Massive Food & Beverage industry expansion in Africa

Massive Food & Beverage industry expansion in Africa – where are the opportunities?

The Western Cape has become the source of many retail investments in Africa. These Supermarket chains’ expansion into Africa has been instrumental in helping South African manufacturers reach new markets. Pick n Pay operates across 6 African countries (Botswana, Lesotho, Namibia, Swaziland, Zimbabwe, Zambia & Ghana), while Shoprite operates in 14 African countries (Angola, Botswana, Ghana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Swaziland, Uganda, Zambia, and the Democratic Republic of the Congo). The Spar Group has retailers represented in Swaziland, Namibia, Mozambique and Botswana, while Woolworths has acquired 33 franchise stores in Botswana, Namibia, Swaziland and Ghana in 2014 alone.

When retailers expand, they often implement their own supply chain, which means that many of the logistical hurdles have already been tackled. It is for this reason that food and beverage suppliers are following retailers as they expand. In 2014, the export of food preparations from South Africa into other African countries grew by 29% to reach a value of R2bn. From the Western Cape (2013), export growth into Africa was particularly high for sauces and condiments has been at 40% for the last five years. These products also reveal the hunger of African markets for packaged or “convenience” foods.

The informal sector, however, is still of huge importance to these markets. Most Western Cape companies sell through a supermarket and also through an importer-distributor who sells to the informal sector.

Largest global food and beverage exporters:
United States (ZAR1360bn) with 10.3% global share
United kingdom (ZAR 841.6bn) with 6.3% global share
Germany (ZAR774bn) with 5.8% global share

Largest global food and beverage importers:
United states (ZAR1162.2bn) with 8.6% global share
China (ZAR939.1bn) with 7.0% global share
Germany (ZAR903.2bn) with 6.7% global share

Global food and beverage trade in 2013 amounted ZAR13.28trn with, the leading traded products being:
Soya beans;
Wheat and meslin and
Other food preparations.

South Africa exported food and beverages to the value of ZAR87.8bn in 2013 growing by 64% from the previous year.

The Western Cape exported food and beverages to the value of ZAR39.3bn in 2013 growing by 32.1% from the previous year.

The Western Cape’s largest food and beverages exports in 2013 were:
Grape wine (20% share);
Citrus fruit (17%); and
Apples, pears and quinces (14%).

Between January 2003 and February 2014 a total of 8,773 FDI projects were recorded into the global food and beverage sector. These projects represent a total capital investment of ZAR2.33trn.

Between January 2003 and February 2014 a total of 47 FDI projects were recorded in the food and beverage sector in South Africa. These projects represent a total capital investment of ZAR13.20bn.

Six of these FDI projects in the Western Cape, representing an estimated total capital investment of ZAR903.99m.