South Africa Food and Drink Report Q4 2012

While we remain broadly optimistic about the consumer outlook in South Africa, serious headwinds from the global economy will inevitably take their toll on GDP growth and therefore also on private consumption. Moreover, there are major domestic problems that will undoubtedly weigh on economic growth, including high unemployment, frequent industrial unrest and intermittent power shortages.

Headline Industry Data (local currency)

?? 2012 per capita food consumption = +8.3%; forecast compound annual growth (CAGR) to 2016 = +8.9%.

?? 2012 alcoholic drinks sales = +9.2%; forecast CAGR to 2016 = +9.4%.

?? 2012 soft drinks sales = +11.9%; forecast CAGR to 2016 = +13.4%.

?? 2012 mass grocery retail sales = +9.4%; forecast CAGR to 2016 = +9.9%.

Key Company Developments

Multinationals Expand Local Production: In August 2012, Swiss food group Nestlé established two new production facilities in South Africa as part of its strategy to expand its footprint in the country. The firm had announced in February 2011 that it would invest ZAR400mn (US$48.9mn) in the two plants to address the growing demand for its products. Shortly before this, the privately owned Italy-based food company (mainly confectionery) Ferrero was reported to be expected to strengthen its business in South Africa over the next few years, potentially through manufacturing another one of its well-known brands locally.

Retail Sales Holding Up Well: Many of South Africa's leading retailers report year-end results mid-year (calendar), and it seems as if the 2011/12 period was another good for one for the industry. Shoprite, the largest South African food retailer by sales, reported an 8.5% increase in same-store sales from June 2011 to more than US$10bn on the back of promising growth from its international business.

Similarly, Woolworths, which focuses more on the higher end of the market than Shoprite, posted a 16% increase in sales in its fiscal year to June 24 2012, to US$7.56bn, with growth driven by the addition of new outlets. The company's sales reached US$7.56bn, beating analysts' estimates.

Key Risks To Outlook

The 'Marikana Massacre' Weighs Down 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 1 - BMI Industry View

Chapter 2 - SWOT Analysis

South Africa Food Industry SWOT

South Africa Drink Industry SWOT

South Africa Mass Grocery Retail Industry SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

Sub-Saharan Africa Food & Drink Ratings

Table: Risk/Reward Sub-Factor Ratings Q (scores out of )

Table: Sub-Saharan Africa Food & Drink Risk/Reward Ratings Q

South Africa’s Risk/Reward Ratings

Macroeconomic Outlook

Table: Economic Activity, -

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Canned Food

Table: Canned Food Value/volume Sales – Historical Data & Forecasts, -

Meat

Table: Meat Volume Sales, Production & Trade – Historical Data & Forecasts, -

Other Prepared Foods

Table: Jams & Jellies Volume Sales, Production & Trade – Historical Data & Forecasts, -

Oils & Fats

Table: Oils & Fats Volume Sales, Production & Trade – Historical Data & Forecasts, -

Dairy

Table: Dairy Volume Sales, Production & Trade – Historical Data & Forecasts, -

Drink

Alcoholic Drinks

Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts, -

Soft Drinks

Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts, -

Hot Drinks

Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts, -

Mass Grocery Retail

Table: MGR Sales By Format – Historical Data & Forecasts, -

Table: Sales Breakdown By Retail Format Type

Trade

Table: Trade Indicators – Historical Data & Forecasts, -

Chapter 5 - Food

Key Industry Trends And Developments

Multinationals Expand Local Production

McDonald’s To Debut McKitchen In South Africa

Olam's Acquisition Complements Diversification Push

DTI Makes Food Processing An Economic Priority

Tiger Brands On An Acquisition Path

Market Overview

Agriculture

Organics

Production

Chapter 6 - Drink

Key Industry Trends And Developments

Government Clamping Down On Alcohol Advertising

SABMiller Excels In Emerging Markets

Market Overview

Alcoholic Drinks

Soft Drinks

Hot Drinks

Chapter 7 - 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’s CEO Stands Down

Woolworths Looking For Growth In Sub-Saharan Africa

Leading Players

Table: Structure Of South Africa's Mass Grocery Retail Market By Estimated Number Of Outlets, -

Table: Structure Of South Africa's Mass Grocery Retail Market – Sales By Format (US$bn), -

Table: Average Annual Sales Value By Format –

Chapter 8 - 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 9 - Company Monitor

Food

Illovo Sugar

Tiger Brands

Pioneer Foods

Drink

SABMiller

Distell

Mass Grocery Retail

Shoprite Group

Woolworths

Pick n Pay

Chapter 10 - Country Snapshot

Table: South Africa's Population By Age Group, - (')

Table: South Africa's Population By Age Group, - (% of total)

Table: South Africa's Key Population Ratios, -

Table: South Africa's Rural And Urban Population, -

Chapter 11 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 12 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 13 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: South Africa (in Africa), Africa