Key consumer trends in Egypt post economic changes

Key consumer trends in Egypt post economic changes
August 17, 2018 Optimetriks

After Egypt’s climbing  inflation reaching a very high  rate of 33% in July 2017 – post devaluation of the pound in November 2016; there are many trends that emerged as coping mechanisms. Some of the most prominent changes and trends are those on consumers.

As per a recent PWC strategy article , “there is a new trend among consumers which is the emergence of demographic micro-segments: Consumers with similar characteristics are showing different spending behavior, with some becoming more cautious and price-sensitive as others maintain their spending patterns.” This trend has resulted in FMCGs and other consumer companies to change their strategies when it comes to segmentation, trying to move into innovations, and having a more targeted portfolio – allowing them to have a more focused approached on segmentation and hence lowering the risk of losing consumers due to price changes. An example of such an innovation could be Edita’s innovation “freska” that is a wafer product that is cheaper than kitkat and other international branded wafers or Pepsico’s newly introduced cheetos popcorn.

Another highlighted trend is the rising move towards locally produced brands. This has become more evident over the last few years and it is mainly because again, consumers are trying to find alternative more price friendly options with “86% claiming that price is the main driver” and also consumers now believe they should support all the local businesses during this time.  As published by Nielsen in a report “A sense of loyalty in support of the local economy is also emerging, with 33% of consumers stating patriotism for Egyptian brands, beyond just price”. “The consumers said they will move to cheaper, local products in Food and Beverage (40%) and Personal Care (41%) categories, and one-fifth of consumers will move to local brands”. This has pushed internationally based FMCGs and consumer companies to fix their marketing strategies towards more locally induced campaigns to create the needed affiliation with the brand –  like Etisalat last campaign introducing mohamed ramadan – (Egyptian’s most recent loved actor) as their main model with a very local jingle that everyone related to or Orange’s Abu Hafiza (also a popular celebrity) feature in their most recent copies. Companies are also focused on finding an alternative to raising their own prices. These strategies include coming up with smaller skus of the product or degramming already existing ones to keep the same price points the consumers are used to.

A change in retail choice has also been on the rise. In that Nielsen study it has been reported that modern Trade retail taken its hardest hit in 2017 with spend (-0.6%) and volume (-32%) declining ahead of Grocers in March 2017. Traditional markets, groceries and discounted stores are becoming more favorable as they match the new trends and needs that the consumers are moving towards  – like buying local brands or limiting their choices when it comes to products, or limiting their bulk purchases. Also since consumers are now seeking more discounts and promotions, these retailers help them in doing so with ease. This trend has a high implication on FMCGs in Egypt as they had to change their trade strategy to match the consumers new move towards the traditional and the discounters by offering promotions in these outlets and re-allocating budgets to those retailers focusing on the shelf presence and the in-trade marketing techniques.

Although the economy has gradually picked up and inflation decreased reaching 13.3 percent  in March 2018 from 14.4 percent in February, lowest rate since the start of the economic turbulences; it is apparent  that consumers will continue to find more coping mechanism to adapt to the ongoing changes in the economy whether in terms of price increases or fluctuating dollar value and therefor companies have to be constantly alert and in survival mode to match their expectations in new found ways.