Food and wine trends in South Africa in 2016 & 2017

FOOD & WINE TRENDS IN SOUTH AFRICA IN 2016 & 2017

Alexandre LasserreFood & Wine

2

Introduction

MarketSA -

ConsumersImport / Export

Global Trends

Product Trends

Opportunities & Conclusion

Market

South African consumers

Import / Export

General trends

Specific product trends

Opportunities and conclusion

3

Market

In 2015, the food retailing market in South Africa represented R508.9 bn - € 35.86

bn - (+ 9% in value compared with 2014).

Sales of alcoholic beverages in South Africa in 2015 - 14 bn € , 44 M HL

+ 59% in value between 2008 and 2015

Forecasts for 2018 - 16.5 bn € - + 22%

Wine consumption: 7 liters per inhabitant

(France - 45 - 50l / year)

Consumption: fairly stable for several years 79%

6%3% 3% 9%

Volume sales in 2015

Beer

Cider

Premixes

Spirits

Wine

MarketSA -


Global Trends

Product Trends


4

South African consumers 55 Millions people and a population growth of 1.7%

Medium Class : 21 M (2012) to 31M (2020)

Increase in food demand : + 50% in 5 years (6,15 Billions Euros)

MarketSA -


Global Trends

Product Trends


5

South African consumers 25% population: Gauteng

45% store purchases: Gauteng and Western Cape

Development of consumption

"On-the-go" - growing urbanization

Development of on-trade and off-trade

Packaging: practicality and conservation

Growing interest in healthy products

MarketSA -


Global Trends

Product Trends


6

The main agricultural and agri-food products exported by France to South Africa in

2016 are wines and spirits, meat and meat products, dairy products , food products

and animal feed. These exports are in line with the structure of French exports in the

world, with the exception of cereals and cereal products, which account for only 2%

of total exports to that country.

Export to South Africa

29%Wines and spirits

15%Dairy products

13%Food products

7%Animal feed

2%Cereals and cereals products

12%Others

5%Malt Total agricultural and agri-food

exports to South Africa

reached177 million € in 2015,

an increase of + 20%

compared with 2014 and +

91% in 5 years

17%Meat and meat products

MarketSA -


Global Trends

Product Trends


7

Import from South Africa The main agricultural and agri-food products imported from South Africa to France

in 2016 are fruits, wines, seafood, spirits and products processed from fruit and

vegetables

63%Fruits

10%Others

9%Wines

8%Seafood

6%products processed from fruit and

vegetables

2%Cereals

2%Spirits

Total French agricultural

and agri-food imports

from South Africa

amounted in 2015 to195

million €.

After a decline in 2014,

South African exports

increased again (+ 7%).

MarketSA -


Global Trends

Product Trends


8

DroughtExample with the poultry industry : the biggest single agricultural industry in South

Africa. The poultry industry uses one third of the maize crop every year as well as the

total soya crop plus imported soya for feed.

Due to the drought in 2016 the price of yellow maize increased from R2 100 per

ton to as much as R3 800 per ton

Increase in feed cost and final product price

The exchange rate also weakened by 30% (at its worst), increasing the cost of

imported products

Increase of 180% in the price of maize. The increase could not be recovered from

the consumer as the lower LSM groups are the predominant buyers of poultry.

MarketSA -


Global Trends

Product Trends


9

Prospects & Trends A Nielsen survey reveals that 92% of South Africans are willing to pay an above-

average price for products that deliver higher quality; and recent Pricecheck

research identified 'ease and efficiency' as South Africans' most-liked aspect of

online shopping

Healthy products

New products with high nutritional values, prepared meals and snacks. More refined

and diversified products.

South Africans have little time for lunch and are increasingly focusing on take-out

and snacks.

Consumers are looking for more transparency (list of ingredients, nutritional intakes

...) and a healthier approach to food.

Prices rose overall (+ 6% inflation), mainly due to the drought in 2015/2016 which

led to an overall increase in raw materials and food products in the country.

MarketSA -


Global Trends

Product Trends


10

Prospects & Trends The South African market changes very quickly :

Variety of chocolates

Cakes

Diversification of products

Retailers create trends:

Free range eggs

No antibiotics

Packaging creates plenty of opportunities:

Smaller portions

Rural exodus

MarketSA -


Global Trends

Product Trends


11

Healthy products

Government incentive with the sugar tax : South Africa is looking to decrease

obesity by 10 percent by 2020

Industry incentive : Shoprite visited the SIAL in 2016 and requested to meet

companies offering organic and without gluten products

4 out of 10

6 out of 10

MarketSA -


Global Trends

Product Trends


12

Healthy products

South Africa do not have an organic regulation. At the moment, anyone can

basically sell a product in South Africa at e.g. a farmers market and claim that it is

organic.

Large retail outlets, realise the importance and the value of certification, and thus

require their suppliers to be certified. There is however no set requirement

according to which regulation (i.e. EU/EOS or NOP) the suppliers, supplying organic

products to South African retail stores need to certify, however there is a general

preference amongst the suppliers to certify according to the EU/EOS standard.

Ecocert is growing at a great pace in South Africa both for the wine and food

industry

MarketSA -


Global Trends

Product Trends


13

Dairy products

Over the past decade, the demand for dairy products increased by more than 35%

5% retail volume and 11% current value growth from 2015 to reach 19.2 bn ZAR

(1,37 bn €) in 2016 and expected to reach 22.9 bn ZAR in 2021

New regulation R260 : requires to show ingredients lists, batch codes and best

by/use by dates on packaging. Regulation on fat free

Cheddar is dominating unprocessed cheese with 51% value share in 2016.

However, feta and gouda both gained shares, 13% and 17%.

South African consumers are attracted by diversification with a growing number of

cheeses available both locally produced and imported.

Supermarkets is the dominant distribution channel for cheese, accounting for a

steady 73% value share.

MarketSA -


Global Trends

Product Trends


14

Snack bars

Sweet biscuits, snack bars and fruit snacks records 12% retail value growth to reach

5.2 bn ZAR in 2016 (380M€)

Snacking is a growing trend in South Africa as many consumers have less time to

prepare and eat full meal.

Manufacturers will need to focus on the health aspect of snack bars and ensure that

the ingredients make the product nutritious enough to be regarded as a

replacement meal

National Brands leads sweet biscuits, snack bars and fruit snacks with a 38% retail

value share in 2016

MarketSA -


Global Trends

Product Trends


15

Meat Over the past decade, meat consumption in South Africa expanded rapidly as a

result of growing income levels, continued urbanization, rising living standards and

dietary diversity. The growth forecast remains strong from 2015 to 2025.

MarketSA -


Global Trends

Product Trends


16

Baked goods Baked goods is expected to achieve a value CAGR of 4% in constant 2016 terms to

reach sales of 21.2 bn ZAR in 2021 (1.5 bn €)

Bread dominates baked goods and grows 14% in current value terms to reach sales of

13.6 bn ZAR in 2016 (970 M €).

Health is a key trend in bakery products in South Africa. Consumers, especially those in

higher LSM classes, are more likely to pay higher prices for products that offer health

benefits (such as low GI (glycemic index), high fiber content or added vitamin enriched ).

Lower LSM groups continue to favor white bread, with the price criterion being more

important than the health benefit.

Pastry is also a steadily growing sector and is benefiting both from population growth

and rising consumer incomes. (Patachou, Paul)

Growing interest from South African companies to discover new wheat varieties.

MarketSA -


Global Trends

Product Trends


17

Wines and spirits trends Fine wines/champagne and spirits increases by 10% in current value terms in 2016

to reach 1.6 bn ZAR

Fine Champagne sees slower growth of 1% in current value terms in 2016

Luxury cognac registers the strongest growth of 14% in current value terms in 2016

Champagne is stagnant in the country but still accounts for nearly 60% of wine imports in value terms.

South Africa is a brand market but there is an increasing interest for wines imported from new regions (Ex: Cahors, Provence). Trend for wines of small independent producers, which now find their place on the South African market.

Drought has had a major impact on the agricultural sector, but winegrowers are satisfied with the 2016/2017 harvest, both in terms of product quality and quantities produced.

MarketSA -


Global Trends

Product Trends


18

Opportunities Growing interest among French agro business for the South African market in the

agri-food sector :

Innovative ingredients to remain competitive on the global market

Perspective of growth of the internal demand for meat, dairy product,

processing food, beverage in relation with the development of the middle class

and urbanization trend

Importance of the South African market as a gateway to fast growing markets in

the SADC region.

The French offer, with a strong presence in all sectors, continues to expand, with

significant market shares in beverages, dairy products, ingredients and also

equipment. Among the major groups are Danone, Lactalis (through Parmalat),

Pernod Ricard, Eurogerm, Soufflet...

MarketSA -


Global Trends

Product Trends


19

Thank you for your attention

Mr. Alexandre Lasserre

Trade Development Adviser

[email protected]

+27 (0) 84 554 50 66

MarketSA -


Global Trends

Product Trends


mailto:[email protected]

Food and wine trends in South Africa in 2016 & 2017

Business

Transcript of Food and wine trends in South Africa in 2016 & 2017