Executive Summary

Aug 2018
Prospects
Healthy snacking impacts cheese

Packaged cheese manufacturers are focusing on creating new consumption occasions, encouraging consumers to snack on their products instead of confectionery, such as chocolate. For some players, this has involved adapting the packaging of their hard cheeses to make them more suitable for on-the-go consumption.

The unit price increase is slower than expected in 2018

The average unit price of cheese increased by a rate slightly under inflation in 2018. This was despite the rising costs of raw materials and the increase in VAT from April 2018, as players sought to avoid alienating the rising middle-classes in the country, as cheese is already regarded as an expensive product.

Cheese continues to target middle- to high-income consumers

Cheese remains out of the financial reach of many consumers, whilst the rising health trend could prove a double-edged sword for this category. Many consumers continue to associate excess weight with affluence.

Competitive Landscape
Parmalat leads cheese in 2018

Parmalat was the clear leader in cheese in value terms in 2018; well ahead of its nearest competitor, Dairybelle. Parmalat increased its sales during 2018 thanks to the good growth of its Italian brand Galbani in mozzarella and mascarpone, which was launched in 2015.

Parmalat starts to rebrand its Simonsberg brand

Parmalat’s progression in cheese partly stems from the rebranding of its Simonsberg brand as Président; thus, taking advantage of the premium image enjoyed by the latter and the wide awareness enjoyed by Simonsberg. The brand was relaunched with packaging featuring both the Simonsberg and Président logos, with this including Feta, Camembert, Creamy Blue and a range of other cheeses, butter and margarine.

The progression of domestic cheese producers

Cheese is led in GBO terms by the multinational Groupe Lactalis, which owns Parmalat. However, this player is followed by a number of strong domestic players, with Dairybelle, Clover and Lancewood Cheese all being South African companies.

Prospects
Growth is driven by strong milk production

Growth in milk in 2018 was supported by its healthy image and by strong supply compared with the previous year as a result of favourable farming conditions, as recovery from drought saw lower grain prices which resulted in lower feed prices. Shelf stable milk has slightly higher sales of milk in retail value terms.

Health and wellness trends support growth in niche categories

Health trends, increasing awareness of lactose intolerance and a desire to reduce fat or cholesterol in the diet are leading more consumers to try soy milk. Local consumers are becoming more familiar with the taste of soy milk.

Growth expected over the forecast period

Drinking milk products is expected to continue to benefit from increased milk production in South Africa in the forecast period, with this driving down prices. Large players such as Clover are likely to continue to expand their production, thus improving their economies of scale.

Competitive Landscape
Clover leads drinking milk products in 2018

Clover maintained its lead in drinking milk products in 2018, although it saw a decline of two percentage points from the previous year. The company benefits from its large size, which enables it to achieve economies of scale and a wide and strong distribution presence.

Private label remains a strong competitor

Private label held a very strong share within drinking milk products in value terms in 2018, although this was down marginally compared with the previous year. Private label enjoys strong consumer trust, with Pick 'n' Pay Retailers notably ranking second in drinking milk products with a double-digit value share in 2018.

The rising popularity of flavoured milk drinks

Both chilled and ambient flavoured milk drinks are present in the country; however, the majority of products are chilled. Although some brands, such as Clover's Tropika, offer ambient variants, most offer chilled.

Prospects
Health and wellness supports growth

The health and wellness trend continued to support the growth of yoghurt and sour milk products in 2018, as these products are perceived to be highly nutritious and particularly good at boosting digestive health. In addition, consumers are increasingly prioritising quality in this category, and are trading up to the leading brands.

Unit prices rise in 2018

The average unit price of yoghurt and sour milk products continued to rise in 2018, due to increases in the prices of input costs. Although due to a production surplus raw milk prices dropped during the review period, these cost reductions were counterbalanced by the rising cost of fuel and an increase in VAT from 1 April 2018.

Manufacturers continue to cater for the healthy snacking trend

Yoghurt is most often consumed as a snack; consumed on its own. However, it is also increasingly used in cooking or with breakfast cereals; the latter trend is particularly strong amongst affluent health-conscious consumers.

Competitive Landscape
Danone leads yogurt and sour milk products in 2018

Danone Southern Africa was the clear leader in yoghurt and sour milk products in value terms in 2018. The company benefits from its extensive product range and strong brands, with Nutriday and Inkomazi Maas accounting for impressive value shares in yoghurt and sour milk products respectively.

Clover claims second place

Clover, in second place in yoghurt and sour milk products in 2018, recorded the strongest value share increase of nearly two percentage points. Much of this growth stemmed from the company’s purchase of Dairybelle's yoghurt operations in 2014, with new brands continuing to shift to its portfolio because of the terms of the acquisition.

Private label remains a strong competitor

Private label is strong in yoghurt and sour milk products, accounting for a double-digit value share in 2018. Private label ranges benefit from strong consumer trust and were boosted by increasing price-sensitivity at the end of the review period.

Prospects
Convenient other dairy products drive growth

Growth in chilled and shelf stable desserts can be attributed to the popularity of shelf stable dairy desserts, due to their lower unit price and lack of need for refrigeration, with around 30% of households in South Africa still lacking fridge-freezers at the end of the review period. Shelf stable products also continue to be allocated more shelf space in retailers, with Danone Southern Africa’s strong brand Ultra Mel custard dominating this category.

Unit prices increase in 2018

Other dairy saw below-inflation unit price growth in current terms in 2018. This was partly due to the decline in the cost of raw milk, due to surplus production, but was also linked to growing price competition and the strength of private label in many categories, which saw manufactures largely unable to increase unit prices, absorbing costs such as the increase in VAT.

Some categories benefit from a healthy image

Segments within other dairy are expected to experience mixed performances. Soy desserts is expected to see growth, benefiting from the healthy image of soy, the widening availability of more affordable options in supermarkets and growing awareness of lactose intolerance.

Competitive Landscape
Nestlé leads other dairy in 2018

Nestlé South Africa continued to lead other dairy in value terms in 2018. Its strength was chiefly due to wide brand awareness and distribution for Nestlé Cremora, which held a strong lead in coffee whiteners.

National Brands gains share

National Brands recorded the strongest value share increase of two percentage points in 2018, cementing its second position. Its Ellis Brown brand in coffee whiteners is available in a wide range of affordable formats.

Danone Southern Africa claims third position

Danone Southern Africa held third position in other dairy in 2018, thanks to its popular Ultra Mel brand, which dominated shelf stable desserts and accounted for a notable value share in overall other dairy.

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Dairy in South Africa

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Overview

Discover the latest market trends and uncover sources of future market growth for the Dairy industry in South Africa with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Dairy industry in South Africa, our research will save you time and money while empowering you to make informed, profitable decisions.

The Dairy in South Africa market research report includes:

  • Analysis of key supply-side and demand trends
  • Detailed segmentation of international and local products
  • Historic volumes and values, company and brand market shares
  • Five year forecasts of market trends and market growth  
  • Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

  • What is the market size of Dairy in South Africa?
  • What are the major brands in South Africa?
  • How has the economic downturn impacted sales performance given its staple food status?
  • Given mounting obesity concerns, are consumers moving from full-fat to reduced fat/fat-free offerings?
  • How are volatile farmgate prices for milk impacting retail prices and sales performance?

Why buy this report?

  • Gain competitive intelligence about market leaders
  • Track key industry trends, opportunities and threats
  • Inform your marketing, brand, strategy and market development, sales and supply functions

This industry report originates from Passport, our Packaged Food market research database.

Butter and Spreads

Cheese

Drinking Milk Products

Other Dairy

Yoghurt and Sour Milk Products

Packaged Food in South Africa - Industry Overview

EXECUTIVE SUMMARY

Strong growth within packaged food in 2018
Convenience and health trends continue to drive sales
Tiger Consumer Brands leads packaged food in 2018
Supermarkets remain leading channel, but losing ground to mixed retailers
Steady growth expected as consumers focus on value added products

FOODSERVICE

Sales to Foodservice
Foodservice outlets meeting demand for convenience
Popular foodservice products
Tiger Consumer Brand leads foodservice sales in 2018
Consumer Foodservice
Sluggish economy and high unemployment limits consumer foodservice growth
Formal grocery retailers expanding foodservice offerings
Steady growth forecasted within consumer foodservice
Category Data
Table 1 Foodservice Sales of Packaged Food by Category: Volume 2013-2018
Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2013-2018
Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2018-2023
Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2018-2023

MARKET DATA

Table 5 Sales of Packaged Food by Category: Volume 2013-2018
Table 6 Sales of Packaged Food by Category: Value 2013-2018
Table 7 Sales of Packaged Food by Category: % Volume Growth 2013-2018
Table 8 Sales of Packaged Food by Category: % Value Growth 2013-2018
Table 9 GBO Company Shares of Packaged Food: % Value 2014-2018
Table 10 NBO Company Shares of Packaged Food: % Value 2014-2018
Table 11 LBN Brand Shares of Packaged Food: % Value 2015-2018
Table 12 Penetration of Private Label by Category: % Value 2013-2018
Table 13 Distribution of Packaged Food by Format: % Value 2013-2018
Table 14 Distribution of Packaged Food by Format and Category: % Value 2018
Table 15 Forecast Sales of Packaged Food by Category: Volume 2018-2023
Table 16 Forecast Sales of Packaged Food by Category: Value 2018-2023
Table 17 Forecast Sales of Packaged Food by Category: % Volume Growth 2018-2023
Table 18 Forecast Sales of Packaged Food by Category: % Value Growth 2018-2023

DEFINITIONS

SOURCES

Summary 1 Research Sources