2012-09-06 08:39:09 - South Africa Food and Drink Report Q1 2012 - a new market research report on companiesandmarkets.com

South Africa is an established regional powerhouse, standing out as an attractive destination among other emerging markets given the potential for using the country as a base from which to expand into the wider Sub-Saharan African region. Whether South Africa is able to reduce unemployment will have a large bearing on how well it does relative to its potential. We highlight that with the population likely to get richer over the next few years, we see per capita food consumption growing at a compound annual rate of 10.9% to 2016.

Headline Industry Data

- 2011 per capita food consumption growth in local currency = +9.6%; forecast compound annual growth to 2016 = +10.4%.
- 2011 beer volume sales = +5.0%; forecast

 

 

compound annual growth to 2016 = +3.4%.
- 2011 mass grocery retail sales = +10.6%; forecast compound annual growth to 2016 = +11.5%.

Key Company Developments

Unilever Upping the Game in South Africa: Unilever has launched a new US$82mn food plant in South Africa, adding to the four plants it currently operates. South Africa is very important to Unilevers Africa business, which has demonstrated strong growth over the past few years. It is believed to be worth more than US$7bn in sales per annum. The company has revealed its ambition to serve higher demand for Knorr, Robertsons, Knorrox, Aromat and Rajah branded products in South Africa and across the African continent.

Walmart Era Begins: Walmarts acquisition of South African general merchandise retailer Massmart, which was finally completed in summer 2011 for US$2.4bn (a 51% stake buy that allowed Massmart to retain its Johannesburg listing), is going to have a major bearing on South Africas food retailing industry over the next few years. Even though Massmart is very much a peripheral part of the food retail scene, with most of its business focused on areas like electronics, Walmart has made it clear that it is going to focus largely on food retailing in South Africa. It is expected to launch at least seven of Massmarts Cambridge bannered food stores over the next few months to get the ball rolling.

Key Risks To Outlook

Food Price Inflation: Consumer confidence could take a hit if the eurozone debt crisis escalates further, prompting a tightening of purse strings. Similarly, a weakening of the domestic housing market (from its already subdued state) could provoke some belt-tightening. Inflation is also a key risk: headline consumer price inflation is relatively contained, being close to 6.0% year-on-year (y-o-y), but food prices in particular could rise higher than we expect, taking a toll on consumer budgets. The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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