South Africa’s largest food manufacturer company, Tiger Brands, is turning to the informal market to grow the visibility and availability of its brands through partnerships with 130,000 spaza shops.
Tiger Brands owns some of South Africa’s most valuable and well-known brands, such as Koo, Oros, Ace Maize Meal, Black Cat, Albany, and Jungle Oats.
Garth Fraser, manager of route-to-market at Tiger Brands, told CNBC Africa that the company aims to leverage the strength and heritage of these brands to drive demand from the informal sector for its products.
Interest from large companies in the informal sector is growing as the formal economy and demand from the country’s middle class stagnates.
Retailers such as Shoprite and Pick n Pay have tried expanding into the sector through their USave and Boxer brands.
Tiger Brands is looking to grow the visibility and availability of its brands in this sector by partnering with spaza shop owners and the local community.
The company has been planning to expand into the sector since 2020, with research indicating that, at times, only about 27% of its products are available at the lower end of the market.
Fraser said the company aims to have its range of products available in 130,000 to 150,000 stores within the next five years.
It has partnered with 46,000 stores in the last two years to stock its products.
Tiger Brands is also looking to employ people from the local community to stimulate the immediate economy while also localising production and transportation to increase the affordability of its products.
So far, the company has employed 200 people with plans to have at least 270 employees within local communities by the end of September this year.
The key, said Fraser, is for Tiger Brands’ products to be readily available for shoppers in the informal sector while also getting people to resonate with their brands.
To drive demand, it will increase its advertising with branded fittings and fixtures in stores, as well as murals and paintings on the outside of the stores.
It is providing fridges so the shops can sell cold Energade and Oros ready-to-drink juices.
The company has also developed a cashless payment and ordering system to minimise the use of cash in its operations, which may also help formalise the informal economy.
Tiger Brands has seen an increase in spaza shop visits, with an average consumer visiting a spaza shop at least four times a week.
The Township Consumer report, compiled by market research agency Survey 54 and digital agency Rogerwilco, found the number of people who shopped at spaza stores had risen to 51% in 2023 from the 44% recorded in 2022.