SA food manufacturers feel the pinch as constrained consumer spening trends down

Food manufacturers are responding to South Africa’s toughening economic environment by introducing smaller packs and adjusting pricing downwards to boost demand as consumers trend down in search of value offerings.

This is despite a rebound in consumer confidence as reflected by the FNB/BER Consumer Confidence Index (CCI) which moved to -9 index points in the fourth quarter, after falling from -10 to -13 in the third quarter of 2025.

Although the fourth-quarter CCI reading of -9 is slightly lower compared to the 2024 festive season reading of -6, it is the highest consumer confidence reading for 2025.

Despite the South African Reserve Bank moving its inflation target to 3%, consumers are still feeling the pinch of cost pressures, driving a large portion of them into debt.

To survive the squeeze that SA consumers are facing, food and beverage manufacturers are introducing smaller packages.

Klaus Plenge, Southern Africa managing director for packaging and food manufacturing equipment supplier, Tetra Pak, said in an interview that food, dairy and beverages manufacturers are seeking smaller packages for their products.

“Smaller sizes are helping the consumer to find new momentum for consumption. In dairy and beverages, the one litre packaging is a challenge, but the half liter is becoming more like the reference,” Plenge said in a recent interview.

“In South Africa, there's a lot of energy drinks and beverages that are now coming in 500ml or smaller sizes and that opens up an opportunity.”

Across foodstuffs, dairy and beverages, South African consumers are also increasingly “looking for no content of sugar or no sugar or low calories, high protein and high energy,” trekking global trends.

But even in foodstuffs such as confectionery, SA consumers are feeling the pinch and have been trending down to manage the cost pressures.

Stuart McClarty, president of the South African Bakers Association and a fellow with the South African Chefs association, said the local economic environment is currently “very tough” for both consumers and food manufacturers such as those in the bakery industry.

“Its very, very tough tough. If you look at the costs now energy of producing of heating ovens and things, it's gone up tremendously,” said McClarty in an interview.

FNB chief economist Mamello Matikinca-Ngwenya said though that consumer sentiment has for now been boosted by the 47 cent per litre decline in the petrol price between August and November, food inflation easing from 5.5% in July to 3.9% by October and the 248 000 jump in employment during the third quarter of 2025.

For bakeries and South African confectionery manufacturers, costs remain high despite the prices for flour flattening out. High rental fees and electricity costs have been stubborn for the industry, leaving the sector grappling with high production costs.

Furthermore, their consumers are also feeling the pinch.

“People now will buy a cupcake instead of a big cake for a birthday. They'll buy a series of cupcakes because it's cheaper so you're still getting the same number of sales but you're getting less value per sale. So people will buy something smaller because they can't afford the big cakes anymore,” explained McClarty.

Even the restaurant sector was also starting to feel the squeeze as consumers reduce consumption. South Africa’s retail sector has also been witnessing rising popularity of the budget stores such as Boxer.

“People will have one cup of coffee not two. When you go out to a restaurant, those kind of things, South Africans are definitely feeling the pinch,” added McClarty.

BUSINESS REPORT