Why investing in market knowledge pays in South Africa’s On Premise

Recent CGA by NIQ roadshows in Johannesburg and Cape Town highlighted the value of the On Premise to drinks suppliers, and how investment in market intelligence can deliver major rewards. Scott Elliott and George Argyropoulos share some of the insights from their trip and CGA’s latest research.
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A central part of South African life 

“It was very clear from our roadshows that bars and restaurants are at the heart of South African life,” says Scott Elliott. “Restrictions during the COVID-19 pandemic reminded us all just how much we value On Premise experiences, and our research shows nearly two thirds of them would feel lost or disappointed if they weren’t able to eat and drink out.” 

 

Why do South Africans go out to socialise? CGA’s surveys show socialising, relaxation and treats are the top three motivations. Just over half (52%) say they visit the On Premise to relax, and similar numbers do so to spend time with friends, family or colleagues (52%), as a treat (48%) or to celebrate (45%).  

 

“South Africa’s bars and restaurants have an incredibly varied appeal,” says George Argyropoulos. “It’s created a core of highly engaged users, half of whom visit at least once a week. Keeping these loyal guests coming back is key to success, but it’s also important to appeal to more occasional users, who could well become brand advocates in the future.”  

 

The impact of the cost of living crisis 

“While consumers are passionate about going out, it’s inevitable that the cost of living crisis has affected spending lately,” says Scott Elliott. Nearly nine in ten (86%) consumers told CGA they have noticed that the cost of living has increased over the last year, and as a result half (50%) are going out less frequently than usual.  

 

The crisis has also led large numbers of people to reduce their budgets for eating and drinking out (45%), look for more value options (40%), choose cheaper options (38%) and order fewer drinks (30%). It’s having a particularly significant impact on purchases of spirits.  

 

“Some South Africans continue to spend freely but others are keeping a very close eye on their outgoings,” says George Argyropoulos. “This makes it more important than ever to deliver consistently good experiences that justify people’s spending, and to establish ranges with the right blend of value-led and more premium options.” 

 

What it all means for suppliers 

“Polarisation in spending has created a complex landscape in South Africa’s On Premise,” says Scott Elliott. “Talking to suppliers shows us they are having to cater for a very wide variety of need states, so up-to-date knowledge of people’s habits and priorities is crucial.” 

 

 

 

“We’ve seen just how deeply bars and restaurants are engrained in people’s lives. Consumers know that this is where human connections and memories are made, and they are eager to continue building them, even when spending is tight,” says George Argyropoulos. “For suppliers the On Premise is a perfect place to establish brand awareness, grow loyalty and gain share—and as consumers hopefully recover their spending confidence, it should become even more lucrative as 2024 goes on.” 

 

 

Learn more 

Successful strategies need to start with a deep and accurate understanding of consumers’ behaviour. People’s habits and preferences can vary from group to group, channel to channel and occasion to occasion, so precise, data-led targeting is needed to unlock short-term gains and sharpen long-term planning. To learn more about how CGA’s research solutions support winning On Premise activity, contact George Argyropoulos here.

 

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