The South African packaged food market saw a 1% drop in value growth in 2012. This is due to deflation within the market as well as promotional pricing from leading manufacturers in order to stimulate and grow volume sales after the recent economic downturn.
Consumers remain cautious in their spending habits and are more reluctant to spend money on "non-essential", "luxury" food items such as impulse and indulgence products, and to a lesser extent, even meal solutions.
Whilst the global recession is over, the impact continued to be felt and countries have been slow to recover. As with many consumers globally, South Africans still experience the effects of the recession and their spending on consumer foodservice remains constrained.
In order to encourage consumer spending, leading manufacturers have had to offer promotional pricing, particularly on non-essential, "luxury" products such as impulse and indulgence products.
Despite activity from international players such as Kraft Foods, which acquired Cadbury (Pty) Ltd in January 2010, and Nestlé's multi-million Rand factories in Babelegi, built in February 2011; local player Tiger Brands continues to dominate South African packaged food.
It is followed by Clover SA, who holds the leading share within the South African dairy market. Tiger Brand's Tastic rice brand holds the biggest value share in 2012, followed by Clover SA's Clover brand.
There have been moves by manufacturers towards smaller pack sizes in order to reduce initial cash outlay on products, and thus appeal to a wider range of consumers. For example, Tiger Brands recently launched Purity Gravy & Soup Mix available in 30g sachets for an affordable R5.99.
As the economy recovers, the South African packaged food market is set to follow suit. Consumers will cautiously revert back to their usual spending habits. There may still be a slight trend towards necessities rather than luxuries, and consumers will remain attracted to value for money in order to stretch their budgets.
Volume growth will remain steady through to 2017, and value growth may see a decline as unit price increases stabilise.
For more information on the South African packaged food market, see the latest research: South African Packaged Food Market
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