Feed the Future Innovation Lab for Food Security Policy Policy Research Brief 8

In Dar es Salaam, the coastal mega-city, the "supermarket revolution" has taken hold, with at least 30 large format outlets across 12 supermarket chains operating in the city. This is a stark contrast to the early 2000s, when the city had very few large supermarkets or chains. The growth of large format supermarkets is still limited outside Dar es Salaam, with Arusha and Mwanza having only a few medium-large format supermarket chains and one large format independent supermarket, respectively. The transformation of the food retail sector in Tanzania is also reflected in the rise of small format supermarkets, which are widely dispersed across the cities. In Dar es Salaam, there are hundreds of small format mini-supermarkets, many of which have opened in the last few years. Additionally, new retail formats adapted for consumer convenience, such as gas station convenience stores and clustered food shops with dedicated parking, are becoming increasingly prevalent in Dar es Salaam. The role of imports versus local products in the Tanzanian food market is a complex issue. While it might be expected that more imports would be present in the primary (and coastal) megacity than in the secondary (interior) cities, the observations present a mixed picture. Dar es Salaam shows a smaller share of imported products than Arusha, at 39% and 44%, respectively. However, total regional representation (local plus imports from Kenya, Uganda, and Ethiopia) of companies and products is about the same in both cities. The milled grains market is dominated by Tanzanian products and firms in all three cities. In Dar es Salaam, products from outside the region are available, but these tend to be highly localized within Tanzania. Of 63 Tanzanian companies selling maize meal in Dar es Salaam, 61 manufacture in that city. This suggests that local firms are playing a significant role in the milled grains market, particularly in Dar es Salaam. The inventory of processed food products in Dar es Salaam, Arusha, and Mwanza reveals a diverse range of products, including maize flour, blended flour, and other flour products, packaged rice, selected dairy products, fruit juices, and processed poultry. The data collection process involved key informant interviews and a product inventory in food retail outlets, which were visited until it became rare to find new products. The inventory covered a range of product types, including the name of the company and/or brand, product type, product name, packaging type, list of ingredients, manufacturing country and city, and contact information. The results of the inventory suggest that the structure of food retail is changing rapidly in Tanzania, with many small- and large format supermarkets moving in. Local and regional food manufacturing appears to be very competitive with imports from outside the region, and are characterized by the rise of a few successful medium and large size firms producing highly processed products, and a surge of many micro and small firms producing branded but largely undifferentiated maize meal, and somewhat more differentiated blended and other meals. The inventory also reveals that the penetration of processed foods has been differentiated between processed products with low value added and those with high value added. Rural and low income households tend towards the former, while urban and higher income households tend towards the latter. The highest expenditure elasticities are for highly processed and perishable foods, and demand for processed food items is projected to grow an average of 7% to 8% per year over the next 30 years.