As Egypt grapples with rising prices and economic challenges, the FMCG and Durables market has witnessed notable shifts in consumer behavior during the first half of 2024.
As Egypt grapples with rising prices and economic challenges, the FMCG and Durables market has witnessed notable shifts in consumer behavior during the first half of 2024. Increasing food prices, import challenges, and the influence of social media on brand preferences are reshaping spending patterns, with a growing preference for local products.
Spending on Essentials Increases
Egyptian consumers are spending more on essential items, with a little over a third of their total spending going towards food, groceries, durables, and electronics, explains a recent NielsenIQ Egypt study. Food prices alone have surged by an average of 40% and 43% for Tech & Durables vs last year, significantly impacting overall spending.
Despite this high increase on food items, 26% of consumers have shifted their spending to more affordable brands for staple foods such as rice, flour, and pasta. This marks a significant jump from the 15% who opted for cheaper brands in the same period last year, reflecting the trade-off between cost and quality in basic food consumption.
Increased Focus on Savings
Despite rising costs, the share of “Savings” in the Egyptian consumers’ wallet has increased by 3%. This trend includes saving at home, participating in informal savings groups and saving through banks.
Health and Wellness remains a Priority
Around 35% of consumers indicated that their top priority for 2024 is maintaining or improving their health and wellness. This has translated into shifts in spending, with NielsenIQ studies showing a realignment of wallet share towards healthier food options and personal care products.
Spending on Entertainment and Personal Care
While dining out and home delivery have been cut back, Egyptian consumers are reallocating funds towards vacations and entertainment. Personal care remains resilient with a 4% increase in consumption, and despite significant price increases, the home climate control market has also seen a 1% rise in unit sales.
Tobacco Consumption Declines
The tobacco industry has experienced one of the highest inflation rates in Egypt, with prices increasing by over 50% between 2023 and 2024. This has led to a significant decline in regular tobacco consumption as consumers reassess their spending priorities.
Tech & Durables sector growth for local production
Egypt has witnessed significant price hikes in the tech & durables sector. A variety of factors, including increased import costs due to the depreciation of the Egyptian pound, high inflation, and supply chain disruptions, have contributed to these elevated prices.
The high demand for electronics coupled with these economic challenges have made it difficult for consumers to find affordable options. Despite the challenges within this sector, there was still growth in consumption driven mainly by locally produced brands specifically within Telecom devices and Climate control appliances.
Implications for Brands and Retailers
These findings highlight the changing dynamics in the Egyptian market as they adapt to economic pressures, with consumers becoming more and more cost-conscious, attempting to secure their near future by focusing on saving and prioritizing health.
"Egyptian consumers are increasingly focused on essential spending, health, and affordability, with over 30% of their budget now allocated to food, groceries, and durable goods. As local brand preferences rise and the demand for affordable options grows, businesses must remain adaptable. With rising prices, brands need to respond to the shift toward savings, cost-conscious decisions, and healthy value-driven purchases", comments Nihal Elkoussi, Managing Director NielsenIQ Egypt.
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