"South Africa Food & Drink Report Q1 2014" now available at Fast Market Research

From: Fast Market Research, Inc.
Published: Thu Jan 23 2014

We expect to see another positive year for the South African economy and consumer industries through 2014, as the country's economy continues to recover post-recession. We forecast real GDP growth of 2.5% in 2014, up from 2.1% the previous year. In addition, private consumption is expected to continue its growth of the past four years at a rate of 2.2% in 2014, and 2.9% in 2015. Although the economic recovery has not been without challenges and will likely remain uneven, in our view, the consumer sector continues to hold up.

Headline Industry Data

* 2014 per capita food consumption (local currency) = +8.1%; five-year forecast compound annual growth (CAGR) to 2017 = +8.1%.
* 2014 soft drinks per capita volume sales = +7.6%; forecast compound annual growth to 2017 = +5.0%
* 2014 mass grocery retail sales (local currency) = +9.3%; forecast compound annual growth to 2017 = +9.2%.

Full Report Details at
- http://www.fastmr.com/prod/764017_south_africa_food_drink_report_q1_2014.aspx?afid=303

Key Company Developments

Pick n Pay Making Progress: South Africa's second biggest food retailer by sales Pick n Pay has improved its position. After a challenging period that saw it lose further ground to its main rival Shoprite, it has reported promising interim results for the first half of its trading year.

Chief among Pick n Pay's problems has been a relatively dated distribution network, which was thought to be a contributing factor in its consistently weaker operating margin performance compared with Shoprite over the past few years.

To address such shortcomings, its margins would have to get weaker before they could get better as the company invested in improving its competitiveness. In the six months to September its same-store sales rose 3.1% year-on-year (y-o-y). Trading profit increased 15.% y-o-y to ZAR317.5mn (US$32.2mn) Longer-term, Pick n Pay is aiming to bump up its operating margins nearer to the 4.5% range, compared with 2.7% last year and 2.3% this year. Getting its margins above 4% would represent a tremendous step forward in Pick n Pay's ability to remain competitive as the South African retail landscape evolves considerably over the next few years. With Walmart's Massmart unit also expected to spend significantly on food retailing, the next few years will be particularly important for Pick n Pay.

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Contact Name: Bill Thompson
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