Baked Goods in South Africa

PROSPECTS

Bread remains an essential part of the daily diet of much of the population

Consumers’ income in 2018 was under pressure from inflationary increases mainly caused by fuel price rises and an increase in VAT for the first time since 1994. Although baked goods products such as brown bread are zero-rated VAT products, most baked goods are not.

Preferences are based on income and convenience

White bread, followed by brown bread, remains one of the most popular types of packaged food in South Africa due to its appeal among low-income consumers. Although unpackaged baked goods are cheaper in terms of unit price per kg compared to their packaged alternatives, consumers still tend to prefer packaged baked goods.

Health and wellness trends affect baked goods

Consumers have become much more health-aware when shopping for food. They increasingly read food labels and better understand the nutritional value of the products they consume.

COMPETITIVE LANDSCAPE

Pioneer Foods leads baked goods in 2018

Pioneer Foods (Pty) Ltd, followed by Tiger Consumer Brands Ltd, is projected to continue to lead baked goods in 2018. Although the Albany variants by Tiger Consumer Brands lead packaged leavened bread, with Sasko by Pioneer Foods ranking second, the combined success of Sasko with the Moirs and Duens brands sees Pioneer Foods leading baked goods overall.

Manufacturers offer more variants

Baked goods in South Africa is benefiting from increased variety in terms of flavoured and speciality breads. Manufacturers are moving away from simply offering traditional brown and white bread to adding functional bread and flavoured bread to their portfolios to offer consumers a variety of choices and cater to all demographics.

Private label remains a significant player

South African low-income groups remain price-sensitive and tend to prefer the cheapest brands that offer reasonable quality. These consumers do not always opt for private label as manufacturers offer a wide range of bread prices from economy to premium, with price discounting remaining prevalent to accommodate a large consumer base.

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