As retail sales wobble and manufacturing crumbles, a growing movement around heritage products with geographical protection offers an unexpected blueprint for rebuilding what deindustrialisation has destroyed.
August’s retail spending data tells a well-known story: consumer spending is carrying the creaking economy. But what we’re buying comes from somewhere else, is made by someone else and contributes to the industrial base of other countries.
The numbers from Stats SA show how the brakes are being applied: retail sales growth slowed to 2.3% year on year in August 2025, down sharply from July’s robust 5.7% and missing market expectations of 3.7%. Month on month, volume sales reversed by 1.2%, giving back some of July’s strong 2.3% gain.
But Dr Elna Moolman, Standard Bank group head of South Africa macroeconomic research, isn’t ready to call it a crisis. “While real or inflation adjusted retail sales fell 1.2% in August from July, this needs to be seen in the context of the strong 2.3% increase in July. The average between these two at 0.55% is quite robust. It would extrapolate to more than 6% annualised growth. In other words, this would imply more than 6% growth if this is sustained for a year relative to a year earlier.”
That’s the good news. The bad news is what this consumption is hiding.
The inversion problem
Household final consumption expenditure (HFCE) now makes up two-thirds of GDP. That ratio sounds impressive, but manufacturing’s share of GDP has been halved, plummeting from 24.86% in 1981 to just 12.80% in 2024 – HFCE grew from 53.54% to 64.40% over the same period.
Industry, as a whole, now makes up only 24.41% of GDP. And it gets worse: in the first quarter of 2025, manufacturing contracted by 2.0%, making it the largest negative contributor to the economic slowdown.
In employment terms, the devastation is insane: manufacturing now absorbs just 12% of formal employment.
It’s structural inversion at industrial scale: an economy that has flipped from making things to buying, and domestic manufacturing can’t meet consumer demand, so imports flood in to fill the gap and put more strain on the chronically fragile current account deficit.
The damage is in the details
Diving into the retail data shows that hardware sales surged 8.1% year on year and other retailers (including jewellery and ecommerce) jumped 7.9%. Food and beverage specialists contracted by 3.7% for the fourth consecutive month, just a couple more to go before the sector gets the recession label.
Siphamandla Mkhwanazi, FNB senior economist, observed that “the total sales volume over the last three months remains 1.2% higher compared to the preceding three months. This suggests that retail activity will likely still make a positive contribution to 3Q25 GDP growth.”
Consumers are spending thanks to lower inflation, interest rate cuts and government wage bill increases that pushed average real net salaries up 1.5% year on year. But many are funding this consumption (largely of imports) through high-interest personal loans and buy now, pay later schemes.
Champagne solutions for Ricoffy problems
Geographical Indications (GI) – not the carb cutting GI, the legal protections that make sure only sparkling wine from Champagne can be called champagne – have emerged as a foil against the deindustrialisation drag.
By tying products to place and protecting their authenticity, GIs transform commodities into premium brands, capturing value that would otherwise leak to foreign processors and marketers.
Rooibos blazed the trail. In May 2021, the European Commission registered the local plant as a Protected Designation of Origin, the first African food product to achieve this status. The implications extend far beyond tea.
“PDO status protects rooibos as a product of place, like Champagne. It gives our customers confidence in origin and quality,” Mientjie Mouton, founder of Carmién Tea, told Daily Maverick.
The rooibos industry now employs about 8,000 people, generates annual turnover exceeding R500-million, and exports almost R1bn in product each year.
Shockingly, 95% of those exports are still bulk tea, with the final retail value captured by international companies. The strategy is to move up the value chain, exporting finished, branded products that retain more of the global retail value within South Africa – similar to Gwede Mantashe’s dreams for our minerals and metals market.
Spreading the wealth
Rooibos also pioneered something else: a benefit-sharing agreement that recognises the traditional knowledge of the Khoi and San people. Since 2019, producers have paid a 1.5% levy on the farm-gate price to Khoi and San councils.
Mouton takes this further, though. At Bergendal Rooibos, a key processing partner, farm workers hold 50% ownership of the facility, with more than 620 workers supporting around 4,000 dependents holding direct stakes in production.
“We recognise the traditional knowledge of the people who first brewed rooibos for medicinal purposes and Carmién believes in adding value and ensuring the benefits of rooibos are shared with all involved, including future generations,” she explained.
Following the flock
Karoo Lamb followed suit in October 2023, becoming South Africa’s first GI-protected meat product after an experimental auction study found that consumers were willing to pay an average premium of R21.80/kg for certified Karoo lamb loin chops over generic equivalents.
Why? Terroir. That distinctive flavour profile comes from indigenous bossies that the sheep graze on, creating a taste that cannot be replicated elsewhere.
In abattoir terms, Karoo lambs make up almost a quarter of national sheep slaughter, about 1.2 million head per year.
The GI model flips the script on agricultural economics: instead of competing on volume and yield per hectare, producers compete on brand value and revenue per kilo. That keeps the value in the country and circulates in local economies, supporting not just farms, but entire regional ecosystems of businesses.
This is the opposite of the consumption-driven, import-dependent model currently propping up GDP growth. It’s production-focused, export-oriented, and impossible to offshore because the value is locked to geography.
Economic proof is in the growing
The GI model offers a template for rebuilding high-value productive capacity in sectors where South Africa has genuine, defensible competitive advantages, as opposed to an economy where growth depends on consumers buying imported goods with borrowed money.
Rooibos and Karoo lamb, and their lesser recognised alcohol cousins Cap Classique and potstill brandy are proof that South Africa still knows how to make things the world wants – things that can’t be made anywhere else, by anyone else.
The brew might be heritage, but the strategy is contemporary. In an economy drowning in consumption, production and local specialisation is the way forward. [DM]
Read the orginal article here: Local products can rescue SA’s GDP from the offshore consumption trap