In 2023, consumers in the Middle East and Africa (MEA) are grappling with the fallout of a challenging period marked by ongoing pandemic disruptions, record-setting inflation, and extreme weather events. As a result, MEA consumers are becoming increasingly mindful of their spending habits and priorities and are adapting their shopping behaviour in response.
Businesses operating in the MEA region must be prepared to navigate these changes and adjust their strategies accordingly. In this article, we will explore some of the key trends shaping the FMCG market in MEA in 2023 and provide insights into how companies can stay ahead of the curve.
1. Saving Attitudes and Financial Polarisation
According to the NielsenIQ Consumer Outlook report, 39% of global consumers have experienced a decline in their financial position due to the current economic slowdown, increased living costs, and ongoing pandemic disruptions. In MEA key markets, only KSA (30%) fared better compared to the global average, while Turkey (57%), South Africa (41%), and Egypt (41%) reported feeling financially worse off than the global average. Feeling the pressure of economic uncertainty, MEA shoppers are seeking ways to reduce their spending and make trade-offs. As a result, consumers are adopting cost-saving measures such as selecting lower-priced products from preferred brands, shopping more at discount/value/lower-priced stores and buying in bulk. These changes in consumer behaviour are also reflected in their choices between discretionary spending, such as clothing and grooming, and their increased preference for cooking at home and spending less on entertainment.
Despite the increasing costs, its impact varies dramatically from household to household and financial polarisation is thus found among MEA consumers. As revealed by a survey conducted by NielsonIQ, a considerable portion of Turkish respondents, about 41%, identified themselves as strugglers, indicating financial insecurity that persists to this day, while only 5% reported being thrivers, who feel financially secure and have been able to save money. On the other hand, situations are getting better in Egypt, the number of strugglers decreased to 17%, with the percentage of thrivers reaching 9%, which is in line with the global average of 10%. Additionally, there are some consumers who have not been impacted financially and continue to maintain their spending habits, while others remain cautious with their spending or have experienced a loss of income or job but have since regained their financial footing. As consumer financial situations become more polarised, it is crucial for brands to comprehend and monitor the insecurity of "Strugglers" and the financial flexibility of "Thrivers."
For brands, it is imperative to monitor consumers' ritual habits as they are likely to solidify which behaviours will become permanent in response to economic changes. To maintain customer loyalty, brands should strike a delicate balance between providing a sense of novelty and retaining the trust of core followers and routine consumers. In addition, selecting the appropriate distribution channel and pricing strategy is of significant importance for brands seeking to succeed in this dynamic market.
2. Holistic View of Financial, Physical, and Mental Health
Even faced with the pressure of economic insecurity, MEA consumers are prioritising more than just financial solvency, focusing on building a better tomorrow by spending on categories that they feel will propel them ahead in the long term. This holistic view of success balances financial, physical, and mental health equally. More specifically, consumers in KSA, South Africa, Egypt, and Turkey are all planning to prioritise spending on goods and services that are important for their mental and physical well-being.
Aspects of consumers' lives have been re-evaluated, impacting their purchasing decisions now and in the future. According to a survey, 46% of global consumers now consider financial health and job security to be on par with mental and physical wellness as the leading areas of greater importance to their lives. This is even more evident in the MEA region, particularly in Turkey and Saudi Arabia. While mental wellness remains a top priority for MEA consumers, planning and saving for unforeseen circumstances now ranks higher than physical wellness. A combination of financial and health-focused priorities is setting the spending tone for 2023.
By recognising the importance of financial security and mental and physical wellness, businesses can better cater to consumers' needs and build long-lasting relationships. To the benefit of consumer goods brands eager to develop in MEA, health and wellness items are among the top categories consumers plan to spend more on this year.
In conclusion, consumers in the MEA region are currently experiencing financial pressure, but there is also a strong sense of resilience. Looking ahead, they are determined to maintain or increase their spending on categories that will propel them toward health and prosperity in the longer term, including physical and mental health. Should you require further guidance on developing your brand in the MEA region, our team is readily available to provide you with expert assistance. Please do not hesitate to contact us to explore how we can help your brand establish and flourish in the MEA market.