Food Processing Ingredients Market Report

An Expert's View about Food , Beverages and Tobacco in South Africa

Posted on: 22 Dec 2012

The South African sector offers U.S. exporters opportunities to supply raw materials or inputs for food processors.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 12/12/2012 GAIN Report Number: South Africa - Republic of Post: Pretoria Food Processing Ingredients Market Report Approved By: Nicolas Rubio Prepared By: Margaret Ntloedibe Report Highlights: The South African sector offers U.S. exporters opportunities to supply raw materials or inputs for food processors. Key factors to supplying to this market are competitive pricing, good quality products, and consistency in both quality and availability. SECTION 1: MARKET SUMMARY South Africa’s agro-food and beverages processing sector, serving a population of about 51 million, remains a significant component of the manufacturing economy. The sector is developed, highly concentrated and competitive, producing high quality and niche products for local and international markets. The agro-processing (food and beverages) industry contributed $24 million between January- August 2012, an annual percentage change of 12 percent. The sector has a number of competitive advantages, including preferential access in the Customs Union for Southern African Customs Union countries, in the United States through the African Growth and Opportunity Act (AGOA), and Free Trade Agreements (FTAs) with Southern African Development Community (SADC) and with the European Union (EU). This South African sector offers U.S. exporters opportunities to supply raw materials or inputs for food processors. However, according to importers and buyers, the key factors to supplying to this market are competitive pricing, good quality products, and consistency in both quality and availability. It is important to know that the sector is divided into several subsectors: Canned and prepared meats; dairy products; canned fruit and vegetables; fish products; vegetables and animal oils and fats; baked products; sugar confectionery and cocoa; roasted peanuts and other nuts; coffee roasting, tea blending and packaging; animal feeds; beverages such as distilleries and wineries; and soft drinks. This industry is dominated by a few very large, diversified, national and multinational food manufacturers, who have established market shares and control both production capacity and sales in most food categories. These conglomerates tend to be involved in a number of food groups, as well as in the production and retailing these products. New and smaller processors play an important role and continue to change the competitive environment of food processing in South Africa despite their limited market share. Additionally, big multinational companies, such as Nestle (Switzerland), Unilever-Unifoods (UK), and Borden (US), operate their own manufacturing plants in South Africa, which produce and market their well-known brands. Other multinationals companies do not have processing facilities, but have arrangements with local manufacturers. For example, branded packaged foods of Knorr are manufactured under license by Robertson’s, a major South African spice packer and food processor. Many South African companies have formed associations with international companies, giving South Africa access to the latest technology and expertise. Examples of these are Simba and Frito-Lay (US), Robertson’s and Best Foods (US), NCD Clover and Danone (France); and H. J. Heinz (US) and Pioneer Foods South Africa which formed a joint venture company Heinz Foods South Africa (SA). This allows foreign companies penetration into the local market. Food companies are among the largest holders of intellectual property rights (Unilever, Proctor & Gamble, and Nestle being the top three in South Africa), which involve patented processes, products, equipment, packaging technology, and trademarks. Although there are over 1,800 food production companies, the top ten are responsible for 70 percent of the industry’s turnover. South Africa’s key players include national and multinational companies such as Tiger Brands, AVI, Premier Foods, Pioneer Foods, FoodCorp, First SA Foods, Nestle, Clover SA, Parmalat SA, Rainbow, Kellogg’s SA, and South African Breweries. All of these food processors depend on formal retail chains to sell their manufactured products. Massmart/Walmart, a retail group invested in a portfolio of focused wholesale and retail chains which distribute well known brands of food, liquor and general merchandise to a broad range of consumers in thirteen countries in Southern Africa. Massmart launched some farm initiative programs to develop its sourcing capacity in fresh produce, whereby they will provide training including market linkages with approximately 1 million small holder farmers and $1 billion in food would be sourced from them in the next five years. Manufacturing Production and Sales According to Statistics South Africa, the production of food and beverage manufactured products for August 2012 grew by 4.8 percent and total estimated value sales increased by 12 percent compared to June 2011. The table below highlights food and beverage annual percentage change in volume of manufactured production and estimated value of sales: Food and Percentage of Production Indices (base 2005=100) Value of Sales (US$ thousands) Beverage Total SA Jan Jan Annual Contributio Jan – Jan – Annual Differenc Manufacturin Manufacturin – – % n % points Aug Aug % e in sales g Divisions g Industry Aug Aug Change 2011 2012 Change between 201 201 between between 2011 and 1 2 2011 and 2011 and 2012 2012 2012 Food and 15.4 111 117 4.8 0.8 21,69 24,30 12.0 2,613 beverages 5 8 Meat, fish, 1.8 116 120 3.0 0.1 5,754 6,348 10.3 594 fruit, etc Dairy products 0.8 110 117 6.4 0.1 1,924 2,195 14.1 271 Grain mill 0.8 106 113 7.1 0.1 3,691 4,333 17.4 642 products Other food 5.2 111 115 3.4 0.2 5,076 5,616 10.6 540 products Beverages 6.8 111 117 5.7 0.4 5,250 5,816 10.8 566 Source: Statistics South Africa Advantages and Challenges for U.S. Exporters Advantages Challenges To sell directly to processors, local South Africa is a strong food producer. importers/agents and/or directly to distribution centers. South Africans are developing a taste for Consumers may need to be educated in preparing and western foods and are willing to try new eating products. products. The growing food processing ingredients Already acquired tastes and preferences for traditional industry needs imported food and locally produced products. beverage products. South Africa is the gateway for regional Competition is stiff from other countries and locally markets. produced products. Established agro-processing industry. While sophisticated for a developing country, much of the latest U.S. technology is far beyond the horizons of even the most richly-resourced SA food companies. South African processors and importers Challenge for U.S. suppliers to respond to trade seek suppliers who can offer reliable and inquiries in a timely fashion. Also South Africa is a quality products at competitive prices. smaller market and may not be able to deal in the volumes that U.S. companies are used to. South African consumers view U.S. Limited knowledge of processors and consumers of the products as high quality. variety and quality of U.S. products. English is one of the 11 official South Processors already have long-standing relationships African languages and virtually everyone with European suppliers due to historical ties. is proficient in English. SECTION 2: ROAD MAP FOR MARKET ENTRY Entry Strategy New U.S. exporters in this market need to fully understand the food processors’ needs and how best to meet their purchasing requirements and specifications. They should consider the following when planning to enter the market: South Africa has a strong domestic food processing industry, but continues to imports food ingredients and additives from all over the world. Will the price for U.S. products be competitive with other suppliers? The food processor’s purchasing policy, i.e. whether it buys directly from overseas suppliers or via local importers/agents. It is important to note that some companies prefer to buy through local agents because they are better positioned to deal with any quality problems encountered by the buyer immediately. The financial strength of the targeted food processor, the geographical network of its target markets, level of demand for imported food ingredients, level of R&D activities and investments into new product introduction, and level of interest in using new ingredients from the United States. There is also a recent trend that indicates that large food processing companies prefer to source their food ingredients directly from overseas suppliers instead of using local agents because they can: Benefit from cost savings when buying in bulk from the overseas suppliers. Control the quality of the ingredients they obtain. Smaller South African food processors tend to prefer to purchase from local agents because they can: Obtain better service from the local agent who buys large quantities from overseas. They require small quantities of food ingredients. Local suppliers make it more convenient for processors to deal with quality issues. Company Profiles A table below provides information on South Africa’s major national and multinational food processing groups. Company and Estimated End-use- Production Procurement Product types Sales channels Location Channels (US$ million) Tiger Brands is a branded fast moving $1,303 Wholesaler/ South Africa, Direct/ consumer packaging goods and healthcare Retail/HRI Cameroon, Agents company that operates mainly in South Kenya, and Africa. It is listed on the Johannesburg Zimbabwe Securities Exchange (JSE) South Africa with about a 53 percent market share. Tiger Brands operates in the Milling and Baking; groceries, confectionery (snacks and treats), beverages, value added meat products, fruit and vegetables, and Out of Home Solutions of the food services sector industries. Some of the well known brand names includes All Gold, Black cat, Cross and Blackwell, Energade, Enterprize, Fattis & Monnis, Mabele Meal, Jungle oats, King Korn, Halls, Koo, Lucky Star, Morvite, Oros, and Tastic Rice. Following financial figures reflected are until March 2012. Grain Milling and Baking = $431 Other Grains = $156 Consumer Brands Groceries = $257 Confectionery (Snacks and Treats) = $113 Beverages = $80 Value Added Meat Products = $96 Out of Home Solution = $21 Exports (canned fruit and vegetables, which includes the deciduous fruit) = $149 ASTRAL FOODS LTD is a leading South $1,046 Wholesaler/ South Africa, Direct/Agents African poultry producer of animal feeds, (2010 Retail/HRI an subsidiaries production and sale of day old chicks, and turnover) in Mauritius, hatching eggs and sales and distribution of Mozambique, various key poultry brands. Brand names Swaziland and include Astral Foods, Country Pair Ross Zambia Poultry, Earlybird, Festive Chicken, Goldi Chicken, Meadow Feeds, National Chicks, Tiger Animal Feeds. AVI Group is listed on the JSE. It is $1,046 Wholesaler/ South Africa Direct/ comprised of trading subsidiaries that (2011 Retail/HRI Agents manufacture, process, market and distribute turnover) branded consumer products in the food, beverage and fashion categories. This report concentrates only on food and beverages. Food categories include groceries, frozen and fresh to market. Groceries (Tea, coffee, biscuits and snacks) Frozen (fish farming, fish and seafood products) Fresh to market (fresh and canned vegetables, especially mushrooms, and juices) AVI is responsible for many of South Africa’s favorite brands such as I & J, Five Roses tea, Bakers cookies, Baumann’s cookies, Ellis Brown creamer, Ciro Coffee, Koffiehuis Coffee, Frisco coffee, House of Coffee, Freshpack, Provita, Pyotts, Willard’s potato chips, and Juice brands includes Sir Juice, The Real Juice, and Quali Juice. Premier Foods is one of South Africa’s Not Retail/ South Africa Direct/ largest manufacturer, distributors and available Convenience Agents marketer of milling and baking products. Stores Categories include maize/corn, bread, wheat and rice. The company carries five of the top 20 of South Africa consumer brands. Premier Fishing is a subsidiary of Sekunjalo Foods. Sekunjalo’s product categories include organic aquaculture (fertilizers and organic abalone farming), and fishing (processors of lobster, squid and hake. Pioneer Foods Group Ltd is one of the $2,247 Distribution South Africa Direct/ leading food manufacturers in South Africa (2010 Center/ Agents and a diversified dominant player of the staple turnover) Wholesalers/ food and value-added products. The company Retail/HRI products categories include baking aids or cake mixes; groceries, tea/coffee, breakfast cereals, biscuits, condiments, juices and acidic drinks, dried fruits, eggs and broiler rearing, and animal feeds. Some of leading brands include Bokomo, Ceres Juice, Heinz, HP Sauce, Liqui-fruit, Nova Feeds, John West, SAD, Safari, Sasko, Weet-Bix, etc FoodCorp Pty Ltd produces and distributes Not Wholesaler/ South Africa Direct/ ingredients for staple foods and other fast available Retail/HRI Agents moving consumer goods. Products range includes consumer brands such as groceries, milling, baking, processing of fish, beverages, pie, with high-end specialty ready to eat meals which are produced and distributed by two Sub-divisions of Specialty and Meal Solutions. Brand names includes Canola Oil, Fifers Bakery, Gourmet Foods, Glenryk, Mageu Number 1, Nola, Ouma Rusks, Pieman’s, Ruto Mills, Sunbake, Super Mabela, Superting, and Yum Yum. Clover Industries Ltd, listed with the JSE $818 Distribution South Africa Direct/ since December 2010 is the largest dairy (2011 Center /Retail/HRI with Agents group in South Africa - dairy products turnover) subsidiaries in categories includes cream, milk/ flavored Botswana, milk, condensed milk, yoghurts, cheese, Namibia, health teas, butter/spreads, desserts, and Swaziland, and beverages such as fruit juices, nectars, and ice West Africa. teas. http: Unilever South Africa Holdings Pty Ltd a Not Distribution South Africa Direct/ subsidiary of Unilever Plc., Manufactures fast available Center /Retail/HRI Agents moving consumer goods (fmcg’s) in foods, home and personal care products product lines includes (spices, sauces, dressings, , margarine, teas, syrups, and food solutions). Food solutions works with caterers, restaurants, hotels and fast food chains. Rainbow Chicken Ltd, South Africa’s $1,078 Distribution South Africa Direct/Agents producer and marketer of chicken products. (2011 Center/Wholesaler/Retail/ Subsidiaries of Rainbow Chicken Ltd include turnover) HRI Rainbow Farms Pty Ltd, Rainbow Chicken Foods (Pty) Ltd, and Vector Logistics (Pty) Ltd. Rainbow brands include own brand, farmer brown, bonny bird, and rainbow food solutions, and vector logistic solutions. It also produces dealer own brands for some retailers and wholesalers. Parmalat South Africa is owned by Parmalat Not Distribution South Africa, Direct/Agent SpA – an Italian dairy company. It is a leader available Center Botswana, in the South African dairy industry. Their /Distributor/Wholesaler/ Mozambique, products include milk, yoghurt, ice cream, Retail/HRI Swaziland, and cheese, and fruit juices. Zambia Kellogg Company of South Africa Pty Ltd Not Distributor/ South Africa Direct/ is the world’s largest manufacturer of Ready- available Wholesaler/ Agent To-Eat cereals, and the market leaders in Retail South Africa in the ready-to-eat cereals business. Their products category includes breakfast cereals, cookies/crackers, natural/organic/frozen, and specialty cereals. SAB Miller PLC, one of the world’s largest $2,426 Wholesaler/ South Africa Direct/ brewers, also one of the world’s largest (2011 Retail/ and Namibia Agent bottlers of Coca Cola products. It operates turnover) HRI seven breweries in South Africa and dominates the local brewing industry with a market share of about 90 percent. 70% of SAB’s income is derived from beer, with the rest coming from soft drinks and sorghum beer. The wine industry is also relatively large, ranked eighth in world output. Distell Group Ltd, partly owned by $1,541 Wholesalers/ South Africa Direct/Agent SABMiller is South Africa’s leading fine- (2011 Retail/HRI wine, spirits, and ready-to-drink (RTD) turnover) alcoholic beverage producer, marketer and distributor. The group is South Africa’s leading producer and marketer of wines, spirits and flavored alcoholic beverages. Amarula cream liqueur (the world’s most consumed) being one of its major exporting product. 76 percent production occurs in South Africa including distribution with sales offices in Angola, Botswana, Mauritius, Namibia, Swaziland, Europe, North and Latin America, including Asia. Illovo Sugar Ltd, Africa’s largest cane sugar $1,014 Wholesaler/ South Africa, Direct/Agent and one of the world’s lowest-cost producers. (2011 Retail/HRI/Bakers/Food Malawi, It is a subsidiary of Associated British Foods turnover) processors/Minerals/Sweets Mozambique, Plc., with extensive agricultural and Swaziland, manufacturing operations in six African Tanzania, and countries of South Africa, Malawi, Zambia Mozambique, Swaziland, Tanzania, and Zambia producing refined and refined sugar. Illovo’s 83 percent of sugar production by volume is sold into domestic or premium- priced exports market, 12 percent sold to regional markets, with the remaining balance sold on the world free market. To boost exports Illovo looks to capitalize on tariff-free access to EU countries. Source: Industry websites and trade press Sector Trends The South African market mirrors similar global trends related to health, convenience, and value for money for food products. Global trends indicate that consumers are moving to healthy and convenient products that provide value. Another trend that has been growing for several years and continues to grow is demand for convenience foods. This is led by an increasing number of households where both partners work and an increasing number of affluent households that can pay for convenience. Manufacturers calibrate towards private labels to capitalize on the growing demand of private label offerings. Fruit juice manufacturers import grape and apple juice for blending with own fruit juices. Numerous pieces of legislation impacting the sector including recent promulgated Consumer Protection Act which gives consumer the right to address to a tribunal complaints on the quality of products. South Africa food processors, canners and packers offer a good opportunity for U.S. suppliers of raw material. Market research confirms that consumers expect food that is not only ready-to eat, but is safe, nutritious, tasty, natural, like-fresh, and feels like a good value for money. Sales of organic food are rising and retailers such as Woolworths and Pick-n-Pay capitalize on the trends and stock organic products targeting the upper Living Standard Measures (LSM). Products include free range beef, lamb, pork, and chickens including vegetables, and wine. Another trend is the demand for goat-derived dairy products which is a niche that keeps growing. Use of health ingredients in many foods and drinks which is becoming increasingly important in the food industry due to increased focus on food safety and security by the recent legislative and regulatory. Flavor developers feel food processors are overly risk averse and lack insight into changing demographics and consumer habits. Opportunity and growth, they concur, lie in developing ‘cross-over’ or fusion products and flavor profiles for the newly empowered black market that wants to keep in touch with traditional roots but aspires to previously unaffordable foods. Kosher and Halaal foods products are a niche that keeps growing. SECTION 3: COMPETITION The U.S. exporters face stiff competition, especially from European countries, Argentina, Brazil and Thailand. The United States is the fourth largest supplier of agricultural, fish and forestry products to South Africa. The rising domestic demand and the inability of local producers to meet it are creating opportunities for imported products. As a result, the sophisticated and expanded middle to upper income groups which have an appetite for foreign tastes and flavors are a major target for imported products. Imports of Selected Ag, Bulk and Intermediary Products in US Dollars: January – July 2012 Product Category Major Strengths of key Supply Advantages and Disadvantages of Supply Countries Local Suppliers Sources Red Meats Australia – The pattern of imports in this South Africa produces a very high quality Fresh/Chilled/Frozen 28% category is variable and depends beef with the domestic undersupply made Germany- largely on local conditions, up with imported meat and meat Net imports from the world of 20% including quality and competitive products. $113 million in 2012 versus Canada – 14% price by the suppliers. Germany a $292 million in 2011. leading supplier due to Free Trade USA is an Agreement (FTA) with South Note: SA net exports were $17 irrelevant Africa as a member of the million in 2012 versus $31 in supplier of European Union. 2011. 0.20% Poultry Meat Brazil – 44% Brazil remains a leading trading Domestic demand for poultry meat is Netherlands – partner for South Africa in terms growing and outpaces the performance of Net imports of $230 million in 18% of poultry due to FTA with South any other proteins on the market. 2012 versus $202 million in United Africa. The United States poultry Domestic producers are unable to meet 2011. Kingdom – exports to South Africa have been consumption needs. South Africa’s 9% constrained by anti-dumping major chicken producers are Astral foods, Note: SA net exports were $8 duties since 2000. Rainbow Chickens, Pioneer Foods, million in 2012 versus $15 USA is a Sovereign and Dagbreek. million in 2011. minor supplier with 4% market share. Turkey Meat Brazil – 62% Competition, price and quality are South Africa is a net importer of turkey USA – 13% the key strengths these suppliers. meat products. Not enough local Net imports of $22 million in Australia – With the growing trend towards production since turkey meat is a South 2012 versus $20 million in 11% healthier lifestyles, turkey African favorites or commonly consumed 2011. products are becoming popular. except during Christmas time. However, the trend is changing as they start to Note: SA net exports were make regular appearance in restaurant $300 million in 2012 versus menus. $439 million in 2011. Fish and Seafood Products Thailand – Despite being a net exporter, Major South African fish traders and 45% South Africa imports continue to processors are Sea Harvest (owned by Net imports of $197 million in India – 11% increase to supplement domestic Tiger brands); Irvin and Johnson (AVI), 2012 versus $140 million in China – 10% demands. Oceana, Premier Foods, and Sekunjalo. 2011. USA is a Note: SA net exports were minor supplier $300 million in 2012 versus of 2%. $333 million in 2011. Dairy Products excluding New Zealand Despite being a net exporter, South Africa is a net importer of dairy cheese – 23% South Africa imports continue to products particularly whey, concentrated France – 22% increase to supplement domestic milk and cream to supplement Net imports of $92 million in Ireland – 10% demands. insufficient domestic production. 2012 versus $61 million in 2011. USA - 9%. Note: SA net exports were $55 million in 2012 versus $49 million 2011. Pulses China – 65% China enjoys a bilateral trade South Africa is a net importer of pulses. Canada – 10% agreement with South Africa. Pulses are an important protein source in Net imports of $56 million in Ethiopia – 5% Domestic production is South Africans diet and imports make up 2012 versus $53 million in insufficient to cover local demand for the shortfall between domestic 2011. USA a minor so imports supplement domestic production and demand. Also, pulses are supplier of demands. highly seasonal imported from November Note: SA net exports were $4 2%. – March in 50kg bags. Pulses are used in million in 2012 versus $3 South Africa by manufacturer for further million in 2011. processing of soups and broths. Vegetable Oils Exc. Soybean Malaysia – Shortages of oils are South Africa is a net importer of edible oil 30% supplemented with unrefined oil oil productions. Local producers are Indonesia – imports which are refined and unable to meet demand due to crop size. Net imports of $455 million in 28% packaged by local oil expressers. Shortages of oils are supplemented 2012 versus $448 million in Argentina – Malaysia provides quality and 2011. 18% competitive prices. Note: SA net exports were $55 million in 2012 versus $70 USA a minor million in 2011. supplier of 0.61% Sugar/Sweetener/Beverage Brazil – 50% A growing domestic demand calls South Africa is a leading producer and a Bases China – 11% for imported products from net exporter of sugar related products. Thailand – 8% competitive suppliers to Local production is sufficient to meet Net imports of $81 million in supplements. demand. 2012 versus $51 million in 2011. USA - 7% Note: SA net exports were $66 million in 2012 versus $52 million in 2011. Breakfast Cereal/Pancake Mix Thailand – Imports from competitive South Africa is a net exporter of breakfast 27% suppliers supplements supply. cereal products. Local production is Net imports of $13 million in Germany – sufficient to meet demand. 2012 versus $16 million in 18% 2011. France – 12% Note: SA net exports were $17 million in both 2012 and 2011. USA - 9% Fruit & Vegetable Juices China – 47% Potential exports to South Africa South Africa is a net exporter and self- Argentina – are for exotic fruit and vegetables sufficient in basic fruit and vegetable Net imports of $68 million in 34% such as berries, kiwi fruits, requirements. 2012 versus $35 million in Spain – 4% including off season fruit and 2011. vegetables from competitive suppliers. Note: SA net exports were USA a minor $117 million in 2012 versus supplier of $120 million in 2011. 0.38% Processed Fruit & Vegetables China – 22% Opportunities exist for South Africa is a net exporter, and Belgium – competitive suppliers of grape and domestic production is sufficient to cover Net imports of $99 million in 12% apple juice which are used as a local demand. 2012 versus $92 million in Italy – 11% base for other fruit juices, 2011. prepared and preserved tomatoes, and fruit pulp. Note: SA net exports were USA - 6%. $226 million in 2012 versus $229 million in 2011. Wine and Beer Italy – 39% Due to the rapid increase in South Africa is a net exporter of wine and France – 29% exports of South African wines beer, particularly wine of fresh grapes. Net imports of $33 million in Netherlands – which creates a niche for specialty The South African wine industry is 2012 versus $28 million in 15% wines and beers from competitive relatively large and extensive ranked 2011. suppliers. seventh in world output. South Africans’ tastes and preferences are becoming more sophisticated and the average consumer is Note: SA net exports were USA is a increasingly expecting a wide range of $415 million in 2012 versus minor supplier wine and beer. $436 million in 2011. of 0.16%. Distilled spirits United Sophisticated tastes and South Africa is a net importer of distilled Kingdom – preferences of South Africans spirits particularly whiskies. Local 70% calls for a range of whiskey production is not enough to meet local Net imports of $162 million in United States products. UK continues to be demand. 2012 versus $176 million in – 7% leading trade supplier of this 2011. Ireland – 6% category. Despite lack of brand awareness of U.S. whisky products among south African Note: SA net exports were $62 consumers, U.S. saw increased in million n 2012 versus $56 whisky exports. million in 2011. Source: Global Trade Atlas SECTION 4: BEST PRODUCT PROSPECTS A. Products in the market with good sales potential South Africa is known for its well developed food processing sector which produces a wide range of processed food products, the local production is not enough so opportunities exist for imports to supplement the needs. Despite stiff competition from the EU countries which in most instances benefits from low import tariff rate to enter the South African market, the American brands are becoming increasingly popular given their high quality attributes including price. Product Jan – July Jan – July Percentage U.S. Import Key Market Category 2012 South 2012 U.S. of Annual Tariff Rate Constraints Attractiveness for Africa Exports to Import Over Market U.S. Imports from S.A. Growth U.S. Development the World ($1,000,000) ($1,000,000) Almonds 7 6.4 55 free free from the U.S. has largest (shelled nuts) EU countries market share of HS080212 93% due to quality and price. South Africa produces only macadamias and pecan nuts. Salmon 538 343 -62 6c/kg 6c/kg U.S. has the largest HS160411 market share of 64%. Glucose and 4.2 3.8 1.56 free Free from the U.S. has the largest Glucose EU countries market share of Syrup 89%. HS170240 Protein EU countries U.S. has the largest Concentrates 5.4 3.1 27 10-20% import tariff market share of HS210610 rate to enter 58%. South Africa is free to 2.6% Food 91 17 2.65 Varied from Varied and U.S. has the largest Preparations free, 5-20%, from the EU market share of HS210690 and 154c/liter countries 19%. for alcoholic import tariff preparations. rate is free to 2.6%. Baking 7 3 -22.81 30% From the EU U.S. has the largest powders countries market share of (baking import rate is 45%. inputs) 3.9%. HS210230 Sauces, 11 4 83.76 5-20% From the EU U.S. has the largest condiments countries market share of and import tariff 31%. seasonings rate is free to HS210390 2.6%. Source: Global Trade Atlas B. Products not present in significant quantities but have good sales potential Selected products below including products not currently available or known about in South Africa have good sales potential. Despite stiff competition from the EU countries which in most instances benefits from low import tariff rate to enter the South African market, American brands are becoming increasingly popular among South African consumers given their high quality attributes including price. Product Jan – Aug 2012 Jan – Aug Percentage U.S. Import Key Market Category South Africa 2012 U.S. of Annual Tariff Rate Constraints Attractiveness Imports from Exports to Import Over Market for U.S. the World S.A. Growth Development ($1,000,000) ($1,000,000) U.S. Sausage 46 6 109.15 free South Africa is a casings net importer of (HS0504) sausage casing products. The import tariff rate is free from both the U.S and the EU countries. USA has 14% market share after China with 63%. Flour and 373 42 15.23 Free to 20% From EU U.S has a market meal of dried countries free to share of 11%. leguminous 2.6% vegetables (HS1106) Malt 34 9 28.63 Free to 3% EU free to U.S. has a 25% (HS1107) 0,111c/kg market share. Plants of 2 140 33.90 Free to 20% EU countries U.S. has a 7% parts of plants enters duty free market share. (including to 2.6% seeds and fruits) (HS1211) Vegetable 20 2 39.97 Free to 25% EU countries U.S. has a market Saps and duty free to share of 8%. Extracts 3.25% (HS1302) Lard 47 42 -32.24 Duty free Duty free from U.S. has a market (HS1501) EU share of 89%. Fats and oils 918 55 58.77 Duty free Duty free from U.S. has a market (HS1504) EU share of 6%. Fixed 8 913 56.47 10% EU countries U.S has a market vegetable fats duty free to share of 12%. and oils 1.3% (HS1515) Prepared 15 1 89.46 5c/kg to 25% EU countries U.S. has a 8% foods duty free to market share. obtained by 3.25%. the swelling or roasting of cereal products (HS1904) Bread, pastry, 36 2 87.08 3.6c/kg to EU countries U.S. has a 5% cakes, and 25% duty free to market share. biscuits 2.73%. (ingredients) (HS1905) Ethyl alcohol, 209 15 14.34 136c/liter to From EU U.S. has a market spirits, and 154c/liter countries share of 7% liqueurs including R17.68c/liter to particularly on (HS2208) additional R20.02c/liter (HS220830). costs of including R2.31/Liter to additional costs R93.03/liter ofR38.oo/liter to levied on R93.03 levied customs and on both the excise Customs, and respectively. Excise duties. Source: Global Trade Atlas C. Products not present because they face significant barriers Product Jan – Aug Jan – Aug Percentage U.S. Key Constraints Over Market Category 2012 South 2012 U.S. of Annual Import Market Development Attractiveness for Africa Exports to Import Tariff U.S. Imports from S.A. Growth Rate the World ($1,000,000) U.S. ($1,000,000) Chicken 175 6 37.60 220c/kg Brazil with 47.53% Consumer demand Cuts 020714 market and US 2.96%. continues to increase The general rate of duty and domestic for this tariff is 220 c/kg production is not in Rand. For the EU the keeping up. rate is 165 c/kg and it is However, prohibition free for the SADC of United States countries. The anti- poultry exports to dumping duty on South Africa of product from Tyson chicken leg quarters Foods is 224 c/kg, from (02071490) since Gold Kist Inc it is 245 2000 are restricted c/kg and 940 c/kg from by an anti-dumping any other United States duty. producers. South Africa imposed the anti- dumping duties on Brazilian chicken in February 2012. Meat of 18 Zero Zero 40% Australia with 45.20% The United States Bovine market share to beef products into frozen supplement imports. South Africa are (0202) Beef products from banned since 2003. SADC countries are imported into South Africa duty free. Animal Feed 42 3 13.72 free France with 20.34% The U.S. has 8% of Preparations market share. the market share. (230990) Lysine feed products are impacted due to dumping duties imposed on the U.S. since 2007 Source: Global Trade Atlas SECTION 5: POST CONTACT AND FURTHER INFORMATION If you have any questions or comments regarding this report or need further assistance, please contact AgPretoria at the following address: Foreign Agricultural Service U.S. Embassy Pretoria, South Africa Washington, D.C., 20521-9300 Tel: +27 12 431 4235 Fax: +27 12 342 2264 Email: For more information on exporting U.S. agricultural products to other countries, please visit the Foreign Agricultural Service’s website at: Post acknowledges the following sources: Industry websites such as World Trade Atlas, Statistics South Africa, the Department of Trade and Industry, local foodservice industry publications, local press, and individual company websites.
Posted: 22 December 2012

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