Shrinking Products and Consumer’s Spending in Africa.
Walter Otieno, the owner of this stand in Kisumu, western Kenya, drops dough balls into a fizzing pan. The encrusted orbs, known as mandazi, are ready for sale within a minute or two.
However, his consumers may not be as satisfied as they previously were. Mr. Otieno has cut the size of his “African doughnuts,” as the snack is often known, in half and sells them for ten Kenyan shillings (about eight cents) apiece.
“I’m compelled to do that to make ends meet,” he says. The cost of his ingredients has risen dramatically. A ten-liter bottle of cooking oil costs 3,000 shillings, up from 2,000 shillings in January; wheat is two-thirds more expensive than a few months earlier.
Kenya’s food-price inflation hit an all-time high of 16% in October, the highest percentage on record. The consequences of Russia’s invasion of Ukraine have exacerbated the situation. What size are your doughnuts? droughts in the area
Other examples may be found across the market. A milkman carries two plastic bottles. A liter cost 40 shillings two years ago. Today, he charges the same sum to fill a half-liter bottle. According to dealers, all types of fruit are sold in smaller bunches.
According to the IMF, the cost of basic goods in Sub-Saharan Africa has grown by about a quarter since 2020. Food produced locally has also become more expensive.
In Ghana, for example, the cost has increased by about 80%. Shrinkflation is also on the increase. Biltong (dried Meat) sticks are not as thick in South Africa. Street vendors in Uganda have downsized the “Rolex” (“rolled eggs”), which is essentially a veggie omelette folded within a chapati.
Shrinkflation is often viewed through the perspective of Western customers who are irritated by unusually large crisp packages.
However, African customers, many of whom lack the cash, credit, or storage space to buy in bulk, have traditionally purchased items in tiny amounts.
Companies in Nigeria have figured out how to sell small sachets of shampoo and washing powder to cash-strapped clients.
As the economy has slowed, manufacturers have reduced the size of their items. Nigerians may now purchase “smallie” pizzas and wash them down with sachets of Baileys, a creamy drink.
Because of poor customer demand, businesses often choose to reduce product offerings rather than raise prices. Add to it the intense rivalry in many markets, where hundreds of merchants offer the same items.
Mrs. Otieno shouts, “Raise prices?” “I dare not do it because clients would flee.”