Edited by Eamonn Ryan
The following presentation was delivered at the 2023 GCCA Cold Chain Conference in Cape Town, by Patrick Prestele, a consultant at Frost & Sullivan, a global leader in consulting and research with over 60 years of experience.
Contrary to the misconception of Africa as a homogenous entity, we (Frost & Sullivan) recognise its complexity. Dynamic variations from one country to another demand a localised approach to understanding and managing market trends.
In respect of South Africa, business confidence is affected by governmental indecision, causing hesitancy among potential investors. Yet, the country’s economic diversity, despite challenges, positions it as a significant player in the region. South Africa’s population, currently at 60 million, is projected to reach approximately 74 million by 2050, implying a considerable increase in households. Urbanisation, expected to rise from 63% to 71% by 2030, and to 85% by 2050 (a phenomenon common to all sub-Saharan Africa), adds another layer to the dynamic landscape. These demographic shifts contribute directly to the high demand for consumer goods, setting the stage for the frozen foods market.
Globally, the frozen foods market is anticipated to grow yearly by 6% over the mentioned forecast period. Fellow middle income countries such as Argentina, Brazil and Mexico are seeing strong growth. The South African frozen foods industry is valued at USD252-million, anticipated to grow to USD323-million by 2028.
As we navigate the intricate landscape of South Africa’s frozen foods market, it is evident that the intersection of convenience, changing consumer demographics, and technological advancements is reshaping the industry. Ready-to-eat meals, fueled by the preferences of the younger generation, are anticipated to play a pivotal role in the future of the market.
In our quest to decipher the frozen foods market in South Africa, we conducted comprehensive consumer studies to uncover the preferences that drive purchasing decisions. By analysing consumer behavior across various age groups, we gained valuable insights that are instrumental in understanding the dynamics of the market.
Analysing the data, we observe a diverse landscape of preferences among different age groups. The younger generation, often characterised by a fast-paced lifestyle and a desire for convenience, is a driving force behind the surge in the ready-to-eat meal sector, which has seen a remarkable growth in the number of start-up manufacturers of ready-to-eat meals. This demographic shift aligns with the growth of fast-food chains and the increasing demand for on-the-go, easily accessible food options.
The convenience culture is notably prominent among the youth, who prioritise quick and efficient meal solutions. This trend has fueled the rapid growth of the fast-food sector in South Africa. Noteworthy players, such as KFC and McDonalds, have expanded their presence in the country, adding thousands of new stores to cater to the changing preferences of the younger consumer base.
In addition to traditional fast-food establishments, the rise of food delivery services has reshaped the landscape of the frozen foods market. Specialised manufacturers, dedicated to producing meals that are either fully frozen or partially frozen, have entered the scene. This dynamic shift is partly driven by the lower costs associated with online platforms compared to traditional brick-and-mortar stores.
To cater to evolving consumer preferences, food delivery services have adopted innovative strategies. For instance, some companies, like Discovery, offer cashback rewards for the purchase of healthy frozen foods. This not only aligns with the convenience aspect but also reflects a growing consciousness about health and wellness among consumers.
While the 18 and younger age group is excluded from the research as being dependent on their parents, young professionals aged 18 to 34 emerge as the primary consumers of the frozen food market, constituting approximately 64% of total consumption. This demographic, encompassing students, early career professionals and young parents, is increasingly seeking convenient ways to minimise time spent in the kitchen. The demand for frozen food delivery services is particularly pronounced within this segment, reflecting the busy lifestyles characteristic of this age group.
Africa, with the youngest and fastest-growing population globally, presents a unique landscape. The age group 35 to 44 is also anticipated to experience growth, suggesting a shift in consumer demographics. Although South Africa exhibits some characteristics more in common with middle-income countries and is more advanced than sub-Saharan Africa as a whole, the frozen food market is expected to remain robust on a national basis.
Several factors contribute to the strength and resilience of the frozen foods market in South Africa. Notably, the increasing employment of women globally and locally has led to more households relying on frozen products due to time constraints. The proliferation of fast-food franchises, including global giants and local favourites like Nando’s, further fuels the demand for convenient frozen options.
Challenges and restraints represent a balancing act
A noteworthy trend is the changing perception of frozen food, particularly among the younger generation. Frozen food is no longer viewed as a compromise on nutritional value or as outdated. Recent studies suggest that frozen foods can actually be more nutrient-rich than fresh foods due to advanced freezing technologies. This shift in perception is crucial for the sustained growth of the frozen foods industry.
However, challenges persist. The enduring popularity of fresh, natural foods remains a restraint, as many consumers still view frozen foods as substitutes rather than equals. Additionally, the aftermath of Covid-19 and fluctuating food prices have left some consumers hesitant to opt for frozen products over fresh alternatives.
A unique factor contributing to the demand for frozen foods is load shedding, which affects both supply and demand. Though it constrains manufacturers, it surprisingly can be a boon for demand. With uncertainty about power supply durations, consumers are turning to frozen foods as a practical solution, given their longer shelf life over fresh alternatives.
The frozen foods market in South Africa stands at the intersection of evolving consumer preferences, demographic shifts, and technological advancements. As we navigate this dynamic landscape, industry players must adapt to changing perceptions and leverage emerging trends to stay ahead. The future promises continued growth, driven by a younger, busy demographic seeking convenience without compromising on quality.
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