Africa is in the midst of a technological revolution, and nothing illustrates that fact than the proliferation of mobile phones. Consider this: more Africans have access to mobile phones than to clean drinking water. In South Africa, the continent’s strongest economy, mobile phone use has gone from 17 percent of adults in 2000 to 76 percent in 2010. Today, more South Africans – 29 million – use mobile phones than radio (28 million), TV (27 million) or personal computers (6 million). Only 5 million South Africans use landline phones.

Nielsen’s recently released Mobile Insights study in South Africa, which examined consumers’ usage of and attitudes toward mobile phones, networks and services, reveals a number of interesting insights:

• High levels of network loyalty: 95 percent of subscribers have been with their carrier for an average of 4.2 years, and 81 percent said they’d recommend their network providers to friends and family, reinforcing the importance of word-of-mouth and reputation in the industry.

• Move from pre-paid to contracts: While pre-paid plans still make up between 82 and 85 percent of the market, 25 percent of subscribers say they could switch from pre-paid to contract packages within the next year.

• Network quality a key decision factor: More than a quarter (27%) said they left their previous provider due to poor network quality.

• Nokia rules: More than half (52%) own that company’s handsets, followed by Samsung and BlackBerry, and 56 percent of those currently using other brands indicated their next handset would likely be a Nokia.

How do South Africans Use their phones?

As in other countries, mobile phones are being used in a range of ways aside from talking. South Africa ranks fifth in the world for mobile data usage, ahead of the United States, which ranks seventh.

More than 20 percent of those surveyed said they download ringtones and a similar number said they download music. Wallpapers, screensavers and pictures are also popular downloadables. The mobile phone as an Internet device is also on the rise – 11 percent of South Africans use their mobiles to go online, and consumers aged 25-34 are the heaviest users. Facebook is the most popular social media platform, used by 85 percent of mobile subscribers. Half of all users of Facebook in South Africa access the site via their mobiles. MXIT, a mobile instant messaging platform, is also popular in the country, with 61 percent saying they access the site.

SMS text messaging is practically ubiquitous among South African mobile customers, and is used by almost 4.2 times more people than e-mail. More than two-thirds (69%) of consumers prefer sending texts to calling, in large part because it is less expensive, and 10 percent believe texting to be a faster way of communicating.

The majority (60%) of South African mobile users said they are aware of mobile banking services offered by banks, but only 21 percent say they use such services. A much larger number of those aware of the services said they would never use them, suggesting banks might need to invest in communicating the benefits and security of mobile banking.

This survey provides a comprehensive benchmark against which the changes occurring in the rapidly evolving telecom sector can be measured. When one considers that just three years ago, there were no smartphones being used on the continent, the pace of change is stunning. South Africa is the biggest market, but other countries on the continent are likely to catch up fast.

Nielsen recently did a comparative study across the key countries participating in the CWC using econometric modeling techniques to measure advertising’s impact on sales in select impulse categories (return-on-investment, or ROI). In the analysis, which was conducted in South Africa, India (which co-hosted this year’s tournament), New Zealand, Australia and the U.K., Nielsen found that there was an average sales boost of 3.5 percent, with Indians being the most reactive.

Carbonated soft drinks and potato chips were the biggest gainers overall, although some categories were more popular than others based on locale. India and New Zealand were the two markets with the most reaction to the CWC 2011: in India, there was an average uplift of 25 percent and in New Zealand, 12 percent, in the categories under consideration during the tournament. A large portion of these sales can be attributed to increased media investment and improved efficiency (ROI).

• Soft drinks: Thanks to a 66 percent increase in media spend during the CWC quarter compared to the same period a year prior, sales of sodas grew 10 percent in India, with media contributing 5 percent of total sales. In South Africa, sales rose 6 percent during the CWC.
• Potato chips and salty snacks: New Zealand saw the biggest growth in this category with sales up 11 percent; ROI increased by 8 percent. Indians also ate more crisps, with the category posting a 3 percent sales increase and an ROI rise of 3 points. Indians gobbled up other salty snacks, with the category posting a 38 percent sales increase and the ROI was up 4 points versus the previous year.
• Beer: Denizens down under quaffed more beer during the tournament. In New Zealand, sales rose 8 percent, driven by a 43 percent increase in media spend. Media contributed about 3 percent to sales during this period. Australians bought roughly 6 percent more beer, with ad spending rising 13 percent. In South Africa, media spending rose 65 percent while sales grew 2 percent.
• Chocolate: Sales grew most in New Zealand and India, 24 percent and 22 percent, respectively. In the former, much of this growth can be linked to a surge in ad spending, with some chocolate brands relating themselves to cricket. In India, media had less of an impact, contributing to just 1 percent to sales.

“This research provides clear evidence of the power of advertising during the CWC. With such a huge audience, advertisers can not only reach millions of people around the world and boost brand awareness, but also drive real sales growth. Media proved twice as effective during the event compared to normal advertising. The brands that did the best were those that linked themselves to the game and the event,” said Tom Hall, Marketing ROI Solutions Leader, APMEA & India, Nielsen. “These lessons can help companies determine budgets and identify which categories might see the greatest sales uplift during future global sporting events such as the upcoming Rugby World Cup and the 2012 Olympics.”

While South Africans were the most pessimistic in Nielsen’s Middle East, Africa and Pakistan region, the decline in confidence was hardly unique. Global online confidence declined for the first time in six quarters as economic recovery hit a stumbling block and recessionary jitters again reverberated around the world. Consumer confidence in the U.S. fell to its lowest level on record in the second quarter

Roughly two-thirds (66%) of South African survey respondents said that they believed that their country was in a recession. They are also no longer as upbeat about their job prospects; with half believing that employment opportunities were not good – a 3 percent rise from the same period a year ago. Almost half (46%) felt negatively about the state of their personal finances, a 2 point rise from Q1, and 83 percent said that they had adjusted their spending habits to save on household expenses, an 18 percent increase from the previous quarter. Almost a quarter (24%) said they have no spare cash.

The major concerns for South Africans in Q2 2011 are no different from the previous two quarters: increasing food and fuel prices, rising cost of utility bills, job security, debt, the economy and crime. “Rising food prices are taking its toll on consumers worldwide as more and more households are spending a higher proportion of their disposable income to put food on the table, and South Africa is not exempt from this trend,” said Diane Johnstone, Managing Director, Nielsen Southern Africa. “South Africans may have weathered the worst of the storm, but the frugal behavior prevalent in 2010 will continue into 2011 as headwinds to growth persist. As disposable income continues to shrink, consumers are constantly re-adjusting their spending patterns to save on household expenses by cutting-back on non-essential, luxury items and activities.

Retail Landscape
The retail sector was affected by these changing consumer patterns, posting slowing growth in 2010 with majors outgrowing non-majors. Overall sales of fast-moving consumer goods (FMCG) grew 3.3 percent in 2010 compared to last year. By contrast, growth in 2009 was up 14.6 percent from 2008. Price increases accounted for about half of the growth in 2010 compared to almost 82 percent in 2009.

Inflation has been on the rise since the start of the 2010, but while many countries are experiencing skyrocketing prices for basic goods, South Africa has seen some deflation among several staples categories such as rice, corn meal, flour, margarine and tuna. All of this is good news for consumers, who are highly price-driven. Meanwhile, prices for fresh milk, ready-to-eat meals, instant coffee, carbonated soft drinks and sugar all rose. Nonetheless, retailers are increasingly optimistic that volume growth will be promising in 2011.

So where are consumers spending their money if not on food? A review of consumer spending trends over the period 2000 to 2010 shows that of discretionary disposable income, the average consumer spent three percent more on out-of-home entertainment (from 35% in 2000 to 38% in 2010). Meanwhile, communications, which encompasses cellphones, Internet and cable/satellite TV, almost doubled during the decade, from 11 percent of spending in 2000 to 21 percent in 2010.

Modern trade has continued to expand, and now accounts for more than 62 percent of all FMCG trade in South Africa. Nielsen has noted a consistent annual shift of one to two percent of trade moving from traditional channels to modern trade. Branded retailers, such as Shoprite and Pick n Pay, continued to grow at the expense of smaller, independent retailers, which are also being squeezed by wholesalers. Shoppers at branded outlets not only visit them more, but also spend more per trip. Nonetheless,independent retailers continue to have the highest level of market penetration.

While most categories saw overall value and volume declines in the first quarter compared to a year ago, one category stood out for growth on both measures: dry groceries. Comparing trends from Q1 2010 to Q1 2011 tells a slightly different story, however, with several categories (toiletries, dry groceries, perishables and household goods) recording solid growth in both value and volume. Key gainers over the past year include ready-to-eat meals, canned pilchards, instant coffee and toilet tissue. Much of the growth was driven from middle income consumers.

South African retail brands, or private label, currently make up about 11 percent of the market (excluding fresh food), the highest among developing markets, but still below developed markets. Overall share has remained stable, but value-oriented South Africans have taken to retail brands in a number of categories including chicken (38% of category) and dishwashing liquid (36% of category). Most notably, consumers from the higher income levels have turned to retail brands with some enthusiasm, and 60 percent of the retail brand market value comes from these shoppers. Nevertheless, there remains room for significant growth with middle income consumers, provided retailers know what drives the performance of private label brands.

Aside from brick-and-mortar shops, online commerce has taken off in South Africa. Fully 71 percent of the six million Internet users in the country are online shoppers.

Challenges for Retailers
Promotions are a boon to budget-conscious consumers, but present a number of challenges for retailers to overcome. For instance, reaching the consumer is difficult, particularly in a country as diverse as South Africa, where profiles can vary by a few kilometers. National retailers need to manage overall shopper engagement while remaining locally relevant and focused. Meanwhile, competition in the food category is intense, as grocers – branded and independent – are fighting for a larger share of sales. Ready-to-eat meals and in-store solutions are gaining popularity, while liquor, pharmacy, food courts and hardware all continue to grow at a faster pace than the center store.

With one exception, direct mail (-7%), all sectors of the media benefited from increased spending. TV attracted the lion’s share of spending and recorded a 28 percent increase for the year. Newspapers were the second-most popular media, with spending increasing 6 percent in 2010, while radio placed third, with spending up 21 percent.

The retail sector dominated advertising, accounting for 27 percent of all spending during the year. Business-to-business advertising came in second with 13 percent, while travel/transportation/leisure rounded out the top three with 11 percent.

United States
Surprisingly, the U.S. squad wasn’t even the most buzzed-about national team. England, Argentina, Brazil, Serbia, and Spain were just some of the countries more closely correlated to the World Cup in conversations online. American consumers were also talking about various World Cup sweepstakes, whether they be corporate-sponsored (from Yahoo!, EA Sports, and McDonald’s) or privately-run pools where members pick the winners. There was also lots of Buzz around David Beckham, who’s not even playing in the World Cup due to an Achilles injury.

United Kingdom
Many World Cup discussions involved Fantasy football leagues as consumers took a more active role in the tournament as it gets closer. England fans have high expectations for their national team, as indicated by the frequency of terms like like “winning” and “champions” tied to the team. But fans also see a strong foe in Brazil, with similar terms grouped around the Latin American soccer power. England’s manager Fabio Capello was the most closely linked person to World Cup messages, followed by the injured Beckham.

South Africa
The World Cup’s host country has more than just soccer on its mind. Visitor and tourism messages drove a significant part of World Cup conversation, as well as ticket inquiries. Key FIFA and Local Organizing Committee (LOC) representatives Jerome Valcke and Danny Jordaan were often cited for addressing these issues. Overshadowing the matches were discussions about security concerns. South African messages also voiced disappointment of Shakira’s “Waka Waka” as the official World Cup song.

Australia
Even as Australia prepares for the this year’s tournament, it’s the fate of future World Cups that’s on the minds of many of the country’s online consumers. Messages about luring the 2018 or 2022 Cup to the Land of Oz – even speculation about potential venues – were prominent in online discussion. As the future of Australian soccer is discussed, many chose to wax nostalgic about the past, with dialogue about retired soccer great Mark Viduka.

Italy
In the weeks leading up to the World Cup, Italians buzzed about the “Will-he-or-won’t-he?” saga of golden boy Francesco Totti coming out of retirement to play for the national team (ultimately he was never called up). Fans of the defending world champs also talked about several members of the Azzurri national team – including head coach Marcello Lippi – and some of the team’s top competition, including Brazil, Argentina, and , perhaps surprisingly, Cameroon.

Germany
The Internet provided lively discussion forums for German soccer fans debating who should and should not have made the national team. Leading the debate was who should replace starting goalkeeper Rene Adler who suffered a rib injury that prevents him from playing with the team in South Africa. Speculation of Germany’s Group D competition was also very high, with tough matchups against Serbia, Ghana, and Australia in the tournament’s preliminary round.

Spain
Spanish fans have been preoccupied with comparisons to South American soccer power Argentina. Messages compare young Spanish phenom David Silva with Argentine superstar Messi and coach Vicente Del Bosque with soccer legend and current Argentina coach Maradona. A classic goalkeeper controversy was also brewing with some calling for Victor Valdes to start over Iker Casillas. Finally – after Sogecable, the leading pay TV company in Spain, sold the rights to Telecinco for some matches and to Cuatro for others – Spanish fans worried about which TV channel to watch the matches and who will be commentating.

With double-digit growth across most categories measured, South Africans continued to take to the Internet in 2008, and the profile of those doing so is evolving.

Andrew Felbert, of Nielsen Online, said, “Not only are there more people online in South Africa, but they are spending more time online and viewing more content.  Companies and advertisers wishing to get their products and services in front of consumers can no longer ignore the power of the Internet.”

According to the new research:

•    The number of unique browsers and pages viewed increased by 25% between December 2007 and December 2008

•    Total time spent online increase by 45%

•    Males continue to dominate and now comprise 58% of the audience, up from 55% a year ago

•    The audience is aging, with the 50+ age group showing the most growth

•    English is the dominant language, comprising 56% of Unique Browsers — increasing share by almost 2%.  Afrikaans was the second-most dominant language, but showed a decrease of 2%.

•    The fastest growing brands are newspapers – Sunday World, Dispatch, Sowetan and The Herald all showed double or triple digit growth.

View the the full release

While 53% of those surveyed by Nielsen think their country has hit a prolonged recession that will last more than 12 months, 18% of consumers, concentrated in a handful of emerging markets, like India, Vietnam, China, and Russia, told Nielsen they expect their countries to be out of recession within the next 12 months.

In contrast, consumers in Japan, Germany, Argentina, Mexico, Turkey, Italy, Taiwan, the U.S., and Spain were the least optimistic about the prospects for quick economic recovery.

Nielsen surveyed 28,663 Internet users in 52 markets across Europe, Asia Pacific, the Americas, and the Middle East between September 22 and October 6, 2008, as part of its Global Online Consumer Survey.

The survey’s results reveal that global consumer confidence fell to a new low this month, dropping from an index of 88 in May 2008 – previously the lowest index on record – to 84 in October, according to Nielsen.  Only Brazil, the Philippines, New Zealand, China, Thailand, South Africa, and Hungary showed improved consumer confidence, compared with May 2008.

Not surprisingly, consumers worldwide are adopting new strategies to reduce discretionary spending and shore up household finances.
 
On average, 49% of global consumers plan to spend less on new clothing, as well as gas and electricity, according to Nielsen. 

Meanwhile, 47% report reducing out-of-home entertainment, 40% say they’ll delay upgrading to new PCs and mobile phones, and 39% will cut down on take-away meals from restaurants. 

Even necessities, like groceries, are on the chopping block — 36% of global consumers report switching to cheaper grocery brands in order to reduce their expenses.

Overall, consumers in Australia, New Zealand, Germany, the U.K., Turkey, the U.S., Colombia, and Argentina plan to make the most changes in their spending habits, as they search for ways to weather the current economic turmoil.

View the full press release.

Read a related press release on consumer confidence in Hong Kong and Great Britain.

Read coverage of Nielsen’s findings by Sky News and in the Shanghai Daily, the Business Standard (India), Forbes, the Financial Times, The China Post, the Thanh Nien Daily, and the Malaysia Star.

Learn more about global consumer confidence levels in the December 2008 issue of Nielsen’s “Consumer Insight” online newsletter.