Organic Packaged Food in South Africa

PROSPECTS

Organic milk remains most affordable product in expensive category, restricted to affluent consumer base

Organic packaged food continued to record the strongest growth in both retail volume and current value terms within health and wellness packaged food in 2019, although it remained the smallest category, and therefore its impressive performance was due to its low sales base. The extremely high prices of much of organic packaged food places it out of reach for the majority of the South African population.

Impressive volume growth for niche of organic baby food due to declining prices

While remaining an expensive niche, organic baby food continued to record impressive retail volume growth, as time-restricted affluent parents, who typically both work, want the best for their babies and are therefore willing to purchase what they perceive to be the highest quality food or milk formula. The impressive performance was mainly linked to the ongoing dramatic fall in the average unit price of organic milk formula, a trend that is predicted to continue into the forecast period, and will result in the category recording the highest retail volume growth within overall organic packaged food.

Despite efforts to attract health-conscious and environmentally-aware consumers, price will remain most influential factor when making purchasing decisions

To expand the target audience, players need to convince consumers of the differences between organic and standard packaged food, so that they understand the health benefits in addition to sustainable or environmental factors that are present in its production, such as lack of pesticides, synthetic fertilisers, or genetically modified organisms. These issues fit well with environmentally-aware and health-conscious consumers who are searching for more natural products, although price will remain the most restricting element to stronger growth.

COMPETITIVE LANDSCAPE

Woolworths retains dominance with wide product offer

Woolworths Holdings Ltd (South Africa) retained its dominance of organic packaged food in 2019, due to its stronghold over the largest category, organic dairy, offering a wide range of products including fresh milk, yoghurt, soy milk and organic cream, through its main private label line Woolworths Organic. It also offers Woolworths Foods and Woolworths, with the retailer present in a number of other smaller categories including organic confectionery, organic rice, pasta and noodles, and organic sweet biscuits.

High fragmentation within expensive niche of organic baby food

Organic baby food is a highly fragmented niche, restricted because of its expensive prices to the most affluent parents, who tend to be more receptive to purchasing organic products for their young children because of their perceived natural composition. Tiger Consumer Brands Ltd strengthened its leadership of organic baby food, due to its dominant leadership of organic dried baby food and organic prepared baby food, where it was followed at a distance by Allganix Foods (Pty) Ltd.

Woolworths losing share in organic pasta due to dynamism of smaller brands

While Woolworths continues to dominate organic pasta with its wide range of products, other retailers and brands are gaining ground and value share from the leader. Shoprite Checkers offers organic pasta under its Simple Truth range including organic spelt macaroni, while Delverde is an organic whole wheat fusilli pasta that is available from certain retailers such as Shoprite Checkers and Pick ‘n’ Pay.

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