South Africa Food and Drink Report Q1 2013
Report description
Our outlook on South Africa's consumer sector remains optimistic, despite serious headwinds from the global economy that will inevitably take their toll on growth. We maintain our core view that economic growth in South Africa will be driven by the demand side (ie, wholesale and retail trade, and financial and personal services) while the supply side (primarily mining and manufacturing) continues to remain weak. In our view, several factors bode well for consumer spending, namely relatively contained inflation, high nominal wage growth and the low interest rate environment, which is likely to keep a lid on debt servicing costs.
Headline Industry Data (local currency)
?? 2013 per capita food consumption = +8.9%; forecast compound annual growth (CAGR) to 2017 = +9.0%.
?? 2013 alcoholic drinks sales = +9.2%; forecast compound annual growth to 2017 = +9.7%.
?? 2013 soft drinks sales = +12.8%; forecast compound annual growth to 2017 = +13.4%.
?? 2013 mass grocery retail sales = +9.9%; forecast compound annual growth to 2017 = +10.0%.
Key Company Developments
Pick n Pay Reports Mixed Results: In October 2012, Pick n Pay, the country's second biggest food retailer, reported encouraging first half results to August with like-for-like sales increasing by 3.2%. Pick n Pay is working towards making itself more efficient, as its operating margins have been lower than Shoprite's for the past few years. However, the company's profits suffered, recording a 6.3% year-onyear (y-o-y) decline in H112 to ZAR182mn (US$21mn). The company recorded overall revenue of ZAR28.3bn (US$3.25mn) in the first half, which represented a 5.9% increase from the same period the previous year.
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 the 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.
Key Risks To Outlook
Marikana Massacre Weighs On Investor Sentiment: The August 2012 deaths of 34 protesting miners at Lonmin's Marikana platinum mine illustrate the seriousness of worker tensions afflicting the platinum industry. Despite the government's efforts to address the underlying issues, we expect the dispute to rumble on, weighing on platinum output and investor perceptions in general. The incident has exposed the serious tensions stemming from poverty and inequality that exist under the surface in South Africa.
Table of contents
Chapter - BMI Industry View
Chapter - SWOT Analysis
South Africa Food Industry SWOT
South Africa Drink Industry SWOT
South Africa Mass Grocery Retail Industry SWOT
Chapter - Business Environment
BMI's Core Global Industry Views
Table: Core Views
Sub-Saharan Africa Risk/Reward Ratings
Table: Sub-Saharan Africa Q113 Food & Drink Risk/Reward Ratings
South Africa's Risk/Reward Ratings
Macroeconomic Outlook
Table: Economic Activity
Chapter - Industry Forecast Scenario
Consumer Outlook
Food
Food Consumption
Table: Food Consumption Indicators – Historical Data & Forecasts, 2010-2017
Confectionery
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Canned Food
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Meat
Table: Meat Production, Consumption & Trade – Historical Data & Forecasts, 2010-2017
Other Prepared Foods
Table: Jams & Jellies Production, Consumption & Trade – Historical Data & Forecasts, 2010-2017
Oils & Fats
Table: Oils & Fats Production, Consumption & Trade – Historical Data & Forecasts, 2010-2017
Dairy
Table: Dairy Production, Consumption & Trade – Historical Data & Forecasts, 2010-2017
Drink
Alcoholic Drinks
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Soft Drinks
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Hot Drinks
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts, 2010-2017
Mass Grocery Retail
Table: MGR Sales By Format – Historical Data & Forecasts, 2010-2017
Table: Sales Breakdown By Retail Format Type
Trade
Table: Trade Indicators – Historical Data & Forecasts, 2010-2017
Chapter - Food
Key Industry Trends And Developments
Fast-Food Sector Thriving
McDonald's To Debut McKitchen In South Africa
Multinationals Expand Local Production
DTI Makes Food Processing An Economic Priority
Tiger Brands On An Acquisition Path
Market Overview
Agriculture
Organics
Food Production
Chapter - Drink
Key Industry Trends And Developments
Government Clamping Down On Alcohol Advertising
Wine Performing Well
Diageo Invests In UB Group SA's Sorghum Unit
SABMiller Well Placed To Grow
Market Overview
Alcoholic Drinks
Soft Drinks
Hot Drinks
Chapter - Mass Grocery Retail
Key Industry Trends And Developments
Retail Sales Holding Up Well
Walmart Makes Local Acquisition
Tesco Could Follow Walmart Into Africa
Pick n Pay CEO Stands Down
Woolworths Looking For Growth In Sub-Saharan Africa
Market Overview
Leading Players
Table: Structure Of South Africa's Mass Grocery Retail Market By Estimated Number Of Outlets, 2004-2011
Table: Structure Of South Africa's Mass Grocery Retail Market – Sales By Format (US$bn), 2004-2011
Table: Average Annual Sales Value By Format – 2011
Chapter - Competitive Landscape
Key Players
Table: Key Players In South Africa's Food Sector
Table: Key Players In South Africa's Drink Sector
Table: Key Players In South Africa's Mass Grocery Retail Industry
Chapter - Company Monitor
Food
Illovo Sugar
Tiger Brands
Pioneer Foods
Drink
SABMiller
Distell
Mass Grocery Retail
Shoprite Group
Woolworths
Pick n Pay
Chapter - Demographic Outlook
Table: South Africa's Population By Age Group, 1990-2020 ('000)
Table: South Africa's Population By Age Group, 1990-2020 (% of total)
Table: South Africa's Key Population Ratios, 1990-2020
Table: South Africa's Rural And Urban Population, 1990-2020
Chapter - Risk/Reward Ratings Methodology
Table: Rewards
Table: Risks
Weighting
Table: Weighting
Chapter - BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
Chapter - BMI Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing
The just-drinks office is currently: Closed
Office opening hours
Mon-Thursdays 9:00am-5:30pm
Fridays 9:00am-4:30pm
The office is closed during weekends.
Current time at just-drinks headquarters: 6:07am (Sunday, 19 May 2013)
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