South Africa Food and Drink Industry Update Quarter 4 2011

  • January 2015
  • -
  • Business Monitor International
  • -
  • 111 pages

While South Africa is clearly the most advanced consumer economy in Africa, it still holds vast potential, which is why the likes of Walmart are keen to get in now. How successful South Africa is in creating the conditions for unemployment to come down significantly will have a large bearing on how well it does relative to its potential. A per capita Gross Domestic Product of about US Dollar 7,000 in 2010 is expected to grow well past US Dollar 20,000 by 2019. In our opinion, Walmart’s entry could set a benchmark in terms of big Western retailers coming into South Africa, investing in cost and eventually using South Africa as a springboard into wider Sub-Saharan Africa.

Headline Market Data
2011 per capita food consumption growth in local currency = 9.6%; projection compound annual growth to 2015 = 10.3%.
2011 beer volume revenues = 5.0%; projection compound annual growth to 2015 = 3.6%.
2011 mass grocery retail revenues = 10.6%; projection compound annual growth to 2015 = 11.5%.

Key Firms Trends
Woolworths Looking For Growth In Sub-Saharan Africa: We expect South Africa’s leading retailers to spend more in wider Sub-Saharan Africa over the next few years. In many ways, they are perfectly placed to introduce and grow the organised retail concept at the mass industry level. The likes of Shoprite, Pick ‘n’ Pay and Woolworths are considerably larger than anything in the wider region, where in many cases organised retail still contributes less than 5% to overall food retail revenues (the bulk of shopping takes places at independent kiosks). This is compared to about 65% in South Africa.
AVI Boosted By Food Business: The food business of South African fast-moving consumer goods industry player AVI performed particularly well in the year to June 2011, with volumes from its coffee and tea businesses all growing well. Like rival Tiger Brands, from which AVI fended off a takeover bid in 2009, AVI is a diversified food and drink player with a range of established brands. Among the most notable is leading seafood processor I&J, which has promising export exposure. Food and drink accounted for about 75% of AVI’s business in the year to June by revenues revenue contribution.
Key Risks To Outlook Rising Food Prices: Even though the strong rand has provided a cushion so far, the risk is that the strong currency means the effects of upward global moves in soft commodity prices have yet to be realised and could have a much greater impact in H211, perhaps if inflation outweighs disinflationary cushions provided by the rand. This would hit consumer spending hard given the high rate of unemployment.

Table Of Contents

BMI Market View .... 5
Industry SWOT Analysis .... 7
South Africa Food Industry Environment and Risk Analysis ... 7
South Africa Drink Industry Environment and Risk Analysis .. 8
South Africa Mass Grocery Retail Industry Environment and Risk Analysis ... 9

Environment Overview Ratings . 10
BMI’s Core World Market Views 10
Data : BMI’s Core Views For The Food and Drink Market ... 17

Macroeconomic Data . 18
Data : Economic Activity 20

Market Projection Scenario ... 21
Consumer Outlook 21
Food .. 22
Food Consumption 22
Data : Food Consumption Indicators - Historical Data and Projections ... 23
Confectionery ... 23
Data : Confectionery Sales - Historical Data and Projections ... 23
Data : Confectionery . 24
Prepared Food . 26
Data : Canned Food Sales - Historical Data and Projections .... 26
Data : Meat 26
Data : Fish .. 28
Data : Frozen Fruit and Vegetables . 29
Data : Jams and Jellies 31
Oils and Fats . 32
Data : Oils and Fats 32
Dairy . 35
Data : Dairy .... 35
Drinks .... 38
Alcoholic Drinks ... 38
Data : Alcohol Sales - Historical Data and Projections ... 39
Soft Drinks .. 39
Data : Soft Drinks Sales - Historical Data and Projections .. 40
Hot Drinks .. 41
Data : Hot Drinks Sales - Historical Data and Projections ... 41
Data : Hot Drinks . 41
Mass Grocery Retail .. 42
Data : Mass Grocery Retail Sales By Format - Historical Data and Projections . 42
Data : Grocery Retail Sales By Format, 2009 and 2019 43
Trade 44
Data : Trade Indicators - Historical Data and Projections ... 44
Food 45
Key Market Trends And Developments .. 45
AVI Boosted By Food Business . 45
Greater Food Price Inflation Remains A Risk .... 46

Industry Analysis .. 46
Agriculture .. 46
Organics 47
Production .. 48
Drink .... 49
Key Market Trends And Developments .. 49
SABMiller Full-Year Earnings Beat Estimates .. 49
SABMiller May Be Lining Up An Acquisition .... 50

Industry Analysis .. 52
Alcoholic Drinks ... 52
Soft Drinks .. 53
Mass Grocery Retail .... 54
Key Market Trends And Developments .. 54
Woolworths Looking For Growth In Sub-Saharan Africa . 54
Shoprite Plans 74 Supermarkets In FY12 As Retail Landscape Changes ... 55
Tesco Could Follow Walmart Into Africa 55
Walmart Looking To Wider Sub-Saharan Africa Region .. 57

Industry Analysis .. 62
Data : Structure of South Africa’s Mass Grocery Retail Industry - Sales Value by Format (US$bn) .. 63
Data : Structure of South Africa’s Mass Grocery Retail Industry - Sales Value by Format (ZARbn) .. 63

Competition Overview ... 64
Consumer Share Price Analysis 64
Key Players . 67
Data : Key Players in South Africa’s Food and Drink Segment ... 67
Data : Key Players in South Africa’s Mass Grocery Retail Market 68

Company Profiles . 70
Food .. 70
Illovo Sugar 70
Tiger Brands .... 70
Pioneer Foods .. 71
Drink . 73
SABMiller ... 73
Distell .... 75
Mass Grocery Retail .. 76
Shoprite Group 76
Woolworths . 77
Pick ‘n’ Pay 78
BMI Food and Drink Methodology . 79
BMI Food and Drink Market Glossary 79
Food and Drink .. 79
Mass Grocery Retail .. 79
BMI Food and Drink Projection ing And Sourcing .. 81
How We Generate Our Market Projections ... 81
Sourcing . 82

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