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The Baby Food Sector in South Africa 2017

The Baby Food Sector in South Africa 2017

Summary

The Baby Food Sector in South Africa 2017, is an analytical report by GlobalData which provides extensive and highly detailed current and future market trends in the South African market.

The South African baby food market has remained vibrant despite a poor economic climate over the last three years. Total consumption has also risen in all sectors, except drinks. In 2016, retail sales are up by 88.4% on 2010 and in terms of volume, total consumption stood at 7.4% higher than in 2010. Milks, however, remains the dominant product group, accounting for 69% of retail sales and 52% of volume in 2016. Baby food is distributed through a variety of outlets in South Africa and there are no restrictions on its sale. The market is expected to increase by 54.5% in current price terms and 4.1% in volume terms between 2016 and 2022. Consumption will be constrained by the expected fall in the number of live births, but it should be encouraged by growing incomes and product innovation.

What else does this report offer?

  • Consumption data based upon a unique combination of industry research, fieldwork, market sizing work and our in-house expertise to offer extensive data about the trends and dynamics affecting the industry.
  • Detailed profile of the companies operating and new companies considering entry in the industry along with their key focus product sectors.
  • Market profile of the various product sectors with the key features & developments, segmentation, per capita trends and the various manufacturers & brands.
  • Overview of baby food retailing with a mention of the major retailers in the country along with the distribution channel.
  • Future projections considering various trends which are likely to affect the industry.
Scope
  • The baby food market remained vibrant despite a poor economic climate over the last three years.
  • The top three socio-economic groups are the main purchasers of commercially prepared baby food, but represent just 25% of the population.
  • The highest growth rates over the period 2010 to 2016 have been registered by wet meals, where retail sales more than doubled and volume sales rose by 17.9%.
  • The market is dominated by Nestlé, which claims over half of all retail sales, although it has faced increasing competition recently.
  • There is significant domestic production, and imports have fallen considerably in recent years.
  • Supermarkets are the main source of supply, accounting for over half of volumes, while hypermarkets are growing in importance.
  • The market is expected to increase by 54.5% in value terms between 2016 and 2022, fuelled by price rises.
Reasons to buy
  • Evaluate important changes in consumer behavior and identify profitable markets and areas for product innovation.
  • Analyse current and forecast behavior trends in each category to identify the best opportunities to exploit.
  • Detailed understanding of consumption by individual product categories in order to align your sales and marketing efforts with the latest trends in the market.
  • Investigates which categories are performing the best and how this is changing market dynamics.


  • Introduction
    • Executive Summary
    • Definitions: Market Sectors
    • Definitions: Terminology
  • Background to the Market
    • Births — Live Birth Rates: The number of live births is estimated to have risen by 4.3%, from 1.15 million in 2006 to 1.2 million in 2016
      • Table Birth & Population Trends, 2006–2016
    • Births — Live Births by Region: Gauteng, which includes both Johannesburg and Pretoria, accounted for the highest proportion of births in 2015, at 21%
      • Table Live Births by Province, 2010–2015
    • The Consumer: The top three LSM groups, 8-10, are the main purchasers of commercially prepared baby food
      • Table Living Standard Measures, 2010–2015
    • The Consumer: As education and living standards improve, the top LSMs are expected to account for a larger proportion of the population in the future
    • The Consumer: Ownership of consumer goods has been increasing
      • Table Ownership of Household Goods
    • The Consumer: Food security was prioritized by the South African Government in 2010
      • Table Annual Average Household Expenditure on Food, Beverages & Tobacco by Population Group, 2014/15
    • The Consumer: When shopping for foods for their children, 34% of mothers said they cared most about the nutritional information available on the label
    • Socio-demographic Trends — Family Structure: Only 36.4% of babies up to the age of four live with both their biological parents
      • Table Marriage & Divorce Trends, 2010–2015
    • Socio-demographic Trends — Number of Women of Child Bearing Age: The number of women of childbearing age stood at 15.3 million in 2016
      • Table Number of Women of Childbearing Age by Age Group, 2009 & 2016
    • Socio-demographic Trends — Births by Age of Mother: There is a clear trend towards giving birth at a later age
      • Table Current Birth Registrations by Age of Mother, 2010–2015
    • Socio-demographic Trends — Births by Ethnic Group: The highest fertility rates are found among the black population, at 2.8 children per woman in 2011
      • Table Estimated Total Fertility Rates, 1996–2011
    • Working Women — Female Employment: The proportion of women in employment stood at 38.4% in 2017 and is rising
      • Table Female Employment Trends, 2010–2017
    • Working Women — Female Employment: In the first quarter of 2017, over half of working women worked for 40 to 45 hours
      • Table Employment Situation by Population Group, 2017
    • Working Women — Legislation: All pregnant workers are entitled to four months' maternity leave
    • Regulations: In 2012, the government finalized regulations to bring South Africa into line with the International Code
    • Regulations: Manufacturers claim that the costs of new labeling and packaging have contributed to higher prices in the shops
    • Regulations: In summer 2015, the Health Minister proposed a tougher series of labeling rules for baby food, including formula
    • Regulations: South Africa is fully compliant with the International Code of Marketing of Breast-milk Substitutes
    • Breastfeeding Trends — Promotion: In 2011, the government announced it would move to an exclusive breastfeeding strategy
    • Breastfeeding Trends — Prevalence: South Africa is thought to have one of the lowest rates of exclusive breastfeeding in the world, although data is conflicting
      • Table Breastfeeding Status by Age, 2003/04 and 2016
    • Breastfeeding Trends — Prevalence: Only 24% of babies under four months were not breastfed at all in 2016
      • Table Breastfeeding Status by Age, 2016
    • Breastfeeding Trends — Prevalence: There are wide variations in the ever-breastfed rate by region
      • Table Breastfeeding Rates by Socio-Demographic Characteristic, 1998 & 2003
    • Breastfeeding Trends — Prevalence: A 2015 survey revealed that only 41% of mothers believed that breast milk provided all the nutrients that babies need
    • Breastfeeding Trends — Legislation: Recent years have seen increasing interest in legislation to promote and protect breastfeeding mothers
  • Market Overview
    • Market Overview: The value of the South African baby food market amounted to R5 billion in 2016 – up 88.4% over the 2010 level
    • Market Overview: All sectors, with the exception of baby drinks, have enjoyed sales growth between 2010 and 2016
      • Table Market Size, 2016, &Growth Rates, 2010–2016
    • Manufacturer Shares: Despite challenges Nestlé has continued to dominate sales, taking a 54.4% share of overall value in 2016
      • Table Baby Food: Manufacturer Share Trends, % Value, 2010–2016
    • Manufacturer Shares: Nestlé's position is due to its leadership in the milks & cereals category
      • Table Baby Food: Manufacturer Shares by Sector, %, 2016
    • The Future: Consumption of baby food will be constrained by the expected fall in the number of live births
      • Table Projected Market Size, 2022, &Growth Rates, 2016–2022
  • Sector Analysis
    • Sector Analysis: Baby Milks
    • Milks Sector Trends: Baby milks is the largest sector in the South African baby food market, with sales amounting to 19,662 tons in 2016
    • Milks Per Capita Trends: Per capita expenditure has risen by 85.3% between 2010 and 2016
    • Milks Segmentation: The growing popularity of later stage milks has reduced the share held by first-stage milks by four percentage points in value since 2010
    • Milks Segmentation: The vast majority of sales consist of milk powder with liquid formula being significantly more expensive
      • Table Baby Milks: Price Positioning, June 2017
    • Milks Segmentation: Standard, mid-range products tend to cost between US$11 and US$15 per kg
      • Table Baby Milks: Price Positioning, June 2017
    • Milks Manufacturer Shares: In 2015 and 2016, Aspen gained market share at Nestlé's expense, but Nestlé remains dominant
    • Milks Manufacturer Shares: Abbott is the largest of the smaller players that are active on the South African market
      • Table Baby Milks: Manufacturer Shares, % Value, 2011–2016
      • Table Baby Milks: Manufacturer Shares, % Volume, 2014–2016
    • Milks Manufacturer Shares: Nestlé leads across the board, followed by Aspen in standard milks, but Abbott is second in the special formula segment
      • Table Baby Milks: Manufacturer Shares by Segment (% Value), 2011
    • Milks Brands: Both Nestlé and Aspen offer two main brands in South Africa: Nan & Lactogen and Infacare & S-26 respectively
    • Sector Analysis: Baby Cereals
    • Cereals Sector Trends: Cereals constitute the third largest sector in the South African baby food market by volume with 16.6% of sales
    • Cereals Per Capita Trends: Per capita expenditure in current price terms rose by 90.6% over the whole period from 2010–2016
    • Cereals Segmentation: Baby cereals consist primarily of dry products and include both instant cereals, and those that require further cooking
    • Cereals Segmentation: The bulk of cereal sales consist of products retailing at between US$6 and US$11 per kilogram
      • Table Cereals & Dry Meals: Price Positioning, 2017
    • Cereals Segmentation: By far the most popular pack size range for cereals is 200g/250g
      • Table Finger Foods: Price Positioning, 2017
    • Cereals Manufacturers: Nestlé had been losing share, but was able to inch ahead of Tiger Brands in value terms in 2014/15, thanks to the higher prices of its products
      • Table Baby Cereals: Manufacturer Shares, 2011–2016
    • Cereals Brands: Nestlé's Cerelac cereal with milk outsells its non-milk and considerably cheaper cereal, Nestum
    • Sector Analysis: Baby Meals
    • Meals Sector Trends: The baby meals segment has performed well: between 2010 and 2016, consumption increased by 17.9% to 11,354 tons
    • Meals Per Capita Trends: Per capita expenditure on wet meals in South Africa has increased annually, totalling a rise of 120% since 2010
    • Meals Segmentation: The launch and take-off of pouches from 2014 onwards, the majority of which are sweet, has led to higher growth rates in sweet products
    • Meals Segmentation: Pouches tend to be more expensive than the equivalent jarred products, although the difference is not as stark as in many other countries
      • Table Wet Meals: Price Positioning, 2017
    • Meals Segmentation: Until recently, virtually all wet meals were marketed in jars
      • Table Wet Meals: Price Positioning, 2017
    • Meals Manufacturer Shares: Until recently, there was only one manufacturer of significance in the baby meals sector: Tiger Brands, with its Purity brand
      • Table Wet Baby Meals: Manufacturer Shares, 2011–2016
    • Meals Brands: In the face of a number of challenges to its leadership of the wet meals segment, Purity has responded with a strategy based on innovation
    • Sector Analysis: Baby Drinks
    • Drinks Sector Trends: Sales of baby drinks fell between 2010 and 2016 in both value and volume terms
    • Drinks Per Capita Trends: At constant prices, per capita expenditure fell by almost 40% since 2010
    • Drinks Segmentation: A broad selection of juices is available, with apple and pear being the most commonly found
      • Table Baby Drinks: Price Positioning, 2017
    • Drinks Segmentation: The new Purity Junior drinks are packaged in plastic bottles
    • Drinks Manufacturer & Brand Shares: Although Tiger Brands has faced increased competition since 2011, it remains the clear market leader
      • Table Baby Drinks/Juices: Manufacturer Shares, 2011–2016
  • Production and Trade
    • Production: There is significant domestic production of baby food in South Africa, with Nestlé, Tiger Brands, Aspen, and most recently Rhodes all active
    • Imports: Imports have fallen considerably in recent years, from a high of over 5,000 tons in 2012
    • Exports: Exports of baby milks and cereals have fluctuated considerably over the last few years
  • Company Profiles
    • Company Profiles: The market is dominated by Nestlé, which claims over half of all retail sales, although it has faced increasing competition recently
    • Company Profiles: Nestlé (South Africa) (Pty) Ltd
      • Table Market shares, 2016:
    • Company Profiles: Tiger Brands Ltd
      • Table Market shares, 2016:
      • Table Tiger Brands: Financial Highlights, 2010–2016
    • Company Profiles: Aspen Nutritionals (Pty) Ltd
      • Table Market shares, 2016:
      • Table Aspen: Financial Highlights, 2010–2016
    • Company Profiles: Other Manufacturers
  • Distribution
    • Retail Structure: The convenience store channel is gradually taking share from larger retail outlets
      • Table Packaged Food Sales by Channel, R Billion, 2010–2017
    • Baby Food Retailing: Baby food is distributed through a variety of outlets in South Africa and there are no restrictions on its sale
    • Baby Food Retailing: The supermarket channel is particularly important in the sale of wet meals and drinks, representing 63% of volume sales in 2016
      • Table Baby Food: Sales by Sector & Store Type, 2016
      • Table Baby Food: Sales by Store Type, 2011–2016
  • Economic Background
    • Political and Economic Background: Real GDP growth is expected to rise annually up to 2022, reaching 2.7% in that year
      • Table Key Macro-Economic Indicators, 2010–2017
    • Political and Economic Background: Throughout the period up to 2022, inflation is forecast to remain at between 5% and 6% per annum
      • Table Key Macroeconomic Forecasts, 2016–2022
  • Prospects and Forecasts
    • Birth and Population Projections: The crude birth rate is expected to decline from 21.4 per thousand population in 2016 to 18.9 per thousand population by 2022
      • Table Birth & Population Projections, 2010–2022
    • Forecast Overview: The market is expected to grow by 4.1% in volume over the period between 2016 and 2022
    • Market Size: Milks will remain the largest sector, accounting for over half of all volume sales
  • Appendix
    • Appendix — The Baby Population: The baby population will fall in line with lower birth numbers, and will stand at 3.5 million in 2022, 3.8% below the 2016 total
      • Table Baby Population, Number of Babies, '000, 2006–2022
    • Appendix — Market Value: Sales have increased annually since 2010, up 88% to R4,969 million in 2016
      • Table Baby Food: Market Value, Current Prices, 2010–2016
    • Appendix — Market Value: In real terms, the rise has been a more subdued 35.7%
      • Table Baby Food: Market Value, Constant Prices, 2010–2016
    • Appendix — Market Value: Between 2010 and 2016 sales fell by 4.5% to US$338 million
      • Table Baby Food: Market Value, US$ Million, 2010–2016
    • Appendix — Market Volume: Baby food consumption has risen much more slowly — up 7.4% between 2010 and 2016 to 38,071 tons
      • Table Baby Food: Market Volume, Tons, 2010–2016
    • Appendix — Per Capita Expenditure: Average expenditure per baby rose by 90% between 2010 and 2016 to R4,145
      • Table Baby Food: Per Capita Expenditure, Current Prices, 2010–2016
    • Appendix — Per Capita Expenditure: In real terms, per capita expenditure increased by 37% up to 2016
      • Table Baby Food: Per Capita Expenditure, Constant Prices, 2010–2016
    • Appendix — Per Capita Expenditure: By the end of 2016 per capita expenditure amounted to US$282 — a 4.6% fall over 2010
      • Table Baby Food: Per Capita Expenditure, US$ Prices, 2010–2016
    • Appendix — Per Capita Consumption: Per capita consumption has increased by just 8.5% since 2010, to 31.8kg
      • Table Baby Food: Per Capita Consumption, Grams, 2010–2016
    • Appendix — Milks: Baby milks is the largest sector in the South African baby food market, with sales amounting to 19,662 tons in 2016
      • Table Baby Milks: Sector Trends, 2010–2016
    • Appendix — Milks: Starter formulae are losing share to follow-on milks and particularly growing-up milks
      • Table Baby Milks: Market Segmentation, Value and Volume, 2010–2016
    • Appendix — Milks: The most expensive milks on the market were found to be Holle and Hipp's organic milks in 2017
      • Table Milk Brand Price Analysis, June 2017
    • Appendix — Milks: The Lactogen and Infacare ranges are the lowest-priced products on the market
      • Table Milk Brand Price Analysis, June 2017
    • Appendix — Cereals: Cereals constitute the third largest sector in the South African baby food market by volume, at 6,312 tons
      • Table Baby Cereals: Sector Trends, 2010–2016
    • Appendix — Meals: The baby meals segment has performed well compared to other areas of the baby food market
      • Table Meals : Sector Trends, 2010–2016
    • Appendix — Drinks: Baby drinks remains a very minor category, accounting for 2% of market volume and less than 1% of market value
      • Table Drinks : Sector Trends, 2010–2016
    • Appendix — Imports: In 2016, imports of milks & cereals fell back to 1,490 tons; Germany accounted for just over 50% of imports in value
      • Table Baby Milks & Cereals: Import Trends, 2010–2016
      • Table Baby Milks & Cereals: Imports by Country of Origin, Value, 2014–2016
    • Appendix — Exports: The vast majority of milks & cereals exports are destined for neighboring African countries, including Mozambique, Zambia, and Botswana
      • Table Baby Milks & Cereals: Export Trends, 2010–2016
      • Table Baby Milks & Cereals: Exports by Country of Destination, Value, 2014–2016
    • Appendix — Value Forecasts: The market is forecast to reach R7,676 million by 2022, with all sectors achieving growth of over 30%
      • Table Baby Food: Market Value Forecasts, Current Prices, 2016–2022
    • Appendix — Value Forecasts: In real terms, the market's growth will be a more subdued 12 %
      • Table Baby Food: Market Value Forecasts, Constant Prices, 2016–2022
    • Appendix — Value Forecasts: By 2022 the market is forecast to show a 54.5% increase over 2016
      • Table Baby Food: Market Value Forecasts, US$ Million, 2016–2022
    • Appendix — Volume Forecasts: The market is expected to grow by 4.1% in volume over the period between 2016 and 2022
      • Table Baby Food: Market Volume Forecasts, Tons, 2016–2022
    • Appendix — Per Capita Forecasts: Per capita expenditure will rise annually to R6,678.5 by 2022
      • Table Baby Food: Per Capita Expenditure, Current Prices, 2016–2022
    • Appendix — Per Capita Forecasts: Growth will be lowest for drinks and highest in the cereals sector
      • Table Baby Food: Per Capita Expenditure, Constant Prices, 2016–2022
    • Appendix — Per Capita Forecasts: By 2022 expenditure per baby will increase by 61%
      • Table Baby Food: Per Capita Expenditure, US$, 2016–2022
    • Appendix — Per Capita Forecasts: Per capita consumption looks set to register growth of 8.6% between 2016 and 2022, to 34.5kg
      • Table Baby Food: Per Capita Consumption, Grams, 2016–2022
    • Summary Methodology

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