Inflation And Currency Devaluations Shift Consumer Priorities In Egypt

January 26, 2025

 

To manage my family-of-four household budget amid soaring prices, we started buying our essentials from three supermarkets within 5 kilometers of each other. The reason is that their deli, bakery, fresh produce, and meat prices vary significantly despite targeting more or less the same consumers.

According to the government, monthly annualized inflation rates have stayed above 25% since January 2023. On the ground, households are paying even more. “Prices in the market are always higher than official numbers,” Nihal El Kousi, NielsonIQ managing director for North Africa and the Levant, said during a November AmCham Egypt event. “What we bought [for] EGP 100 two years ago is now more than double.” 

As a result, consumers are rethinking strategies and priorities to balance their budgets, which can result in significant changes to purchase patterns. Sometimes, they are the opposite of expert predictions as perception, as much as cost-cutting, often influences Egyptian consumer behavior, El Kousi said. 

In addition, reaching local consumers is becoming increasingly complicated. “Our world has been redefined in the past five years, and last year in particular,” said Baheya Obeid, PepsiCo Egypt’s director of Insights for the beverages sector in Africa, the Middle East and South Asia. “Gen Z and Gen Alpha [born from 1996 to date] are becoming extremely challenging” as they are increasingly impatient and peers, rather than professionals, influence their purchase decisions.

Consumer landscape

From November 2021 to September 2023, annual inflation rates rose consistently from 5.6% to 38%. They dropped to just over 25% by November 2024. The Central Bank’s target is between 5% and 9%. 

Sustained high inflation helped many consumer goods companies achieve a 40% increase in revenue in the first three quarters of 2024 versus a year earlier, El Kousi said, adding, “39% of that revenue [boost] came from significant price jumps. Volume growth accounted for 1% versus 2023.”  

That revenue-volume gap should shrink in 2025 with declining inflation. “The market reflects this, with the pace of revenue growth dropping,” El Kousi said. 

Throughout 2023 and 2024, rising prices affected consumers differently. “‘Thrivers’ saved money and felt more financially secure, while ‘unchanged’ felt no impact and continued to spend the same,” according to research by NielsonIQ, a global marketing research firm.

“Cautious consumers” think twice about purchases. Meanwhile, “‘rebounders’ experienced income or job loss but now feel they are back on track,” El Kousi said.

Least fortunate are “strugglers, who suffered financial insecurity and continue to do so today,” NielsonIQ noted.  El Kousi said that category grew from 17% of those surveyed in 2022 to 24% in the latest report.

Yoyoing priorities

Since 2023, Egyptian consumers have altered their purchase priorities significantly. During peak inflation that year, locals told NielsonIQ they planned to cut down on out-of-home entertainment, holidays, home decor and snacking.

In 2024, that sentiment flipped. Consumers feel current price levels are their “new way of life,” El Kousi said. “Therefore, they are willing to pay more for items they vowed not to spend more money on. They prioritize products that make them feel happier and better.”

Those products include personal care items and other luxury or nonessential items. A breakdown shows a rise in sales of premium brands and niche non-edible products, El Kousi said. 

In edibles, “healthy and tasty” food consumption grew in Egypt throughout 2024. El Kousi said sales of beverages labeled “light” or “diet” jumped 114%, versus a 5% decline in traditional sodas. Energy drink sales more than doubled, replacing soda among select local demographics. 

Snacks’ sales grew 8% in 2024. Top choices were baked crisps and those labeled “high in protein,” which jumped 31% to 1,136%, while sales of traditional snacks stagnated or declined. “There is [also] indulgence in trying new flavors and combinations to see which ones are tasty,” El Kousi said. 

To balance household budgets, El Kousi said, consumers are cutting spending on food and home care products as well as essential personal care products like deodorant, shampoo and toothbrushes.

Conditional growth

Aside from a product’s taste, market positioning, branding and other unique attributes, common factors are influencing local consumption. “Value-seeking is omnipresent,” Obeid of PepsiCo told AmCham Egypt members. Consumers constantly search for large packs for the lowest price per serving or smaller, affordable packs. Accordingly, consumers have “strong affiliation to brands that represent value and abandon those that don’t,” Obeid said.

Additionally, “In Egypt, 73% [of surveyed consumers] now follow planned purchases,” significantly reducing the potential for impulse buying.

Convenient access to products is another condition for consumption. “In Egypt, 55% [of those surveyed] choose easy [and] quick options to prepare food [because of their] hectic lives and increasing desire for shortcuts,” Obeid said. “Developments in [artificial intelligence] and [augmented reality] will provide consumers with practical, timesaving, affordable tools for meal planning and cooking.”

Obeid also noted MENA consumers spend more if brands they trust branch out into other business lines through collaborations and new product offerings. However, she did not give percentages for Egypt. 

Lastly, local consumers are increasingly unwilling to buy lower quality products, regardless of price. “They may cut their purchases of high-quality products or seek better deals on them, but they will not replace them,” El Kousi stressed. 

Reaching consumers

In November, Leena Faheid, media analytics and insights head at Procter & Gamble, told AmCham Egypt that while consumers are historically attracted to TV ads and billboards, the internet is a close third.

Nearly 72% of Egyptians surveyed by Procter & Gamble use search engines like Google or social media platforms like Facebook to find, research and compare prices and features of products or brands. 

A detailed look reveals social media platforms replacing traditional search engines. Within social media, while most locals still use conventional platforms like Facebook, YouTube and Instagram, the fastest growing are TikTok and Snapchat, especially among Gen Z and Gen Alpha, Faheid said. “It is a sign they want short videos to tell them about the products over text and images.”

Within each social media platform, local consumers buy products if authentic users, influencers or celebrities endorse them, not experts or established figures, Faheid said. Her research found four of the five most followed accounts are those of friends and family members; sports icons and teams; restaurants, chefs and food bloggers; and influencers.

Advertising products in games is another growing sales channel with “87% of the survey sample playing games,” Faheid said. Nearly 72% of Egyptians play games on phones with computers a distant second and consoles third.

Locals also are attracted to real-world benefits, such as free delivery, cash-on-delivery, discounts, customer service and a reward system. However, Faheid stressed that “good product quality” is still the cornerstone of Egyptians’ purchase decisions. 

Looking ahead, consumption patterns will continue changing. “Local consumers’ motivations, needs and behavior are impacted by different factors every year,” Obeid said. A case in point is young consumers preferring brands associated with influencers they follow over established brands.

To adapt, Faheid stressed companies need flexible budgets and quick reallocation of funds to emerging channels that are attracting consumers. “There are a lot of global changes that will happen in 2025 in AI and gamification of interactions, influence and choice, and learning and discovery of products,” El Kousi said. “Companies in Egypt need to be ready when those trends proliferate in Egypt.”