Mageu growth stagnates

27 May 2014

BMi Research has released its 2014 annual quantification report on the mageu market in South Africa, which indicates that it is still considered a popular product in Southern Africa, due to its ease of production and the market is expected to continue to remain strong. However, several factors in the past year have meant that growth has stagnated.

Travel costs have played a large part in slowing growth in many markets, not just mageu. Petrol prices currently sit at their highest in recorded history and, as the e-Toll system commenced in Gauteng - the largest consumer market of mageu, more companies are being forced to raise their prices to accommodate this cost.
Weather conditions have caused a decrease in the levels of usable product, causing suppliers to struggle to obtain resources for the manufacture of their products. This has caused an increase in imports, which pushes pricing up.
The mining industry has undergone many strikes and changes, which has led to many players, who previously retailed in this market, to pull out until the market settles down.

Packaging has shifted, as more players move from sachets into bottles and cartons, which are more durable and cheaper forms of packaging. Some players also feel this makes the product feel more like a luxury item. There has also been a shift from the smaller pack sizes (less than 500ml) into the larger sizes as consumers continue to make bulk purchase choices.

Channel distribution 2013

On-consumption has experienced a decline in market share in 2013, as less products are sold into mines due to the strikes.

Local regional distribution 2013

The North West Province has experienced a decline in market share during 2013 as major players shift focus away from the area and focus more on smaller, more penetrable markets.

Moving into 2014 and onwards, smaller players are expecting to slow their productions as they continue to struggle against the market leaders of the mageu industry.

BMi Research specialises in consumer and industrial research in various sectors, including the retail market. For more information, go to www.bmi.co.za.