In today’s Codera Analytics post we use retail data to measure how consumers respond to price increases by measuring changes in basket compositions in relation to changes in prices. The chart shows a measure of the average cumulative substitution effects across South African consumers for liquor and wine purchases. A higher substitution value means consumers are substituting to cheaper items when prices increase. We see that wine drinkers have been much less likely to substitute to cheaper products when prices rise than liquor drinkers. During the early stages of the cost-of-living crisis of 2022, consumers shifted to cheaper products. But since then, wine drinkers, particularly high-spending consumers, have not substituted towards cheaper items. By shifting to cheaper products, the average liquor drinker has saved about 10% since mid-2021. This is smaller than the roughly 25% saving the average consumer has experienced on their grocery bill over this period. The ongoing inflation will affect the consumption patterns of different consumer segments differently.
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