In March 2018, the second biggest player in processed meat and seafood at that time, Tiger Brands Ltd, had to cease operations at three of its factories and recall all Enterprise brand products after the Department of Health traced a listeriosis outbreak, which claimed 200 lives, to its factories. In the announcement by the Minister of Health, consumers were cautioned away from all processed meat products, such as polony, which is popular among low-income consumers as it forms part of their daily lunchtime diet.
Consumers’ income came under pressure in 2018 with increases in costs including VAT which rose for the first time since 1994. This has resulted in the substitution of fresh meat with shelf stable meat as the latter is more affordable for the majority of the population.
The unit prices of processed meat and seafood have increased due to a rise in the price of raw materials, which are largely imported and made more expensive by the volatile local currency. However, manufacturers’ promotional discounts provide relief for consumers as competition intensifies.
Oceana Brands Ltd is projected to retain the leading position in processed meat and seafood in 2018 with an increased value share due to its shelf stable Lucky Star brand that leads processed meat and seafood. Eskort Ltd ranked third in 2017 but will move into second place in 2018 due to Tiger Consumer Brands Ltd losing significant value share because of the necessary product recall amid the listeriosis outbreak.
Tiger Consumer Brands Ltd will drop several places down the rankings within processed meat and seafood by the end of 2018 due to losing value share. Tiger Brands Ltd’s processed meat products were at the centre of a listeriosis outbreak in 2018 and the company had to recall all its Enterprise processed meat products.
Private label offers discounts and cheaper unit prices for shelf stable meat and seafood, making it more difficult for manufacturers to pass on increases in raw material costs to consumers. Manufacturers have to absorb the rising costs of raw materials to maintain their share of sales, with some manufacturers resorting to reducing the meat content in their products in order to remain competitive.
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Discover the latest market trends and uncover sources of future market growth for the Processed Meat and Seafood industry in South Africa with research from Euromonitor's team of in-country analysts.
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This industry report originates from Passport.