fresh connections: southern africa

PRODUCE MARKETING ASSOCIATION

Emerging Black Middle Class

August 17, 2016

Fresh Connections:

Southern Africa


SA’s new Black Middle Class

5 Million and Rising


I grew up in a

rural area outside

Nelspruit. I’m a

lot better off than

my parents. My

children will be

much better off

than me. They

have to be!

Gloria,

Gauteng


How did we do it

• 10 focus groups

• Eighty20 analysis of AMPS

• and other databases

• Ramsay Media Research (RMR)

• (6000+ respondents)

• Video interviews

• Workshops with experts

• A follow-up and comparison study with 2004

study


Before 1994… Group Areas Act

Bantu Education

Travel restrictions

Job reservation

Repression


• World Bank definition of a middle

class in a developing economy is

anyone earning more than $2 (R29)

a day, that’s about R900 per month


But South Africa is not


73rd percentile of population

An

nu

al p

er c

apit

a gr

ow

th in

inco

me

Income deciles ranked by per capita income

Growth incidence curve Mean of growth rates

%

Survivors TopEnd

70r% of SA

Population

Middle Class

Missing and disillusioned

Middle

9% of SA

Population

22% of SA

Population

3% of SA

Population

After Bhorat, H.


Our Definition

Must be Black African adult, 18+ Either live in household with income between R20,000 & R55,000pm OR Must meet at least two of the following criteria:

own a car

tertiary qualification or currently studying (student aged 20-34)

work in white collar/’professional’ job

live in metropolitan area in decent housing or pay rent of R5000+ (For comparative purposes, we used a similar definition to our previous ones; we use same for all races)


2004

• SA’s total middle class – 5 million

adults

• Black middle class – 1.6 million

adults

• (590,000 households)

• Black middle class notably absent from

top LSMs

• only 15% in LSM 9 - 10


Black middle class

adults in 2016

5.6 MILLION


Upward Bound

• Since 2004...

• this segment has grown by 350%

• the number of households has increased to over

2.1 MILLION

2016 stats


White Middle Class

White middle class stagnant

over same period, from

2.8m adults in 2004

to 2.6m in 2015


Growing Black Middle Class

0

1000

2000

3000

4000

5000

6000

2004 2008 2012 2014 2015

Black Coloured Indian White

307

2872

2798

721 951 981

2686 2688

2620 2800

1747

563 657

406

4224

5330

5610

506 641 680


Black Middle Class concentrated in cities

0%

5%

6%

5%

5%

18%

52%

5%

6%


Spending power black middle class 2015

Average personal income

R10,819

Average household income

R26 360

Overall spending power over

R480 billion (White R360 billion)


Assets owned by black middle class

Item Black middle

class 2004 Black middle

class 2015 White middle

class 2015

Dishwasher 3% 16% 27%

Computer in home

19% 59% 70%

DVD player 30% 72% 80%

Washing machine

24% 73% 90%

Microwave 60% 98% 98%


Driving Growth


Driving Growth Supported By:

Credit Education BEE Economic growth


Our parents told us over and over again that the way to succeed is to be educated

Education moves you from working class to middle class – it gives you choices


• Only 14% don’t have a matric

• Half (58%) have a post matric

qualification

• Since 2004 the number of black middle

class members with a tertiary

qualification has grown by over 2.0

million


• Post-recession - stability

• Incomes & spending slowly rise

• Organic growth: children enter

middle class

• Maturity accompanied by

realism

• Increasingly selective


Internet usage on the rise

(used by black middle class during the last seven days, AMPS 2015)

• 2004 = 10%

• 2015 = 67%

• Cell phone ownership 2004

36%

• Cell phone ownership 2015

97%


The new email

• 67% have a facebook profile

• 76% of those are logging on at least

once a day

RMR


Pasta and coffee belonged to the Bourgeoisie but now I can afford them


Food Consumption

• Changes with your status

e.g. eat salads, no pilchards

• More precooked meals due to household

providing income

• Much more of a leisure and social

activity’

• More eating out; regular, social leisure

activity... not the ‘treat’ it used to be

• Take-aways a feature of Friday nights

especially at month end


Nando’s – telling it like it isn’t


‘mafikizolos’ 2nd wave

forerunners

aspirants


2.8 million aspirants with household income between R12,000 and R20,000 who don’t qualify as middle class But desire ‘to get there’ and will fuel future growth working towards perception of a middle class lifestyle; mimicry using certain conspicuous products, brands confronted with • debt burden • scarcity of jobs • gap market


you just arrived yesterday

recent experience of hardship overcame huge odds often had some level of advantage still on sharp learning curve still growing in confidence super-charged expectations


younger grew up in a middle class environment better prepared & often better educated more confident less fearful of slipping back more realistic aspirations less pressure from extended family

“I could have chased any dream because although we weren’t rich, we had the resources”


First wave to reach middle class remember hardship pride in achievements fear of slipping backwards have learnt from recession, more realistic and discreet recession’s forced move away from ‘catch-up’ lifestyle big dreams, believe anything is possible


lifestyle choices are being made amidst


FAMILY AT HOME FAMILY OUTSIDE

THE HOME


Family spend.. no choice

We don’t have extended families,

we have families

I didn’t have to do it, but in reality I

had no choice .. Called ”Ubuntu

tax” or “Black Tax”

For many marketers, family are

now major competitors

for share of wallet (ave 20%)


Composition of the household


KFC ad


INVISIBILITY

RECOGNITION


Make of car owned

23%

19%

8%

7%

6%

However, aspiration

remains High


40% of white middle class are in LSM 10 verses 11% for black

Black middle class car ownership up

by 2,0 million since 2004


LIFESTYLE DEBT


Despite rumour to the contrary, management of debt appears mostly

‘under control’

RMR


Mall mania.. lifestyle

• The mall is the middle class

playground…with lots of online

browsing & research

happening beforehand


Mall mania

• Middle class people only really shop in the

shopping malls

• The mall is the middle class fish bowl


Opening of the Mall of

Africa

Saturday 30th April 2016

Queue outside Game


Location, location, location

• Location more often determines store

choice

• “In my area I go to Pick n Pay and

Woolworths - there isn’t a Shoprite nearby

even if I wanted to go to one”

• “I only shop at a store where a white person

also shops”

• Note: it’s important see retailers as brands


Salon clip

Salon clip


LEGACY CATCH UP


Evidence of growing financial literacy

More future planning rather than living for

today

Leaving a legacy eg children’s education and investments


Around 70% send children to

ex-Model C or private schools

78% are not happy with the

standard of education in government schools

I don’t want them to

suffer like we did

RMR


TOWNSHIP SUBURB


28% say they still live in

townships, but typically

‘burbs in the township’

The line between townships

and suburbs is becoming


Township developments

make a middle class

lifestyle more

possible .. infrastructure..

Diepkloof Expensive, Beverly

Hills


But township connections remain strong and result in lots of movement back and forth

back and forth


MOTHER

TONGUE ENGLISH


are fluent in English

but great concern about

loss of mother tongue

especially by children

Over 90%

RMR


Black middle class White middle class

SABC 1 (90%*) DSTV (64%*)

SABC 2 SABC 2

e.TV SABC 3

SABC 3 e.TV

DSTV SABC 1

WIDE TV REPERTOIRE

*watched last 7 days


Dramatic growth in DSTV viewership

It’s a must-have as

middle class

PERCENTAGE

OF DSTV

WATCHED IN

LAST 7 DAYS

2004 2015

9% 79%


DSTV ad


DAILY NEWSPAPERS


1.

2.

3.

4.



1.

2.

3.

4.

RADIO STATIONS


ROOTS MODERN


Forerunners - Medium


CONSPICUOUS INTRINSICS


FNB

BMW Mercedes Benz

Samsung Johnnie Walker

Woolworths


• FNB and Woolworths are

widely recognised as brands

meeting their needs

• Woolworths: It’s all

about quality and class

• FNB: they really

understand my needs


Past is past

• Much disdain for brands from past

My past is defined by Lucky Star, we had

it day and night and I can’t eat it anymore


Brands


Black Middle Class depend heavily on

brands A Brand is a name, term, symbol, design or a combination

that identifies a seller’s products or services and thereby

differentiates them from competition.

A brand can be associated with a product, service, retail

outlet or even a person or a combination of two or more

e.g. Tiger Woods golf clubs by Nike; BP service station

with Pick n Pay convenience store.

Some brands are so strong that the generic name is the

same as a brand (Colgate, Hoover, Elastoplast)

Some products or services are difficult to brand, e.g

perishables, franchise operations


You have some options .. Go for it!

If you can differentiate your product/s and are demonstrably superior

It provides predictable sales at expected higher margins

Should give you higher profit; good brands demand a premium

Most sales are to same customers, thus limiting marketing effort and

spend

Satisfied customers tell others

Partners can provide availability, exposure and credibility

Allows for brand extensions (different products to same market at

lower cost)

Can capitalize on existing routes to market


Brand extension


Producer

Independent

Wholesaler

Informal Trader Chain

Informal

Buying groups

Retail Chain

(e.g.: Shoprite)

Wholesaler

Route to market

New entrants


Don’t do it if…..

You have limited funds

Your product isn’t obviously different or superior

No control over your brand after it has left you

No supportive partner/s to add value and exposure to your

brand

You can’t ensure consistency of quality and availability

If you use a spokesperson, be sure of him or her –

remember Oscar .. and Tiger .. and Lance .. but Farmer

Brown is different!


Be careful if…

You don’t have an existing, well known and understood

brand

You don’t know your customers and consumers very well

You can’t meet your promises .. every time

You are offering more than one product under the same

brand name

.. Most important, you lose control of your brand


30

20

10

0

1 5 – 1 9 2 0 – 2 4 2 5 – 3 4 3 5 – 4 4 4 5 – 4 9 5 0 – 5 4 5 5 - 6 4 6 5 +

The Market of the future

4 . 3 5 . 5

%

A G E R A N G E O F M I D D L E C L A S S

A G E R A N G E O F B L A C K M I D D L E C L A S S

A G E R A N G E O F W H I T E M I D D L E C L A S S

Reflects a ‘normalisation’ trend (increasing numbers born into

middle class)


Confidence levels

Highly motivated and on a

journey.

68% are more optimistic

than five years ago

30% whites

stic 40% whites are less

I have the confidence that I will be able to achieve

my goals. There’s light at the end of my tunnel

RMR


Nkalndla


Afrika Tau

fresh connections: southern africa

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