Field Force GM, Ged Nooy, looks at how manufacturers and retailers will win in SA’s low-growth economy (Image supplied)
Instead, winners are strategically removing excess baggage, simplifying portfolios, segmenting retail strategies and building new revenue streams rooted in data, trade and community ecosystems.
Four interconnected trends are shaping the next phase of FMCG and retail in South Africa.
- Manufacturers: From ZBB to portfolio rationalisation
After years of Zero-Based Budgeting(ZBB) (popularised by the so-called “3G Effect”), global manufacturers are now pulling a deeper structural lever: SKU and portfolio rationalisation, increasingly referred to as portfolio complexity reduction.
This trend is highly visible in global liquor players.
- Diageo, through its Accelerate strategy, has explicitly committed to simplifying its portfolio, prioritising core brands, and reallocating resources toward higher-return growth drivers.
- Campari Group has similarly communicated a tighter portfolio focus, concentrating investment behind fewer, stronger brands.
- Pernod Ricard has gone further, publicly discussing reductions in organisational and portfolio complexity, with prior disclosures pointing to SKU reductions of up to 30% in certain markets, linked to significant efficiency gains.
Importantly, this trend has moved well beyond liquor.
- Nestlé has framed portfolio optimisation as a way to simplify the value chain and free up resources.
- Unilever has refocused its business around 30 “Power Brands”, which now account for the majority of revenue and investment.
- Procter & Gamble famously divested or discontinued just under 100 brands to focus on its core portfolio.
- Most recently, PepsiCo confirmed plans to cut roughly 20% of its U.S. product lineup to drive productivity and simplify operations.
Locally, manufacturers are following the same path.
- Tiger Brands has recently rationalised its product range, cutting flavour and line extensions across several key brands to refocus investment on core, higher-velocity products.
- In parallel, Premier Group has announced the strategic acquisition of fellow South African food producer RFG Holdings, expanding its footprint across multiple FMCG categories while reinforcing a sharper, more focused portfolio strategy.
As this trend begins to materially impact the South African market, two call-outs are critical.
1. Portfolio rationalisation is not simply about cutting the tail. Manufacturers must understand the role each SKU plays. You would not win a football match with 11 Cristiano Ronaldos, you need defenders, midfielders and a goalkeeper. In the same way, some “tail” SKUs play specialist roles in price ladders, channel relevance, range architecture or shopper conversion. Blind pruning risks weakening the system, and could lead to share losses.
2. As portfolios tighten, trade marketing and in-store execution become exponentially more important. With fewer SKUs carrying more weight, visibility, availability, price execution and KPI tracking at shelf level will matter more than ever. Portfolio rationalisation without world-class trade execution simply shifts complexity downstream.
- Formal retail: Premiumisation and the battle for the masses
South African formal retail is increasingly polarised, with distinct strategies emerging for affluent shoppers and highly constrained households.On the premium end, Woolworths established leadership early, but competition is intensifying.
- Checkers FreshX continues to expand experiential formats and invest in innovation, including trials of smart shopping trolleys aimed at higher-income consumers.
- Spar Gourmet is being rolled out nationally to compete for affluent shoppers.
- Food Lover’s Market is also accelerating its push into higher-income segments, rolling out flagship and premium “theatre of food” concept stores.
- New entrants such as The Pantry reflect growing demand for curated, premium convenience retail.
At the other end of the spectrum sits the mass market, where scale still lives.
- Walmart’s strategy in South Africa remains highly focused. Rather than pursuing loyalty schemes or promotional broadsheets, the group is doubling down on Big Box Retail through Makro and launching Walmart-branded store formats in order to compete more effectively in the space through the repurposing of selected Game stores, anchored in an EDLP model designed to serve customers more efficiently and improve everyday affordability.
- Shoprite Group continues aggressive expansion of Shoprite and Usave, with growth driven primarily by new store openings rather than like-for-like growth.
- Boxer, Pick n Pay’s discount format, has become the group’s growth engine, delivering strong turnover and like-for-like performance.
Across mass formats, EDLP strategies, Key Value Items (KVIs) and loyalty programmes function as income support mechanisms for constrained households.
Expect a continued dogfight as retailers attempt to show shareholders growth, competing aggressively to capture as much of each shopper’s wallet as possible through format proliferation, loyalty mechanics and basket expansion strategies.
- Incremental revenue: Retailers become platforms
In a low-growth environment, retailers are increasingly monetising assets beyond product sales.
Retail media has moved decisively in-house. Shoprite’s Rainmaker Media has emerged as the leading example, leveraging first-party shopper data across in-store and digital channels.
Pick n Pay’s partnership with GIG Retail (Smollan) represents its response, creating a structured retail media and shopper marketing platform.
On-demand fulfilment platforms such as Checkers Sixty60, Pick n Pay ASAP, Woolies Dash, Takealot enable closed-loop measurement that provides ROI from exposure to purchase.
Retailers are also expanding into financial services, largely through partnerships rather than banking licences.
Pick n Pay, Shoprite and Woolworths all act as financial access points, leveraging foot traffic, loyalty data and trust at scale.
The unintended consequence of these shifts is a rapid erosion of traditional media budgets, as spend is increasingly diverted into trade.
Media agencies and brand marketing teams are being challenged to redefine their role, as trade marketing and sales functions lead in owning retailer relationships and influencing shoppers at the moment of truth, both online and in-store.
- The Informal market: Winning the future by empowering communities
The informal economy remains the final frontier. Informal FMCG trade is estimated between R180–190bn annually, while township liquor trade is estimated at R110bn per year.
This market is not chaotic. It consists of hundreds of thousands of circular mini-economies built on cash, informal credit, locality and decades of trust.
Beer and CSD manufacturers have historically succeeded here through deep distribution and enablement through providing fridges, solar panels and inverters.
Others are now following. Tiger Brands, for example, has openly stated its intention to significantly expand into spaza and informal trade.Building advocacy and loyalty in 2026 and beyond will require continuous engagement, real value creation and empowerment, rather than replacement, of mini-ecosystems.
South Africa’s FMCG and retail winners will simplify intelligently, segment precisely and invest deeply in ecosystems.
In a low-growth economy, focus beats fragmentation and trust beats technology deployed in isolation.
Execution and measurement are now decisive sources of competitive advantage. As portfolios tighten, formats proliferate and incremental revenue streams become more complex, winners will be defined by consistent execution at shelf, in-store, digitally and within communities while measuring actual behaviour and sales drivers.
Future growth will belong to those who can turn effective strategy into disciplined execution, prove ROI and continuously course-correct based on what the data is truly saying...ends
