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Just Released: "South Africa Food & Drink Report Q1 2014"

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2014-01-25 19:19:27 - Recently published research from Business Monitor International, "South Africa Food & Drink Report Q1 2014", is now available at Fast Market Research

We expect to see another positive year for the South African economy and consumer industries through 2014, as the country's economy continues to recover post-recession. We forecast real GDP growth of 2.5% in 2014, up from 2.1% the previous year. In addition, private consumption is expected to continue its growth of the past four years at a rate of 2.2% in 2014, and 2.9% in 2015. Although the economic recovery has not been without challenges and will likely remain uneven, in our view, the consumer sector continues to hold up.

Headline Industry Data

* 2014 per capita food consumption (local currency) = +8.1%; five-year forecast compound annual growth (CAGR) to 2017 = +8.1%.
* 2014 soft drinks per capita volume sales

= +7.6%; forecast compound annual growth to 2017 = +5.0%
* 2014 mass grocery retail sales (local currency) = +9.3%; forecast compound annual growth to 2017 = +9.2%.

Full Report Details at
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Key Company Developments

Pick n Pay Making Progress: South Africa's second biggest food retailer by sales Pick n Pay has improved its position. After a challenging period that saw it lose further ground to its main rival Shoprite, it has reported promising interim results for the first half of its trading year.

Chief among Pick n Pay's problems has been a relatively dated distribution network, which was thought to be a contributing factor in its consistently weaker operating margin performance compared with Shoprite over the past few years.

To address such shortcomings, its margins would have to get weaker before they could get better as the company invested in improving its competitiveness. In the six months to September its same-store sales rose 3.1% year-on-year (y-o-y). Trading profit increased 15.% y-o-y to ZAR317.5mn (US$32.2mn) Longer-term, Pick n Pay is aiming to bump up its operating margins nearer to the 4.5% range, compared with 2.7% last year and 2.3% this year. Getting its margins above 4% would represent a tremendous step forward in Pick n Pay's ability to remain competitive as the South African retail landscape evolves considerably over the next few years. With Walmart's Massmart unit also expected to spend significantly on food retailing, the next few years will be particularly important for Pick n Pay.

Shoprite Best Placed To Grow At Home And In Wider Africa: Shoprite has been one of the outstanding corporate South African success stories, reporting sales increases for the past five years. The food retailer has established itself as a leader in South Africa's organised grocery sector and in leading the charge into wider Sub-Saharan Africa, where there are some phenomenal long-term growth opportunities. In Shoprite's year ending June 2013, group sales increased 12.1% year-on-year, with profits rising by 15.6% and 114 new stores opened. Looking at food retailing specifically (Shoprite also sells furniture), we maintain the opinion that it is the best placed South African retailer to continue leading growth both at home and in wider Africa, where the weakness of the rand against some other African currencies is making South African imports more affordable.

Diageo Invests In UB Group SA's Sorghum Unit: In November 2012, UK drinks major Diageo and India's UB Group entered into a memorandum of understanding under which UB Group's sorghum beer business in South Africa will become a 50:50 joint venture. This followed a spirits deal between the two firms. Diageo will spend US$36mn for its 50%, with the other half held by UB Group's chief, Vijay Mallya.

Report Table of Contents:

The table of contents for this report is available upon request.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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