Other Dairy in South Africa

PROSPECTS

Rising demand for convenience driving growth and innovation

Recent 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’s strong Ultra Mel custard brand dominating sales in this category.

Limited cream supply puts upward pressure on unit prices

Rising demand for full cream milk products such as butter and full cream and double cream yoghurt is putting pressure on the availability of cream and therefore unit prices throughout South Africa. Furthermore, leading producer Clover recently experienced a shortage of cream after damage caused by a fire at its milk powder factory in Estcourt, KwaZulu Natal.

Dairy alternatives and convenient portioning appeal

Other dairy is expected to see a mixed performance over the coming years. For example, soy desserts is expected to see growth, benefiting from the healthy image of soy, widening availability of more affordable options in supermarkets and growing awareness of lactose intolerance.

COMPETITIVE LANDSCAPE

Expanding product range ensures Nestlé remains in leading position

Nestlé continued to lead other dairy in value terms in 2019, with the company benefiting from wide brand awareness and distribution for its Nestlé Cremora range, which is highly popular within coffee whiteners. Nestlé Cremora is well supported by marketing, with the brand having a highly popular Facebook page that offers frequent recipe suggestions, thus helping to broaden usage and awareness.

Producers focusing on innovation in response to intensifying competition

Competition remains intense among brands and private label ranges within ready to eat custard, with players that invest in product innovation differentiating themselves from competitors. For example, Ultra Mel recently launched new strawberry and banana flavoured ready to eat custard products in its mini range.

Extensive product offering key to Lancewood’s success in cottage cheese

Lancewood remains the leading player in cottage cheese in South Africa due to its offering of a wide portfolio that includes plain, flavoured, creamed, smooth chunky, full fat, low fat and fat free formats. Furthermore, during the review period, the company also added a lactose free low-fat smooth cottage cheese to its product range in response to changing consumer trends.

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