands have achieved, building their retail footprint in a way that meets consumers’ elevated demands.
With the on-trade re-opening, marketers should not fall back on old tactics, discarding the valuable progress made in retail and the opportunities it presents. Building shopper experiences in retail is key to future brand growth and relevance, especially as in-home consumption occasions gained a firm foothold during Covid lockdown and remain popular.
It is also time to look beyond Southern Africa to established markets in West Africa such as Nigeria, Ghana, Cameroon and Côte d’Ivoire, Ethiopia in East Africa as well as the far North territories such as Egypt and Morocco where consumer demand for experiential retail is prevalent, coupled with the presence of a strong middle class.
It would be unwise to fall into the trap of thinking that African markets can be served with “leftover” point-of-sale materials from South AFrica, or solutions of inferior quality. The ever-burgeoning middle class is retail savvy and has high expectations. There exist some beautifully designed high-end liquor stores which would put many global stores to shame, while at the other end of spectrum there are tiny outlets stocking multiple brands which require real innovation to stand out and be noticed.
As African designers begin to make a name for themselves on the global stage, brand collaboration prospects exist for both pack and retail design that truly celebrate Africa and even further entrench global brands in the hearts and minds of African consumers. While all the obvious reasons remain for brands to maintain their clearly defined identity, it is also true that Africa is a cultural melting pot where a one-size-fits-all approach may not work.
A significant opportunity exists for brands to work with retailers to develop custom solutions for their stores, especially when it comes to category management and using their anchor brands to signal category locations. Gebhardt acknowledges that certain materials, substrates and even some production techniques may be unavailable in some markets, and in those instances local marketing teams can draw on expertise and craftsmanship from more established markets, including South Africa.
Market leading brands have the opportunity and resources to forge the pathway, building relationships with local traders that benefit brand, consumer, and store, all while contributing to the growth of the African economy.
This expected growth, even if somewhat tempered, combined with continued expansion of the middle class is positively impacting the retail channel, including liquor retail, in many African countries. The demand for retail growth (and increased sophistication) is fuelled by urbanisation and wealth creation, as well as consumer and shopper demand as the metaverse exposes them to what they may be missing out on.
Luxury & premium fashion brands have been investing in African markets for some time, creating shop-in-shop concepts within larger retailers to cater to the growing demand for experiences equivalent to those enjoyed by shoppers in New York, Cape Town, or Paris. Levi’s®, for example has 21 standalone stores across Africa (excluding shop-in-shops) vs 16 in South Africa.
Supermarket groups Pick ‘n Pay and Spar have followed in the footsteps of Shoprite Checkers by expanding into African territories, and despite some store closures in the wake of the pandemic, all groups opened more stores than they closed or sold in Africa during 2021.
South African supermarket groups have demonstrated a strategic focus on extending their African footprint, though to date most of this expansion has been in Southern Africa, as well as Ghana and Nigeria, and primarily through their grocery stores with limited dedicated liquor outlets. According to its 2021 Annual Financial Statements, the Shoprite group has 181 stores with 23 liquor stores In Africa (outside of South Africa), with a stated intent to expand. In many markets liquor sales are permitted inside supermarkets, so that independent liquor stores have not been deemed necessary.
In addition, looking at the total number of stores falling under the Shoprite umbrella in South Africa (2,219 of which 537 are Liquor Stores), the African opportunity becomes even more evident. Pick ‘n Pay’s African footprint (excl. South Africa) increased from 154 to 163 stores in 2021, including its partnership with TM Supermarkets in Nigeria where it has 61 stores. In their Annual Financial Report, Pick ‘n Pay appear cautiously optimistic about continued expansion into Africa in the wake of Covid, stating “While short-term prospects remain constrained, the Group is committed to driving long-term sustainable growth in the rest of Africa, at acceptable levels of risk, and without compromising core South African operations.”
