Africa-Press-Ethiopia
Covid-19 will cause subdued consumer spending growth in Ethiopia, with real household spending expected to grow 3.6% y/y in 2020 compared to the previous forecast of 7.7%.
Over the medium term, the outlook is positive for consumer spending, with household incomes rising considerably. Employment gains are expected from the agricultural and manufacturing sectors with a strong demand for Ethiopian exports supporting a transition from subsistence farming to higher-income commercial agriculture.
With a weakening birr and many consumer goods imported (including nearly 10% of food), inflation remains a concern. New forecasts expect inflation to average 10% over the next four years (2020-2024).
Overall, while there are positive trends after Covid-19 impacts abate, the overall profile of the Ethiopian consumer remains weak, with low GDP per capita, inflation eroding income, and much consumer spending on essential items.
Injera remains the country’s most important packaged food item Injera is a sourdough flatbread made from teff, which is a naturally grown, gluten-free grain that is served at virtually all meals. In addition to its importance as food, injera also plays a significant symbolic role in Ethiopia’s food culture as it is used to scoop up food from shared platters, including during the practice known as Gursha. This refers to the feeding of close friends and relatives by hand to symbolise loyalty and devotion.
Other important grocery items include pulses such as beans and chickpeas and various fresh vegetables. These are eaten by consumers across all income levels and typically purchased from open markets in an unpackaged form. Whereas meat such as lamb, mutton, goat meat and beef are more heavily consumed by high-income households. The largest religious group is Ethiopian Orthodox Christians and it is common for them to abstain from eating all animal products on certain days of the week. Rice and bread are also important staples for many households, however, most of the rice seen in stores was imported. All the bread found in stores was unbranded.
Consumption of soft drinks remains very limited in the country, with Ethiopians buying drinks mainly during weekends and other special occasions. Traditional freshly squeezed juice and coffee remain highly popular throughout the country and are largely affordable even for low-income consumers.
We noticed that there were also many stock outs of basic items such as fresh milk, bread, carbonated soft drinks and sugar across the various stores. The majority of the packaged food items were imported from the Middle East and expensive compared to the pricing in the other countries. We also found that staples such as rice and flour were sold in bulk sizes (5kg) for resale in smaller quantities or bought to be shared with family members.
