South Africa’s Food Retail & Wholesale Market 2025: Growth, Trends, and Challenges

Who Owns Whom’s report on the wholesale and retail of food in South Africa highlights critical shifts in the industry amid ongoing debates about VAT increases. With food security and inequality at the centre, private sector innovation and government policies are reshaping the landscape, particularly in township economies and the growing ecommerce sector.

The VAT increase in the latest Budget is considered insensitive to low income earners, and insufficiently offset by an extended exemption of additional food items to avoid the likelihood of deepening poverty, inequality, and injustice. 

Challenges in South Africa’s food wholesale market

Food is the most basic need and at the bottom of the Maslow hierarchy, ahead of clothing and shelter. With a stagnating economy and rising cost of living, the plight of lower-income earners and the unemployed, and their daily need for food, cannot be ignored.

Stats SA’s unemployment figures crept up from 26% to over 30% from 2015 to 2020 and have stuck well above 30% since then while real unemployment, using an expanded definition, sits above 40%, which is unacceptably high and deserving to be a primary priority for any government.

Food production and wholesale in South Africa

There has been an increase in small-scale food production, which is not very productive due to supply chain hindrances, making it difficult for small producers to gear up for the export market. Small-scale production is key to improving food security for households.

Some of the biggest retailers such as Shoprite, Pick n Pay, Spar, and Food Lover’s Market have expanded their presence in townships, rural areas and low-income communities. They have also started to form partnerships with informal traders, such as spaza shops, to streamline supply chains and improve product availability, thereby enhancing the food wholesale and distribution network within township economies and making hygienic food more accessible for poor communities

Operational efficiencies, hygienic standards and financial standing are enhanced through these partnerships and contribute to lowering food prices. These initiatives were mostly spurred by the entry of foreign wholesalers mainly from Pakistan, Somalia and Ethiopia introducing cheap foodstuffs into the community, challenging incumbent retailers to find innovative ways of remaining profitable while serving this huge market, which is estimated in the billions of rands.

Regulation in the food retail sector

For the longest time, spaza shops operated informally and did not have to comply with regulations, mainly because they are spaza, meaning miniature or imitation of the real thing. The R638 Food Regulations introduced in 2018 to help ensure that all food products are safe for human consumption, has not been adequately monitored and enforced to the extent that fatal casualties occurred. Government reactively decided to introduce further regulations that call for each spaza shop owner to rezone their home or place of business and register it as a business within a short timeframe. It however then displayed woeful incapacity to deal with the applications. This new regulation has been costly for applicants and does not address hygiene and food safety issues that were plaguing the industry.

Private sector resilience and self-regulation 

South Africa’s continued development of new shopping centres is testimony to the private sector’s ability to find ways to thrive in a stagnant economy. Despite years of declining GDP/Capita, food consumption is increasing, indicating that nutritional intake is improving to some extent.

An example of how the private sector self regulates is how Pick n Pay’s shareholders, who paid a heavy price for poor management, supported a turnaround plan, subscribed to a rights issue and changed management. No taxpayer funds were involved in this “business rescue” as at a critical stage, Pick n Pay was technically insolvent. If it had no reasonable prospects, bankruptcy and liquidation would have ensued, at no cost to taxpayers.

Growth of ecommerce grocery sales South Africa

As articulated in the Who Owns Whom report on the retail of food in South Africa, the rapid growth of ecommerce and home delivery services has seen retailers increasingly adopting sophisticated technologies and fulfilment models.

There are great successes and innovations in this sector despite some challenges pertaining to food security, inequality and affordability for millions of South Africans.