Embattled South Africans are cutting back on expensive biscuits – but sticking to the good tea
- Tea is getting expensive, numbers from consumer giant AVI show – but South Africans are largely sticking by their rooibos and Five Roses.
- Fancy biscuits, though, are not so popular anymore, and consumers are looking for cheaper cookies.
- And things don't look like they'll be getting any better for consumers in the near future, AVI says.
In its last financial year it sold 1.8% less tea than in 2017, consumer brands AVI said in results released on Monday – which thinks is pretty good, considering how steeply tea prices have increased over the last three years.
Its premium tea range Five Roses and the Freshpak rooibos tea brand "continued to perform well", AVI said about its financial year to the end of June.
AVI's average tea selling price for the year increased 7.3%, while its rooibos input cost spiked 27% thanks to a local drought. Tea prices on auction in Mombassa increased by nearly 13% in the year to April, as bad weather hit production in Tanzania, and in India prices surged this month after floods in several key growing areas.
See also: Nescafé, Ricoffy and Frisco are at war – which means cheaper prices for instant coffee drinkers
But while South Africans were loyal to their tea, they had noticeably started to scale down on the biscuits, the AVI numbers showed. It recorded a 5.8% decrease in biscuit sales at its Snackworks division, which houses the Bakers brands with such evergreen favourites as Blue Label Marie biscuits. That was despite an average biscuit selling price increase well below that of tea, at just 4.7%
The decrease in sales were thanks to "constrained consumers migrating to lower priced offerings", AVI said.
And that trend will likely continue. Many of its sales categories could show "low, or even negative, growth rates," AVI warned its investors, "until there is a meaningful improvement in the economy."
Many of AVI's brands such as Willards chips and Frisco coffee fall into discretionary spending, with some, such as shoe store Spitz and fragrance brand House of Yardley, are on the luxury end of the market.
AVI reported a total revenue of R13.44 billion for the year, up 1.9% compared to the year before.
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