Food Processing Sector Offers Opportunities for Exporters

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

Posted on: 23 Jan 2012

South Africa’s food and beverages processing sector remains a significant component of the manufacturing economy. The sector is developed, highly concentrated and competitive, producing high quality a

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: 12/29/2011 GAIN Report Number: South Africa - Republic of Food Processing Ingredients South Africa’s Food Processing Sector Offers Opportunities for U.S. Exporters Post: Pretoria Approved By: Nicolas Rubio Prepared By: Margaret Ntloedibe Report Highlights: South Africa’s food and beverages processing sector 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. It also offers U.S. exporters good opportunities to supply raw materials or inputs for food processors. The 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. South Africa largest export products are wine, citrus, grapes, sugar, apples, pears and quinces. Other important export products are avocados, pineapples, dates, and preserved fruits and nuts. The January-October 2011 global trade statistics reveal that trade between the United States and South Africa increased from 2010 to 2011. U.S. exports of agricultural, fish and forestry products to South Africa jumped by 66 percent so far to $384 million mostly due to increases of cereals exports, whereas South Africa exports to United States increased by 1.5 percent so far to $196 million. U.S. exports to South Africa of bulk products surged by 129 percent to $177 million due to higher wheat exports. U.S. exports of intermediary agricultural products to this market also jumped by 61 percent to $90 million due to various products such as sunflower-seed or safflower oil, malt, fats of bovine, and glucose and syrups. South African agricultural exports to United States have been dominated by wine, citrus, grapes, macadamia nuts, and raw sugar; accounting for about half of total exports. Intermediary products from South Africa to the United States increased by 15 percent to $22 million due to higher sales of essential citrus fruit oils of lemon. 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. Manufacturing Production and Sales According to Statistics South Africa, the production of food and beverage manufactured products for October 2011 grew by 3.6 percent and total estimated value sales increased by 8.2 percent compared to October 2010. The table below highlights food and beverage annual percentage change in volume of manufactured production and value of sales: Food and Percentage of Indices (base 2005=100) Value of Sales (US$ million) Beverage Total SA Manufacturi Manufacturi Jan Jan Annual Contributio Jan – Jan – Annual Differenc ng Divisions ng Industry – – % n % points Oct Oct % e in sales Oct Oct Change 2010 2011 Change between 201 201 between between 2010 and 0 1 2010 2010 2011 and and 2011 2011 Food and 15.4 111 115 3.6 0.3 25,01 27,06 8.2 2,051 beverages 4 5 Meat, fish, 1.8 113 117 4.2 0.1 6,781 7,554 11.4 773 fruit, etc Dairy 0.8 108 114 5.5 0.0 2,275 2,408 5.9 133 products Grain mill 0.8 110 107 -2.2 0.0 4,335 4,716 8.8 381 products Other food 5.2 117 115 -1.3 -0.1 5,655 6,007 6.2 352 products Beverages 6.8 111 115 3.6 0.3 5,970 6,380 6.9 410 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 Consumers may need to be educated in preparing and for western foods and are willing to try eating products. new products. The growing food processing Already acquired tastes and preferences for traditional ingredients industry needs imported locally produced products. food and 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 inquiries in a timely fashion. Also South Africa is a and quality products at competitive smaller market and may not be able to deal in the prices. volumes that U.S. companies are used to. South African consumers view U.S. Limited knowledge of processors and consumers of products as high quality. the 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 with European suppliers due to historical ties. everyone 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 company, 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. Market Structure Distribution Channels This chart gives an overview of the usual distribution channel for imported food ingredients from U.S. exporters to food processors. U.S. exporter (this chart can a lso apply to Importer Dist Food Retail ributor the domestic /Agent Processor suppl HRI ier) 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 Sales End-use- Production Procurement Product types (US$ channels Location Channels millions) Tiger Brands is a branded fast moving consumer $2,241 Wholesaler/ South Africa, Direct/ packaging goods and healthcare company that Retail/HRI Cameroon, Agents operates mainly in South Africa including trade Kenya, and partners in selected emerging markets. It also owns a Zimbabwe 37 percent market share of the National Foods Holding Limited in Zimbabwe. It is listed on the Johannesburg Securities Exchange (JSE) South Africa with a 50 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. Grain Milling and Baking = $774 Other Grains = $270 Consumer Brands Groceries = $428 Confectionery (Snacks and Treats) = $217 Beverages = $129 Value Added Meats = $177 Out of Home Solution = $37 Exports (canned fruit and vegetables) = $89 Deciduous Fruit = $120 http://www.tigerbrands.co.za/ AVI Group is listed on the JSE. It is comprised of $1,116 Wholesaler/ South Africa Direct/ trading subsidiaries that manufacture, process, market Retail/HRI Agents and distribute 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 biscuits (cookies), Ellis Brown coffee creamer, Ciro Coffee, Koffiehuis Coffee, Frisco coffee, House of Coffee, Willard’s potato chips, and Quali Juice. www.avi.co.za Premier Foods is one of South Africa’s largest Not Retail/ South Africa Direct/ manufacturer, distributors and marketer of milling and available Convenience Agents baking products. Categories include maize/corn, Stores bread, wheat and rice. The company carries five of the top 20 of South Africa consumer brands. www.premierfoods.com 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 is one of the leading food $2,311 Distribution South Africa Direct/ manufacturers in South Africa and the dominant Center/ Agents player of the staple food sector. The company Wholesalers/ products categories include baking aids or cake mixes; Retail/HRI groceries, tea/coffee, breakfast cereals, biscuits, condiments, juices and acidic drinks, dried fruits, eggs and broiler rearing, and animal feeds. http://www.pioneerfoods.co.za/ FoodCorp is a major South African food Not Wholesaler/ South Africa Direct/ manufacturing company. Products range includes available Retail/HRI Agents consumer brands such as groceries, milling, baking, and beverages, processing of fish, pies; and high-end specialty ready to eat meals. Foodcorp is a subsidiary of Pamodzi Investment Holdings. http://www.foodcorp.co.za/ Clover SA (Pty) Ltd, largest dairy group in South $882 Distribution South Africa Direct/ Africa - dairy products categories includes cream, Center /Retail/HRI Agents milk/ flavored milk, condensed milk, yoghurts, cheese, health teas, butter/spreads, desserts, and beverages such as fruit juices, nectars, and ice teas. http: www.clover.co.za Unilever South Africa a subsidiary of Unilever Plc., Not Distribution South Africa Direct/ Manufactures fast moving consumer goods (fmcg’s) in available Center /Retail/HRI Agents 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. http://www.unilever.com Rainbow, South Africa’s largest processor and Not Distribution South Africa Direct/Agents marketer of chicken. It is a fully-integrated broiler available Center/Wholesaler/Retail/ producer that breeds and rears its own livestock, HRI processes and markets fresh, frozen, value-added and further processed chicken nationally and internationally. Rainbow incorporates Rainbow Farms (supplier of fresh and frozen), Epol (animal feed), Cobb SA (breeding stock operation), and vector Logistics (temperature-controlled distribution). Rainbow brands include own brand, farmer brown, bonny bird, and rainbow food solutions. It also produces dealer own brands for some retailers and wholesalers. http://www.rainbowchicken.co.za/ Parmalat South Africa is owned by Parmalat SpA – Not Distribution South Africa, Direct/Agent an Italian dairy company. It is a leader in the South available Center Botswana, African dairy industry. Their products include milk, /Distributor/Wholesaler/ Mozambique, yoghurt, ice cream, cheese, and fruit juices. Retail/HRI Swaziland, and http://www.parmalat.co.za Zambia Kellogg Company of South Africa Pty Ltd is the Not Distributor/ South Africa Direct/ world’s largest manufacturer of Ready-To-Eat cereals, available Wholesaler/ Agent and the market leaders in South Africa in the ready-to- Retail eat cereals business. Their products category includes breakfast cereals, cookies/crackers, natural/organic/frozen, and specialty cereals. www.kelloggs.co.za South African Breweries (SAB) Ltd, a subsidiary of Not Wholesaler/ South Africa Direct/ SABMiller Plc, operates seven breweries in South available Retail/ and Namibia Agent Africa and dominates the local brewing industry with HRI 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. www.sabmiller.com Distell, partly owned by SABMiller is South Africa’s $1,538 Wholesalers/ South Africa Direct/Agent leading fine-wine, spirits, and ready-to-drink (RTD) Retail/HRI alcoholic beverage producer, marketer and distributor. The company is South Africa’s leading wine exporter with one of its product being Amarula cream liqueur (the world’s most consumed). Production occurs in South Africa including distribution with sales offices in Botswana, Namibia, Europe, North and Latin America, including Asia. According to the company site, Distell’s revenue grew for the 12 months to June 2011 by 4.4 percent to reach R12,3 billion (US$1.54 billion) on sales. www.distell.co.za Illovo Sugar South Africa, Africa’s largest cane Year Wholesaler/ South Africa, Direct/Agent sugar and one of the world’s lowest-cost producers. It ended Retail/HRI/Bakers/Food Malawi, is a subsidiary of Associated British Foods Plc., with March processors/Minerals/Sweets Mozambique, extensive agricultural and manufacturing operations in 2011 Swaziland, six African countries of South Africa, Malawi, ($1,013) Tanzania, and Mozambique, Swaziland, Tanzania, and Zambia 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. www.illovo.co.za 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 – October 2011) Product Category Major Supply Strengths of key Supply Advantages and Disadvantages of Local Sources Countries Suppliers Red Meats Fresh/Chilled/Frozen Germany – The pattern of imports in this South Africa produces a very high quality 24% category is variable and depends beef with the domestic undersupply made Net imports from the world of $140 Australia – largely on local conditions, up with imported meat and meat products. million in 2011 versus $100 million 21% including quality and competitive in 2010, and $279,000 from USA in Canada – 14% price by the suppliers. Germany a 2011 versus $101,000 in 2010. leading supplier due to Free Trade USA is an Agreement (FTA) with South Note: SA net exports were $39 irrelevant Africa as a member of the million in 2011 versus $72 in 2010. supplier of European Union. 0.20% Poultry Meat Brazil – 55% Brazil remains a leading trading Domestic demand for poultry meat is Netherlands – partner for South Africa in terms of growing and outpaces the performance of Net imports of $300 million in 2011 10% poultry due to FTA with South any other proteins on the market. Domestic versus $191 billion in 2010, and Argentina – 7% Africa. The United States poultry producers are unable to meet consumption $11 billion from USA in 2011 exports to South Africa have been needs. South Africa’s major chicken versus $4 billion in 2010. USA is a minor constrained by anti-dumping duties producers are Astral foods, Rainbow supplier with since 2000. Chickens, Pioneer Foods, Sovereign and Note: SA net exports were $19 4% market Dagbreek. million in 2011 versus $30 million share. in 2010. Turkey Meat Brazil – 53% Competition, price and quality are South Africa is a net importer of turkey Canada – 16% the key strengths these suppliers. meat products. Not enough local Net imports of $32 million in 2011 USA – 13% With the growing trend towards production since turkey meat is a South versus $25 million in 2010, and $4 healthier lifestyles, turkey products African favorites or commonly consumed million from USA in 2011 versus are becoming popular. except during Christmas time. However, $1million in 2010. the trend is changing as they start to make regular appearance in restaurant menus. Note: SA net exports were $699,000 in 2011 versus $842,000 in 2010. Fish and Seafood Products Thailand – 36% Despite being a net exporter, South Major South African fish traders and India – 16% Africa imports continue to increase processors are Sea Harvest (owned by Net imports of $210 million in 2011 China – 10% to supplement domestic demands. Tiger brands); Irvin and Johnson (AVI), versus $193 million in 2010, and $7 Oceana, Premier Foods, and Sekunjalo. million from the USA in 2011 USA is a minor versus $3 million in 2010. supplier of 3%. Note: SA net exports were $460 million in 2011 versus $413 million in 2010. Dairy Products excluding cheese France – 26% Despite being a net exporter, South South Africa is a net importer of dairy New Zealand – Africa imports continue to increase products particularly whey, concentrated Net imports of $95 million in 2011 18% to supplement domestic demands. milk and cream to supplement insufficient versus $74 million in 2010, and $7 Ireland – 8% domestic production. million from the USA in 2011 versus $6 million in 2010. USA - 7%. Note: SA net exports were $70 million versus $58 million 2010. Pulses China – 69% China enjoys a bilateral trade South Africa is a net importer of pulses. Canada – 13% agreement with South Africa. Pulses are an important protein source in Net imports of $65 million in 2011 Ethiopia – 3% Domestic production is insufficient South Africans diet and imports make up versus $66 million in 2010, and to cover local demand so imports for the shortfall between domestic $1.2 million from USA in 2011 USA a minor supplement domestic demands. production and demand. Also, pulses are versus $377,000 in 2010. supplier of 2%. highly seasonal imported from November – March in 50kg bags. Pulses are used in Note: SA net exports were $4 South Africa by manufacturer for further million versus $2 million in 2010. processing of soups and broths. Vegetable Oils Exc. Soybean oil Malaysia – Shortages of oils are supplemented South Africa is a net importer of edible oil 38% with unrefined oil imports which productions. Local producers are unable Net imports of $607 million in 2011 Indonesia – are refined and packaged by local to meet demand due to crop size. versus $451 million in 2010, and 32% oil expressers. Malaysia provides Shortages of oils are supplemented $17 million from USA in 2011 Argentina – 8% quality and competitive prices. versus $3 million in 2010. USA - 3% Note: SA net exports were $98 million versus $91 million in 2010. Sugar/Sweetener/Beverage Bases Brazil – 46% A growing domestic demand calls South Africa is a leading producer and a China – 13% for imported products from net exporter of sugar related products. Net imports of $78 million in 2011 Mozambique – competitive suppliers to Local production is sufficient to meet versus $53 million in 2010, and $8 11% supplements. demand. million from USA in 2011 versus $4 million in 2010. USA - 10% Note: SA net exports were $99 million versus $119 million in 2010. Breakfast Cereal/Pancake Mix France – 21% Imports from competitive suppliers South Africa is a net exporter of breakfast Germany – supplements supply. cereal products. Local production is Net imports of $24 million in 2011 18% sufficient to meet demand. versus $20 million in 2010, and Thailand – 17% $1.3 million from USA in 2011 versus $1.8 million in 2010. USA - 5% Note: SA net exports were $26 million versus $22 million in 2010. Fruit & Vegetable Juices China – 41% 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 $65 million in 2011 27% such as berries, kiwi fruits, requirements. versus $45 million in 2010, and Spain – 10% including off season fruit and $442,000 from USA in 2011 versus vegetables from competitive $364,000 in 2010. USA is a small suppliers. supplier of 1% Note: SA net exports were $191 million versus $176 million in 2010. Processed Fruit & Vegetables China – 21% Opportunities exist for competitive South Africa is a net exporter, and Italy – 13% suppliers of grape and apple juice domestic production is sufficient to cover Net imports of $135 million in 2011 Belgium – 13% which are used as a base for other local demand. versus $118 million in 2010, and $9 fruit juices, prepared and preserved million from USA in 2011 versus USA - 7%. tomatoes, and fruit pulp. $10 million in 2010. Note: SA net exports were $315 million versus $331 million in 2010. Wine and Beer France – 35% Due to the rapid increase in exports South Africa is a net exporter of wine and Netherlands – of South African wines which beer, particularly wine of fresh grapes. Net imports of $39 million in 2011 25% creates a niche for specialty wines The South African wine industry is versus $30 million in 2010, and Italy – 21% and beers from competitive relatively large and extensive ranked $454,000 from USA in 2011 versus suppliers. seventh in world output. South Africans’ $1.5 million in 2010. USA is a minor tastes and preferences are becoming more supplier of sophisticated and the average consumer is Note: SA net exports were $643 1.16%. increasingly expecting a wide range of million versus $663 million in wine and beer. 2010. Distilled spirits United Sophisticated tastes and South Africa is a net importer of distilled Kingdom – preferences of South Africans calls spirits particularly whiskies. Local 68% for a range of whiskey products. production is not enough to meet local Net imports of $312 million in 2011 Ireland – 9% UK continues to be leading trade demand. versus $253 million in 2010, and United States – supplier of this category. Despite $23 million from USA in 2011 7% lack of brand awareness of U.S. versus $16 million in 2010. whisky products among south African consumers, U.S. saw Note: SA net exports were $96 increased in whisky exports. million versus $75 million in 2010. 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 – Oct Jan – Oct Percenta U.S. Key Market Category 2011 South 2011 U.S. ge of Import Constraints Attractivene Africa Exports to Annual Tariff Rate Over ss for U.S. Imports S.A. Import Market from the ($1,000,00 Growth Developme World 0) U.S. nt ($1,000,00 0) Almonds 6 5.6 24.65 free free from U.S. (shelled the EU dominates the nuts) countries market. SA HS080212 produces and macadamias and pecans. Fats of 12 6 181.79 free Free from U.S. has Bovine the EU largest HS150200 countries. market share of 51%. Animal Fats 1.1 1.1 88.99 free to From the EU U.S. has the and Oils 10% countries largest HS150600 import tariff market share rate is free of 99%. to 1.3%. Salmon 1.7 1.2 -22.07 6c/kg 6c/kg U.S. has the HS160411 largest market share of 70%. Sugar 37 15 86.12 free Free from U.S. has the Sweeteners the EU largest : lactose, countries market share glucose of 41%. and syrups (HS170200 ) Protein EU countries U.S. has the Concentrat import tariff largest es rate to enter market share HS2 8 3 -23.21 10-20% 10610 South Africa of 40%. is free to 2.6% Food 130 24 3.95 Varied from Varied and U.S. has the Preparation free, 5- from the EU largest s 20%, and countries market share HS210690 154c/liter import tariff of 22%. for rate is free alcoholic to 2.6%. preparation s. Baking 8 4 142.10 30% From the EU U.S. has the powders countries largest (baking import rate market share inputs) is 3.9%. of 51%. HS210230 Sauces, 14 3 10.78 5-20% From the EU U.S. has the condiments countries largest and import tariff market share seasonings rate is free of 23%. HS210390 to 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 – Oct Jan – Oct Percentag U.S. Key Market Category 2011 South 2011 U.S. e of Import Constraints Attractivene Africa Exports to Annual Tariff Over ss for U.S. Imports S.A. Import Rate Market from the ($1,000,00 Growth Developme World 0) U.S. nt ($1,000,00 0) Sausage 64 4 -11.93 free South Africa is casings a net importer (HS050400 of sausage ) casing products. The import tariff rate is free from both the U.S and the EU countries. Cereals 1 .038 106.75 0.65c/kg EU countries U.S. has a Flour to 20% enter the market share (HS1102) market duty of 4%. free to 2.6%. Flour and .718 .046 42.81 Free to From EU U.S has a meal of 20% countries market share dried free to 2.6% of 6%. leguminous vegetables (HS1106) Malt 51 7 109.85 Free to 3% EU free to U.S. has a (HS1107) 0,111c/kg 13% market share. Plants of 2.4 .125 -23.35 Free to EU countries U.S. has a 5% parts of 20% enters duty market share. plants free to 2.6% (including seeds and fruits) (HS1211) Vegetable 26 2 -16.49 Free to EU countries U.S. has a Saps and 25% duty free to market share Extracts 3.25% of 6%. (HS1302) Lard .070 .025 -18.05 Duty free Duty free U.S. has a (HS1501) from EU market share of 36%. Fats and .876 .053 -39.05 Duty free Duty free U.S. has a oils from EU market share (HS1504) of 6%. Fixed 10 .680 -45.79 10% EU countries U.S has a vegetable duty free to market share fats and 1.3% of 7%. oils (HS1515) Animal and 2 .385 -23.81 10% Duty free U.S has a vegetable from EU 20% market fats and countries. share. oils (HS1518) Malts 28 .899 -13.28 20% EU countries U.S. has a 3% Extract duty free to market share. (flavorings) 20% (HS1901) Tabioca & .484 .017 Zero Duty free Duty free U.S. has a 4% Substitutes imports from EU market share. prepared from the countries. from starch U.S for the (HS1903) past two years. Prepared 24 1 -29.12 5c/kg to EU countries U.S. has a 5% foods 25% duty free to market share. obtained 3.25%. by the swelling or roasting of cereal products (HS1904) Bread, 46 2 83.73 3.6c/kg to EU countries U.S. has a 3% pastry, 25% duty free to market share. cakes, and 2.73%. biscuits (ingredient s) (HS1905) Soups and 4 .164 61.93 Free, and EU countries U.S. has a Broths 3c/kg to duty free to market share (HS2104) 2 5 % 3 . 2 5 % . o f 4 % . Wine of 18 .452 34.80 25% From EU U.S. has a fresh including countries market share grapes additional R9.49c/liter of 3%. (HS2204) costs of to 3.25%. R2.31/liter to R93.03/Lit er levied on both the Customs, and excise duties. Ethyl 312 23 44.26 136c/liter From EU U.S. has a alcohol, to countries market share spirits, and 154c/liter R17.68c/liter of 7% liqueurs including to particularly on (HS2208) additional R20.02c/liter (HS220830). costs of including R2.31/Liter additional to costs R93.03/lite ofR38.oo/lite r levied on r to R93.03 customs levied on and excise both the respectivel Customs, y. and Excise duties. Source: Global Trade Atlas C. Products not present because they face significant barriers Product Jan – Oct Jan – Oct Percentag U.S. Key Market Category 2011 South 2011 U.S. e of Impor Constraints Attractivenes Africa Exports to Annual t Tariff Over Market s for U.S. Imports S.A. Import Rate Developmen from the ($1,000,000 Growth t World ) U.S. ($1,000,000 ) Chicken 195 6 173.60 220c/k Brazil with Consumer Cuts g 47.53% demand 020714 market and continues to US 2.96%. increase and The general domestic rate of duty production is for this tariff not keeping is 220 c/kg in up. However, Rand. For the prohibition of EU the rate is United States 165 c/kg and poultry exports it is free for to South Africa the SADC of chicken leg countries. quarters The anti- (02071490) dumping duty since 2000 are on product restricted by from Tyson an anti- Foods is 224 dumping duty. c/kg, from Gold Kist Inc it is 245 c/kg and 696 c/kg from any other United States producers. Meat of 23 Zero Zero 40% Australia with The United Bovine 45.20% States beef frozen market share products into (0202) to South Africa supplement are banned imports. Beef since 2003. products from SADC countries are imported into South Africa duty free. Animal 51 4 12.01 free France with The U.S. has Feed 20.34% 8% of the Preparation market market share. s (230990) share. 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: agpretoria@fas.usda.gov For more information on exporting U.S. agricultural products to other countries, please visit the Foreign Agricultural Service’s website at: http://www.fas.usda.gov 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: 23 January 2012

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