Tiger Brands expands its footprint in booming South African informal sector, creates ‘Perfect Outlets’

Tiger Brands expands its footprint in booming South African informal sector, creates ‘Perfect Outlets’

Tiger Brands is expanding its presence in the local general trade to capture significant growth opportunities identified in the informal sector of the economy, by implementing robust Route-to-Market support and solutions for its general trade customers, including spazas and midi-wholesalers.

The business’ growth objective is to expand its reach and support across 130 000 general trade stores over the next five years. To date, the company has reached more than 46 500 general trade outlets with a target of 50 000 by the finish of the year.

In addition to this, Tiger Brands is working with customers to create ‘Perfect Outlets’ in the general trade, with investments in point-of-sale marketing execution across the Tiger Brands basket and branded coolers to improve cold availability of Tiger Brands’ ready-to-drink beverages. The aim is to establish 2 000 Perfect Outlets over the next five years.

To build further brand awareness among consumers in the informal sector and to encourage increased transactional sales of Tiger Brands products, select general trade stores and community walls are being branded with mural stories around some of the company’s most recognised heritage and category brands.

The informal sector is a significant portion of the South African economy, contributing at least 6% to the Coarse Domestic Product (GDP) and accounting for one-third of local jobs in the country (Stats SA, 2021), demonstrating its significant potential in reducing poverty.

Referred to as the ‘hidden economy’, the South African informal independent traders, such as spazas, contribute 26% or R184bn of the total R716bn SA FMCG market. More than 70% of South African households purchase from the informal trade (Trade Intelligence, 2022).

To date, Tiger Brands and its partners believe created around 198 jobs within communities where it is executing its route-to-market growth strategy and aims to maintain created a further 74 jobs, taking the total number of jobs to 272 by the conclude of September 2023. A large proportion of these are women. In Tembisa alone, at least 60% of all modern jobs created are occupied by women.

“With the local informal market remaining largely untapped and statistics showing that it is growing at a faster rate than the modern trade, we see exponential room for growth in this segment and are engaging closely to support our traders and better present our brands to consumers at the point-of-purchase. By investing to realise these opportunities, we stand to claim a competitive advantage in the market, propelled by the strength of our heritage brands that hold aspirational category positions in South Africa,” says Luigi Ferrini, Chief Customer Officer, Tiger Brands.

This robust execution is portion of Tiger Brands’ strategic focus on building a growth pipeline with the tactical aim of winning at the point-of-purchase, recognising the growing importance and contribution of the informal market to the total South African fast-moving consumer goods (FMCG) sector.

Some of the key tactical initiatives implemented by Tiger Brands in the general trade to grow its presence include:

• The introduction of a mobile cashless payment and order platform solution – an easy process with the delivery of stock from a midi-wholesaler to a spaza store or supermarket within 48 hours, dramatically reducing the risks for customers associated with the handling of cash.
• A trader loyalty rewards programme that offers incentives to encourage traders to increase their Tiger Brands stock orders.
• Using data and shopper insights to ensure an optimal product range, pack sizes and product bundles are available in store to meet shopper needs.
• Investments in township marketing activations.
• Shopper communication and brand marketing campaigns at the point of sale (POS).

QUICK FACTS
• South Africa’s informal sector contributes at least 6% of GDP and accounts for one-third of local jobs (Stats SA, 2021)
• Informal and independent traders, such as spazas, contribute 26% or R184bn of the total R716bn SA FMCG market (Trade Intelligence, 2022)
• More than 70% of South African households purchase from the informal trade (Trade Intelligence, 2022)
• The Informal trade includes:
o Hawkers
o Small Spazas
o Large Spazas
o Superettes
o Mini/Midi Wholesalers
• The South African FMCG informal independent market has grown at an average rate of 6.7% between 2018 and 2023 – faster than the modern market.
• By 2030, small retailers are anticipated to create 70% of all recent jobs.
• Shoppers visit spazas on average 4 times per week compared to supermarkets which shoppers visit once a week.
• Spazas believe a apt understanding of their consumers and offer value and convenience.
• Tiger Brands is aiming to expand its presence in130 000 general trade stores over the next 5 years.
• To date (August 2023), the company has expanded its reach to more than 46 500 general trade outlets and target 50 000 outlets by the terminate September 2023.
• Over the next 5 years , Tiger Brands will invest in 2 000 ‘Perfect Outlets’ with point-of-sale marketing execution across the Tiger Brands basket and branded coolers to improve cold availability of Tiger Brands’ ready-to-drink beverages.
• Through its General Trade route-to-market strategy, Tiger Brands and its partners aim to create 272 local jobs in communities by terminate September 2023. 198 local community jobs created to date acquire focused on women.
• Largest Tiger Brands categories availability in General Trade:
o Culinary
o Grains
o HPC (Home and Personal Care)
o Snacks & Treats and Beverages
• Tiger Brands’ consumer basket size in the informal sector has increased by 185.7% between 2018 and 2023 (Tembisa)
• Distribution of Tiger Brands category products in the informal sector has increased by 68.8% from 28.5% in 2020 to 97.3% in 2023 (Tembisa)

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