Business Monitor International's South Africa Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with forecasts on South Africa's food and drink industry.
South Africa ranks among the world's most distinctive consumer markets. While a proportion of the population possess wealth on par with most developed countries, a far greater number are still bracketed as low income. This is despite an economic boom that added great impetus to the middle class. Unlike the majority of emerging markets, domestic companies have firmly established themselves as leading players across the food, drink and mass grocery retail (MGR) industries. BMI's forecast that South Africa's GDP will fall 1.9% in 2009 has affected some of South Africa's leading companies to varying degrees as discussed in BMI's recently published South Africa Food & Drink Report for Q309.
Although its business is geared around emerging markets, SABMiller has not been spared as it has been similarity affected by the demand weakness that is stifling the global beer industry as consumers cut back on non-essential beverage consumption. Earlier this quarter, the brewer reported that most of its markets underperformed in the fourth quarter of its financial year ending March 2009 as demand slid at a quicker than expected rate with underlying beer volumes dropping 1%. In South Africa, volumes dropped 2%. Yet, with a domestic market share above 90% within beer, it remains ideally placed to capitalise on BMI's prediction that alcoholic drinks value sales will increase 31.6% through to 2013 and reach ZAR18.2bn.
Leading domestic food company Tiger Brands fared better - reporting operating income of ZAR131mn (US$15.4mn) in H1 (from September 30 2008 to March 31 2009). Possessing a healthy balance sheet, Tiger has also been active on the investment front this quarter - acquiring leading mayonnaise company Cross & Blackwell South Africa (C&B) from Nestlé as it moves to use the economic downturn to enhance its position.
After losing market share to Shoprite for two successive years, Pick 'n' Pay began to stem the flow this quarter after reporting solid financials. It increased its FY08/09 (year ending February 2009) turnover by 17.4% year-on-year to ZAR49.9bn (US$5.6bn).and reported net income of registered at ZAR1.69bn as consumers responded favourably to its increased emphasis on price competitiveness. Both Shoprite and Pick 'n' Pay remain well placed to take advantage of BMI's forecast that MGR sales will increase 40.4% between 2009 and 2013 and reach ZAR313bn.
Key Topics Covered: •Executive Summary •SWOT Analysis •Macroeconomic Outlook •Food •Drink •Mass Grocery Retail •Competitive Landscape •Appendix •Country Snapshot: South Africa Demographic Data •Food & Drink Business Environment Ratings •Glossary Companies Mentioned: •Illovo Sugar •Tiger Brands •Pioneer Foods •Distell •SABMiller •Shoprite Group •Woolworths •Pick n Pay