South Africa’s Diamond Offering

Don’t let the latest South African ABC scandal scare you off the potential the market offers for UK publications. The economy remains stable after significant growth, a whole new middle class is emerging who have real disposable income for luxury goods and aspire to the European and American lifestyles. South Africa has a population of 46 million, with over 50% under the age of 34; it offers publishers a youthful target audience. With 11 official languages, English represents 8.2% of the language spoken.

Local Publishing Market

The local publishing market has burgeoned in the last three years with launches like Woman & Home, Heat, Cleo, InStyle, Stuff, Sports Illustrated, Psychologies and, more recently, Avocado – a food magazine focusing on world cuisines. Admittedly, there have been some closures, but on the whole the market continues to perform well. Aside from the English versions of local magazines, there have been a number of Afrikaans versions like Manwees, a high quality general lifestyle magazine focusing on fashion, health, inspiration, leisure, money, relationships and sex.

The domestic market is shaped by two major players: Media 24, publishers of such titles as Heat, InStyle, Maxpower and Caxton who publish titles like People, Bona and SA Garden & Home. Other players in the market include Johncom, Ramsay Son & Parker and Associated Magazines.

There are over 350 local titles with official ABC figures, but it is suggested that there are over 1,000 titles published locally. The current condition of the market is on the soft side; however the women’s weekly category remains defiantly strong.

From an international perspective, the strongest performing sectors are women’s weeklies, women’s fashion monthlies, home interest, current affairs, puzzle titles and motoring titles.

Distribution

The distribution of magazines in South Africa is dominated by subsidiaries of the major publishing houses. For publishers outside of South Africa wishing to export their magazines to South Africa, there are a number of options: Magscene, MCS/Caxton and RNA all have expertise in the import market.

Magscene are a relatively recently formed company. This company recently acquired Distrimag, a distribution company they used to reach high end stores and a specialist network. In addition to this distribution route, Magscene use Junk Mail Distribution who distribute to all the major chains and independent outlets. Using both of these distribution routes, Magscene have an established network of over 10,000 outlets nationally.

MCS/Caxton are a partly owned subsidiary of Caxton and use the RNA network to distribute imported press. RNA is the distribution arm of Caxton, for which international press represents a 30% share of their business with over 1,200 titles (including partworks). RNA distributes all MCS/Caxton product and has additional direct relationships with overseas publishing clients.

With a population of 46 million, the number of retail outlets relative to the UK is small. A large circulation domestic title will have distribution to approximately 13,000 outlets while a larger import title such as Hello! would penetrate 1,100 of these outlets.

Unsurprisingly, sales are from urban areas with over 50% of sales of international magazines coming from the Gauteng region (Johannesburg and Pretoria), followed by the Cape region and the Natal region (Durban). In targeting these three regions you can reach over 85% of your target market.

Retail Structure

The retail structure in South Africa is dominated by retail chains which are located mainly in shopping malls and centres.

For most international titles, CNA is the most important chain and accounts for over 50% of sales of international titles across its 190 stores. CNA is the SA equivalent of WHS with its strength being the wide range of both local and international titles. CNA is a destination store for international press and this is recognised at head office level where there is flexibility for promotions and special issues. Many of the specialist international titles are distributed exclusively in CNA and this can be used to the titles’ advantage within the chain.

Exclusive Books is predominantly a book chain, but in recent years has seen a consistent growth in magazine sales. Although dependent on the demographic of the magazine, titles such as Wallpaper* can achieve in the 44 Exclusive Books stores sales of equal or greater share to CNA. Exclusive Books also offer strong promotional vehicles and using this for exposure on the right title can lead to long term sales growth. However, the range in Exclusive Books is limited and the company have just announced that new titles will not be accepted during the November to February period, and when new titles are listed it has to be in place of an existing title.

Supermarket chains dominate the domestic magazine market with a 58% share of sales. Although the share across international titles is much lower, supermarkets do present an opportunity. Spar, Woolworths, Pick N Pay and Checkers all carry international titles in their stores with strong results. Publishers need to be willing to test considerable volume. Efficiencies are generally in excess of 50% and sales in the SA supermarket chains can rival the results achieved in a comparable chain in the UK.

The supermarkets do focus on the magazines being affordable and, generally, titles that have cover prices in excess of 60 rand are not accepted. Putting this into context, domestic weeklies typically cost no more than 15 rand and domestic monthlies no more than 35 rand in the supermarket chains. Price increases have to be considered carefully as the chains find these logistically hard to implement, needing at least six weeks’ notice and barcodes have to remain consistent.

Pricing remains one of the most important factors. If you want to sell a considerable volume, then you have to be competitively priced with the local titles. Hello! has been a huge success in South Africa due to its pricing strategy and willingness to supply the copies to the market. Pricing within reach of the local celebrity weeklies but enough to establish it as an upmarket, aspirational, international magazine.

To give some perspective to pricing, 70% of the population earns less than £400 a month, so a magazine priced at 100 Rand (£7.14) is a luxury they simply can’t afford.

Forecourt and garage shops are as yet an untapped market for international press, but with BP, Shell, Sasol and Engen becoming increasingly focused on increasing their market share of magazines through extending their range, this presents an opportunity.

Niche agents offer targeted opportunities, and recent developments have seen international press ranged in chains such as Sportsman’s Warehouse, CD Warehouse and Toys R Us.

Creating a Strategy

We have already seen how pricing is critical to the success of the title in this market.

Promotion is important too; many of the retail groups are happy to work with international publishers on promotional programmes. At the moment, it is really only CNA and Exclusive Books offering promotional vehicles, however other retailers will really get behind exclusive promotions for their stores. The market is still very responsive to added-value gifts and retailers crave this sort of activity. Basic promotions like a back copy bagged with a current activity still show a great promotional uplift.

Consider how your product gets to market. Sea-freight is the most common for international press and on-sale dates are normally 3-4 weeks after the UK. The market is used to the delay, however there may be titles that need to be air-freighted for them to be relevant, or even selected issues if they are particularly timely.

Subscriptions in South Africa have never really been a viable method of distribution, mainly due to the cost and inefficient postal system. Retailers like CNA have responded to this and created a shop save scheme where customers may reserve a copy of the magazine to be collected. Sales from this scheme can be considerable on some titles.

Economic Influences

Another factor influencing consumer demand and the shape of the economy is South Africa’s policy of Black Economic Empowerment (BEE). Its purpose is to stimulate economic growth, not to apologise for the apartheid years. The major difference to other economic growth policies is that BEE focuses on inequality.

BEE is driven by legislation which measures companies’ empowerment in specific ways. It looks at empowerment through ownership, management, HR development and ways of indirect empowerment. The impact of this policy is a changing workplace and disposable income for a greater share of the population.

In a Nutshell

This is a market that continues to emerge. It offers publishers huge potential to sell a considerable number of copies. It is fair to say South Africa is never going to be the most profitable market for a publisher but, in terms of volume, it could become your number 1 export market with the right pricing, promotion and distribution strategy.