Voluntary Report - public distribution

**Date:** 3/23/2004

**GAIN Report Number:** SF4010

SF4010

**South Africa, Republic of**

**Food Processing Ingredients Sector**

**South Africa\'s Food-Processing Industry**

**2004**

**Approved by:**

![](media/image1.wmf)Scott Reynolds

U.S. Embassy, South Africa

**Prepared by:**

Rachel Bickford

Margaret Ntloedibe

**Report Highlights:**

South Africa's food manufacturing industry continues to offer good
potential for US food ingredients. South Africa\'s food ingredients and
processing sector follows trends in the rest of the world. For example,
South African consumers expect value added elements to processed foods
like added health benefits or perceived \"beauty\" benefits. Exporters
should keep in mind that much advanced food processing technology is far
beyond the horizons of even the most richly resourced South African food
company. Industry sources comments that in the next three years to 2006,
demand for consumer non-durables is likely to increase by 2-3% per year.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Pretoria \[SF1\]

\[SF\]

####### TABLE OF CONTENTS

Section 1. Overview of South Africa
.............................................................. Page 3 of
19

Section 2. Market Summary
.............................................................................
Page 3 of 19

1.  Overview of South Africa's food processing sector ...... Page 3 of
    19

2.  Advantages and Challenges for US exporters ............. Page 10 of
    19

Section 3. Road Map for Market Entry
........................................................... Page 11 of
19

1.  Entry Strategy
    ....................................................................
    Page 11 of 19

2.  Market Structure
    ................................................................
    Page 11 of 19

3.  Company Profiles
    ............................................................... Page
    12 of 19

4.  Sector Trends
    ......................................................................
    Page 13 of 19

Section 4. Competition in the Sector
............................................................. Page 13 of
19

Section 5. Best Product Prospects
.................................................................. Page
18 of 19

Section 6. Post Contact and Further Information
...................................... Page 19 of 19

####### Section 1. Overview of south africa

South Africa has a population of 44 million and a GDP of \$126 billion
(2003). The Global Competitiveness Report ranks South Africa 25^th^ out
of 75 countries and first amongst developing countries in terms of
economic development. South Africa rated 22^nd^ for general
infrastructure and 16^th^ for financial market sophistication. Because
of its isolation during the apartheid years South Africa, unlike most
developing countries, was forced to develop a strong technological base.

South Africa has two economies, the first prosperous and largely white,
and the second poor and largely black. South African consumers in the
middle and upper income levels are demanding healthier, convenient,
quality foods, while the majority, the poorer sections of the population
still demand staple foods at low prices. The Government's overriding
challenge is to bring prosperity to the majority of citizens who remain
poor. Despite the inequality of income levels, South Africa's economy is
the largest and wealthiest on the African continent, boasting a GDP
equal to one-third of Africa's total output, a diverse and sophisticated
private sector, and impressive infrastructure and a wide range of
valuable mineral resources.

In the past three years South Africa has concluded highly attractive
preferential trade agreements with the South African Customs Union
(SACU), the European Union (EU), the Southern African Development
Council (SADC) countries, and is negotiating other agreements with the
United States and MERCOSUR. These agreements open up new market and
business opportunities for businesses wanting to invest directly in
South Africa or partner with it for other types of business
collaboration.

####### SECTION 2. MARKET SUMMARY

# 2.1 Overview of South Africa's food processing sector

South Africa's food and beverage industry is a strongly competitive
sector producing high quality commodity and niche products for local and
international markets. Food production is linked strongly to the
agricultural sector and South Africa is generally considered a net
exporter. The South African food and beverage industry reflects
sophisticated first world consumer demands within the context of a
larger third world economy, with consumers in the middle to upper income
levels demanding healthier, convenient quality foods and the poorer
sections of the population demanding staple foods at low prices. South
Africa is also an important entry point into other African markets.

According to the South African Department of Trade and Industry, the
agro-food industry (inputs, primary production, processing) contributes
approximately \$12.4 billion to South Africa's GDP and employs 451,000
people in the formal sector. Food production is the largest
manufacturing industry, forming 15% of the productive sector. The food
industry is largely self-sufficient, but imports most of its rice and
wheat requirements from the Far East and the United States respectively.
South Africa produces a wide variety of crops and has substantial
secondary food processing industries. Meat processing is the single
largest sub-sector, followed by grain milling and animal feed
manufacturing.

Many South African companies have formed associations with international
ones, giving South Africa access to the latest technology and expertise.
Examples of this are Simba and Frito-Lay (US), Robertson's and Best
Foods (US) and NCD Clover and Dannone (France); and a recent joint
venture by H.J. Heinz and Pioneer Foods South Africa to form a 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.

South Africa is a major exporter of foodstuffs, exporting double of what
it imports. Fresh fruit and nuts are the largest export (by value),
followed by sugar, processed fruit and vegetables, fish products,
alcoholic products and cereals and grains. South Africa also produces
certain niche market products, such as Rooibos tea, which is being
marketed internationally.

South Africa has a well-established beverage industry, which is
experiencing considerable growth, particularly in the brewing (beer) and
wine sectors. South African Breweries (SAB) dominates the local brewing
industry. 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 seventh in world output. A total of 250 cellars operate,
producing three times the Australian harvest. The soft drink business is
dominated by Cadbury Schweppes, which sells and distributes its products
through Amalgamated Beverages Industries, the leading Coca-Cola system
bottlers. South Africa exports a large percentage of its alcoholic
beverage production as domestic consumption of wine and spirits is
ranked fairly low by international standards.

Although there are over 4,000 food production companies, the top ten are
responsible for seventy percent of the industry's turnover. Key players
are Unifoods/Best Foods (including Robertsons), Nestle, National Brands,
Tiger Brands, Premier Foods and Nabisco.

2003 was a hard year for South Africa's food and beverage industry due
to the challenges of a mature food industry and flat consumer demand.
Industry analysts are optimistic for overall growth in demand for
consumer non-durables, in contrast to the flat demand over the past few
years. A leading economics consultant believes that in the next three
years, to 2006, demand for consumer non-durables will increase by 2-3
percent per year at a gently rising rate. Supplying South African poorer
consumers will offer new areas for growth.

Two of South Africa's largest food processing companies, Tiger Brands
and National Brands, have confirmed this year that they only want their
products to be either the first or the second brands on the shelves and
have pulled out of sectors where they cannot achieve this placing. Their
absence leaves an opportunity for small and medium companies to grow.

H.J. Heinz, a U.S. based company, and Pioneer Foods South Africa
launched a joint venture company, Heinz Foods South Africa (SA). It will
utilize Heinz's world-class technology to manufacture products in South
Africa. According to the Marketing Director of the company, the company
will concentrate on four main segments of the South African food market:
ketchup, sauces, and condiments; frozen meals and snacks; quick-serve
meals and soups; and tuna and seafood. Heinz's flagship products will
now be produced in South Africa -- including ketchup, beans and soups.
Heinz Foods SA will market products under various brands names,
including Today Frozen Foods (formerly a part of Pioneer Foods) John
West, Wellington's, and Heinz.

The food-processing sector is driven by a number of factors, including
climatic conditions, overall economic growth, private consumption
expenditure and the continued deregulation and liberalization of the
agricultural sector. There was virtually no growth in the food sector of
the Johannesburg Securities Exchange in the year 2003. According to an
article on South African consumer trends, one reason for the poor
performance of food companies was a change in consumer spending patterns
from luxury food items to the lottery, other gambling, and cellular
phones.

**Milled grain products,** the largest food sub-sector, contributes 17%
to food processing output. As consumer incomes rise, the demand for
maize meal tends to decline in favor of other grains. From 2001 to 2002,
production of maize meal declined by 0.79% while crushed corn increased
by 11.58%. In that same period wheat based milled products increased
7.45%. The production of maize-based breakfast food increased by 11%.

Almost 80% of total **meat** sales are to private households and 6% goes
into the catering and hotel industries. The production of processed
meats declined slightly but steadily across the board, except for a
slight increase in smoked, not canned ham.

The production of **milk products** has generally declined, with
*condensed* milk falling by 15% from 2001 to 2002, powdered milk by 20%
and butter by 34%*.* The dairy industry is under severe attack due to
reduced consumer demand, increased competition from smaller processors
and lower selling prices. Meanwhile, input costs are increasing and
processors are importing more ingredients.

Domestic production of **fish and fish products** remained stable during
2002. Production of canned fish increased 3% from 2001 to 2002, while
frozen prepared fish declined by only 1.5% and fishmeal increased by 6%.

Relatively high levels of foreign competition face local **fats and
oils** producers. The production of most products remained constant from
2001 to 2002 except for sunflower seed oil that increased by 31%.

Although the production of meat pies and sausage rolls declined, the
overall production of **bakery products**, especially sweet biscuits
increased by 17%. This trend illustrates a change in consumer spending
patterns that especially affects luxury products.

Production of **canned fruits and jams** as well as **canned and frozen
vegetables** increased substantially from 2001 to 2002 due to higher
demand from local and export markets.

The **beverage industry** comprises three sub-sectors, malt and malt
beverages (41%), distilleries and wineries (32%) and soft drinks (27%).
Private households account for the largest share of domestic demand and
increases have been steady due to increasing income levels and the
westernization of consumers. Demand has also moved from sorghum beer to
barley beer, but South Africa's liquor industry is also victim of the
shifts in consumer spending.

SABMiller is one of the world\'s largest brewers with a brewing presence
in over 40 countries across four continents and a portfolio of strong
brands and leading market shares in many of the countries in which it
has brewing operations. It captures approximately over 90% of all beer
sold in Southern Africa, a market share that has remained consistent for
the last 15 years. SAB International has brewing operations in 40
countries. A further 32 independent microbreweries are active in South
Africa.

Distell, the new company formed by the merger between Stellenbosch
Farmers Winery (SFW) and Distillers Corporation, now controls about 80%
of the brandy market, 60% of the wine market and 75% of the market for
alcoholic fruit drinks.

Internationally, the wine industry is relatively small, ranking 16^th^
with about 1.5% of global plantings, but production, at seventh
position, accounts for 3% of the world production.

South Africa\'s 2004 wine production is expected to reach a total of
about 1.250 million MT and the country's 2004 exports for natural wine
are expected to grow by 6.3% from last year. One of South Africa's
largest wine and spirits exporters, wines of South Africa (WOSA),
expects to sell more of its export quality wines in the domestic markets
because of a likely over-supply worldwide.

Coca-Cola dominates the **soft drink** industry and sells and
distributes its products mostly (60%) through Amalgamated Beverage
Industries (ABI). ABI, which controls about 90% of the market for
carbonated soft drinks, reported a drop of 3% in local sales for the
2000-2001 financial year.

The statistical table below shows the latest available data on the total
amount of food and beverages manufactured in South Africa:

+-------------------------+---------+------+--------+--------+-------+
| Product                 | Unit    | 2000 | 2001   | 2002   | 2003  |
|                         |         |      |        |        |       |
|                         | T=Tons  |      |        |        | (Jan  |
|                         |         |      |        |        | -Aug) |
|                         | Kl=Kil  |      |        |        |       |
|                         | olitres |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| FOOD:                   |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| CANNED AND PREPARED     | T       | 8    | 9,334  | 8,877  | 5,966 |
| MEATS:                  |         | ,875 |        |        |       |
|                         | T       |      | 4,352  | 4,106  | 2,448 |
| Bacon                   |         | 4    |        |        |       |
|                         | T       | ,291 | 730    | 789    | 499   |
| Ham -- not tinned:      |         |      |        |        |       |
|                         | T       | 771  | 4,962  | 4,774  | 2,873 |
| Cooked                  |         |      |        |        |       |
|                         | T       | 4    | 10,896 | 10,714 | 6,628 |
| Smoked                  |         | ,857 |        |        |       |
|                         | T       |      | 41,316 | 38,800 | 2     |
| Meat Loaves and Prawn   |         | 11   |        |        | 6,545 |
|                         | T       | ,057 | 20,958 | 20,650 |       |
| Patties                 |         |      |        |        | 9,112 |
|                         | T       | 40   | 4,666  | 4,546  |       |
| Polony                  |         | ,572 |        |        | 2,694 |
|                         | T       |      | 971    | 966    |       |
| Sausages -- not tinned: |         | 22   |        |        | 432   |
|                         | T       | ,563 | 1,197  | 927    |       |
| Vienna type             |         |      |        |        | 438   |
|                         | T       | 4    | 8,680  | 8,177  |       |
| Pork                    |         | ,111 |        |        | 5,393 |
|                         | T       |      | 1,130  | 1,142  |       |
| Beef                    |         | 1    |        |        | 674   |
|                         | T       | ,083 | 4,126  | 3,641  |       |
| Boerewors               |         |      |        |        | 2,079 |
|                         | T       | 1    | \-     | \-     |       |
| Russians                |         | ,208 |        |        | \-    |
|                         | T       |      | 7,757  | 6,727  |       |
| Frankfurters            |         | 9    |        |        | 5,158 |
|                         |         | ,028 |        |        |       |
| Other                   |         |      |        |        |       |
|                         |         | 1    |        |        |       |
| Tinned Sausages         |         | ,163 |        |        |       |
|                         |         |      |        |        |       |
| Other tinned meat       |         | 4    |        |        |       |
|                         |         | ,355 |        |        |       |
|                         |         |      |        |        |       |
|                         |         | 1    |        |        |       |
|                         |         | ,682 |        |        |       |
|                         |         |      |        |        |       |
|                         |         | 6    |        |        |       |
|                         |         | ,144 |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| DAIRY PRODUCTS:         | T       | 11   | 12,315 | 9,737  | 8,502 |
|                         |         | ,152 |        |        |       |
| Butter                  | T       |      | 31,960 | 30,112 | 1     |
|                         |         | 30   |        |        | 7,462 |
| Cheese:                 | T       | ,336 | 14,793 | 13,687 |       |
|                         |         |      |        |        | 8,452 |
| Cheddar                 | T       | 15   | 9,099  | 9,557  |       |
|                         |         | ,518 |        |        | 6,401 |
| Gouda                   | T       |      | 14,735 | 10,979 |       |
|                         |         | 7    |        |        | 6,201 |
| Processed cheese and    | T       | ,050 | 48,317 | 36,271 |       |
| cheese spreads          |         |      |        |        | 2     |
|                         | kl      | 14   | 42,798 | 65,910 | 3,945 |
| Condensed milk          |         | ,855 |        |        |       |
|                         | kl      |      | 31,167 | 34,800 | 4     |
| Powdered Milk (full     | (Jan    | 36   |        |        | 8,260 |
| cream, low fat,         | -May)\* | ,220 | 29,230 | 31,491 |       |
| skimmed, etc)           |         |      |        |        | 11,   |
|                         | kl      | 46   | 14,057 | 17,791 | 697\* |
| Yoghurt (natural,       | (Jan    | ,824 |        |        |       |
| flavored, fruit, etc)   | -May)\* |      | 6,093  | 7,722  | 15,   |
|                         |         | 26   |        |        | 236\* |
| Ice Cream:              | kl      | ,693 | 5,285  | 5,074  |       |
|                         | (Jan    |      |        |        | 5,    |
| Dairy ice cream (butter | -Apr)\* | 34   |        |        | 735\* |
| fat only)               |         | ,445 |        |        |       |
|                         | kl      |      |        |        | 3,305 |
| Sorbet (more than 4%    |         | 13   |        |        |       |
| vegetable fat)          | kl      | ,032 |        |        | 2,923 |
|                         |         |      |        |        |       |
| Soft serve (basic mix)  |         | 5    |        |        |       |
|                         |         | ,625 |        |        |       |
| Water ices              |         |      |        |        |       |
|                         |         | 5    |        |        |       |
| Milk ices (less than 4% |         | ,403 |        |        |       |
| vegetable fat)          |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| CANNED FRUIT AND        | T       | 17   | 15,980 | 16,245 | 9,629 |
| VEGETABLES:             |         | ,042 |        |        |       |
|                         | T       |      | 1,558  | 1,890  | 1,076 |
| Jams                    |         | 2    |        |        |       |
|                         | T       | ,372 | 18,485 | 15,341 | 1     |
| Apricot                 |         |      |        |        | 2,134 |
|                         | T       | 20   | 1,821  | 2,424  |       |
| Peach                   |         | ,216 |        |        | 666   |
|                         | T       |      | 19,883 | 26,159 |       |
| Other                   |         | 1    |        |        | \-    |
|                         | T       | ,345 | 61,934 | 62,396 |       |
| Marmalade               | (Jan    |      |        |        | 74,   |
|                         | -May)\* | 25   | 15,127 | 23,521 | 044\* |
| Canned Fruit:           |         | ,732 |        |        |       |
|                         | T       |      | 24,040 | 24,695 | 22,   |
| Apricots                | (Jan    | 55   |        |        | 341\* |
|                         | -May)\* | ,725 | 2,365  | 2,077  |       |
| Peaches                 |         |      |        |        | 3     |
|                         | T       | 14   | 34,444 | 35,393 | 0,732 |
| Pears                   |         | ,930 |        |        |       |
|                         | T       |      | 2      | 2      | \-    |
| Fruit Cocktail          |         | 27   | 18,908 | 35,121 |       |
|                         | T       | ,080 |        |        | 2     |
| Guavas                  |         |      | 35,642 | 36,784 | 0,349 |
|                         | Kl      | 2    |        |        |       |
| Other (e.g.,            |         | ,123 | 1      | 1      | 15    |
| pineapples, fruit       | Kl      |      | 00,749 | 28,902 | 0,315 |
| salad)                  |         | 37   |        |        |       |
|                         | Kl      | ,303 | 43,571 | 35,998 | 2     |
| Fruit-Juices and        |         |      |        |        | 1,934 |
| drinks:                 | T       | 217  | 33,822 | 32,387 |       |
|                         |         | ,168 |        |        | 8     |
| Fruit-juices            | T       |      | 27,770 | 32,703 | 6,110 |
|                         |         | 34   |        |        |       |
| Fruit Squash            | T       | ,071 | 1,379  | 1,729  | 3     |
|                         |         |      |        |        | 3,838 |
| Cordials and Bases      | Kl      | 108  | 25,883 | 28,149 |       |
|                         |         | ,327 |        |        | 2     |
| Canned Vegetables:      | T       |      |        |        | 0,392 |
|                         |         | 37   |        |        |       |
| Beans (baked and green) |         | ,805 |        |        | 2     |
|                         |         |      |        |        | 6,244 |
| Other (e.g., green      |         | 35   |        |        |       |
| peas, sweet corn)       |         | ,819 |        |        | 1,158 |
|                         |         |      |        |        |       |
| Chutney and Tomato      |         | 28   |        |        | 1     |
| sauce                   |         | ,916 |        |        | 6,683 |
|                         |         |      |        |        |       |
| Worcester sauce         |         | 1    |        |        |       |
|                         |         | ,483 |        |        |       |
| Mayonnaise and salad    |         |      |        |        |       |
| creams                  |         | 27   |        |        |       |
|                         |         | ,639 |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| FISH PRODUCTS AND       | T       | 30   | 35,795 | 36,895 | 3     |
| SIMILAR FOODS:          |         | ,383 |        |        | 2,112 |
|                         | T       |      | 62,441 | 61,431 |       |
| Canned and Frozen Fish  |         | 61   |        |        | 4     |
|                         | T       | ,047 | \-     | \-     | 1,136 |
| Canned fish             |         |      |        |        |       |
|                         | T       | \-   | 1      | 1      | \-    |
| Frozen fish (e.g., fish |         |      | 10,559 | 17,210 |       |
| sticks)                 |         | 108  |        |        | 8     |
|                         |         | ,923 |        |        | 9,444 |
| Frozen Crayfish         |         |      |        |        |       |
|                         |         |      |        |        |       |
| Fish Products           |         |      |        |        |       |
|                         |         |      |        |        |       |
| Fish Meal               |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| VEGETABLES AND ANIMAL   | T       | 295  | 3      | 4      | 28    |
| OILS AND FATS:          |         | ,056 | 64,175 | 78,711 | 5,583 |
|                         | T       |      |        |        |       |
| Primary Products        |         | 38   | 39,568 | 36,249 | 2     |
| Produced                | T       | ,194 |        |        | 3,691 |
|                         |         |      | 4      | 4      |       |
| Self-produced edible    | T       | 477  | 34,823 | 62,951 | 28    |
| oils:                   |         | ,587 |        |        | 1,960 |
|                         | T       |      | 3      | 4      |       |
| Sunflower seed oil      |         | 299  | 46,746 | 12,263 | 27    |
|                         | T       | ,479 |        |        | 5,991 |
| Maize Germ and other    |         |      | 1      | 1      |       |
| self-produced oils      | T       | 156  | 69,885 | 76,920 | 11    |
|                         |         | ,405 |        |        | 1,702 |
| Oil-seed cake and meal  |         |      | 2      | 3      |       |
|                         |         | 294  | 92,933 | 25,245 | 22    |
| Primary Products used   |         | ,363 |        |        | 2,933 |
| for Further Processing: |         |      | 37,359 | 25,204 |       |
|                         |         | 60   |        |        | 1     |
| Sunflower seed oil,     |         | ,858 |        |        | 6,598 |
| other self-produced     |         |      |        |        |       |
| oils and refined oils   |         |      |        |        |       |
| used for production of  |         |      |        |        |       |
| hydrogenated fats       |         |      |        |        |       |
|                         |         |      |        |        |       |
| Secondary Products :    |         |      |        |        |       |
|                         |         |      |        |        |       |
| Margarine               |         |      |        |        |       |
|                         |         |      |        |        |       |
| Blended table, salad    |         |      |        |        |       |
| and cooking oils        |         |      |        |        |       |
|                         |         |      |        |        |       |
| Other Vegetable fats    |         |      |        |        |       |
| (e.g., for baking and   |         |      |        |        |       |
| cooking purposes)       |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| GRAIN MILL PRODUCTS:    | T       | 28   | 28,193 | 31,580 | 2     |
|                         |         | ,141 |        |        | 0,736 |
| Wheaten Products        | T       |      | 5      | 5      |       |
|                         |         | 492  | 32,234 | 77,729 | 39    |
| Meal and flour products | T       | ,710 |        |        | 7,246 |
|                         |         |      | 8      | 8      |       |
| Self-raising flour      | T       | 765  | 32,456 | 82,726 | 53    |
|                         |         | ,966 |        |        | 6,509 |
| Cake flour              | T       |      | 5      | 5      |       |
|                         |         | 537  | 19,641 | 67,551 | 38    |
| Bread flour             | T       | ,375 |        |        | 7,052 |
|                         |         |      | 13,899 | 10,458 |       |
| Brown Bread Meal        | 1,000 T | 11   |        |        | 7,643 |
|                         |         | ,693 | 4      | 4      |       |
| Whole-Wheat meal        | T       |      | 46,335 | 61,932 | 29    |
|                         |         | 417  |        |        | 5,712 |
| By-Products             | T       | ,456 | 2,789  | 2,811  |       |
|                         | (Jan    |      |        |        | 1,828 |
| Bran (including         | -Apr)\* | 2    | 2      | 2      |       |
| digestive bran)         |         | ,589 | 45,601 | 29,885 | 12    |
|                         | T       |      |        |        | 6,628 |
| Mealie Products:        |         | 228  | 1      | 1      |       |
|                         | T       | ,830 | 59,251 | 77,688 | 51,   |
| Mealie meal             |         |      |        |        | 335\* |
|                         |         | 148  | 1,0    | 1,0    |       |
| Samp, mealie rice and   |         | ,218 | 70,174 | 63,931 | 69    |
| grits                   |         |      |        |        | 7,067 |
|                         |         | 992  | 38,297 | 42,546 |       |
| Crushed mealies --      |         | ,014 |        |        | 3     |
| sifted and unsifted     |         |      |        |        | 1,012 |
|                         |         | 36   |        |        |       |
| Germ Meal and Hominy    |         | ,707 |        |        |       |
| Chop                    |         |      |        |        |       |
|                         |         |      |        |        |       |
| Breakfast Foods         |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| BAKERY PRODUCTS:        | 1,      | 637  | 582    | 616    | 490   |
|                         | 000,000 |      |        |        |       |
| Bread                   |         | 675  | 666    | 687    | 528   |
|                         | 1,      |      |        |        |       |
| White (including        | 000,000 | 19   | 18,190 | 21,382 | 1     |
| super-white)            |         | ,577 |        |        | 3,035 |
|                         | T       |      | 11,295 | 12,746 |       |
| Brown and whole-wheat   |         | 7    |        |        | 5,976 |
|                         | T       | ,416 | 13,494 | 17,679 |       |
| Biscuits                |         |      |        |        | 9,220 |
|                         | T       | 10   | 1      | 1      |       |
| Plain                   |         | ,340 | 94,569 | 88,275 | 9     |
|                         | 1,000   |      |        |        | 8,499 |
| Salty type              |         | 176  | 1      | 1      |       |
|                         | 1,000   | ,541 | 00,852 | 06,517 | \-    |
| Chocolate               |         |      |        |        |       |
| covered/filled          |         | 82   |        |        |       |
|                         |         | ,179 |        |        |       |
| Meat Pies (single       |         |      |        |        |       |
| portion type) and       |         |      |        |        |       |
| sausage rolls           |         |      |        |        |       |
|                         |         |      |        |        |       |
| Buns and Rolls          |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| SUGAR:                  | 1,000 T | 1    | 1,096  | 1,141  | 764   |
|                         |         | ,148 |        |        |       |
| Sugar                   | 1,000 T |      | 297    | 269    | 111   |
|                         |         | 309  |        |        |       |
| Refined                 | 1,000 T |      | 833    | 854    | 442   |
|                         |         | 804  |        |        |       |
| Golden Brown            | 1,000 T |      | 965    | 1052   | 390   |
|                         |         | 946  |        |        |       |
| Raw Sugar               |         |      |        |        |       |
|                         |         |      |        |        |       |
| For refining            |         |      |        |        |       |
|                         |         |      |        |        |       |
| For export              |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| CHOCOLATES, SUGAR       | T       | 12   | 13,963 | 13,474 | 7,308 |
| CONFECTIONERY AND       |         | ,419 |        |        |       |
| COCOA:                  | R1,000  |      | 5      | 5      | 34    |
|                         |         | 432  | 02,202 | 19,023 | 1,545 |
| Chocolate and Chocolate | T       | ,226 |        |        |       |
| confectionery           |         |      | 25,425 | 22,864 | 1     |
|                         | R1,000  | 22   |        |        | 4,601 |
| Solid chocolate slabs,  |         | ,965 | 9      | 1,0    |       |
| bars and novelties:     | T       |      | 24,476 | 16,192 | 76    |
|                         |         | 819  |        |        | 5,762 |
| Quantity                | R1,000  | ,488 | 7,184  | 7,994  |       |
|                         |         |      |        |        | 4,748 |
| Value                   | T       | 6    | 3      | 4      |       |
|                         |         | ,996 | 58,495 | 11,387 | 27    |
| Filled bars and other   | R1,000  |      |        |        | 8,544 |
| chocolate counter lines |         | 373  | 20,644 | 20,650 |       |
| with hard, soft or      | T       | ,051 |        |        | 1     |
| cereal centers:         |         |      | 3      | 3      | 2,125 |
|                         | R1,000  | 20   | 16,474 | 30,652 |       |
| Quantity                |         | ,744 |        |        | 21    |
|                         | T       |      | 14,928 | 14,885 | 5,015 |
| Value                   |         | 307  |        |        |       |
|                         | R1,000  | ,645 | 3      | 4      | 7,466 |
| Chocolate assortments   |         |      | 29,446 | 04,955 |       |
| and straight lines      | T       | 14   |        |        | 15    |
|                         |         | ,254 | 23,861 | 25,269 | 9,834 |
| Quantity                | R1,000  |      |        |        |       |
|                         |         | 291  | 4      | 5      | 1     |
| Value                   | T       | ,306 | 98,061 | 81,154 | 6,058 |
|                         |         |      |        |        |       |
| Sugar Confectionery     | R1,000  | 23   | 5,730  | 6,125  | 45    |
|                         |         | ,121 |        |        | 4,075 |
| Boiled sweets           |         |      | 1      | 2      |       |
|                         |         | 460  | 85,518 | 06,415 | 3,771 |
| Quantity                |         | ,078 |        |        |       |
|                         |         |      | 16,148 | 17,187 | 16    |
| Value                   |         | 4    |        |        | 0,390 |
|                         |         | ,916 | 2      | 2      |       |
| Toffees and Caramels    |         |      | 17,066 | 36,442 | 1     |
|                         |         | 151  |        |        | 2,687 |
| Quantity                |         | ,330 |        |        |       |
|                         |         |      |        |        | 15    |
| Value                   |         | 14   |        |        | 9,800 |
|                         |         | ,008 |        |        |       |
| Gums, Jellies,          |         |      |        |        |       |
| pastilles, starch-goods |         | 195  |        |        |       |
| and lozenges            |         | ,779 |        |        |       |
|                         |         |      |        |        |       |
| Quantity                |         |      |        |        |       |
|                         |         |      |        |        |       |
| Value                   |         |      |        |        |       |
|                         |         |      |        |        |       |
| Panned Confectionery    |         |      |        |        |       |
|                         |         |      |        |        |       |
| Quantity                |         |      |        |        |       |
|                         |         |      |        |        |       |
| Value                   |         |      |        |        |       |
|                         |         |      |        |        |       |
| Other sugar             |         |      |        |        |       |
| confectionery           |         |      |        |        |       |
|                         |         |      |        |        |       |
| Quantity                |         |      |        |        |       |
|                         |         |      |        |        |       |
| Value                   |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| ROASTED PEANUTS AND     | T       | 13   | 13,971 | 13,526 | 7,835 |
| OTHER NUTS:             |         | ,997 |        |        |       |
|                         | T       |      | 17,302 | 18,465 | 1     |
| Groundnuts, roasted     |         | 17   |        |        | 1,578 |
|                         |         | ,062 |        |        |       |
| Peanut butter           |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| COFFEE ROASTING, TEA    | T       | 3    | 3,650  | 2,843  | 1,877 |
| BLENDING:               |         | ,395 |        |        |       |
|                         | T       |      | 4,042  | 4,353  | 2,408 |
| Coffee                  |         | 4    |        |        |       |
|                         | T       | ,831 | 22,201 | 26,365 | 1     |
| Pure                    |         |      |        |        | 7,602 |
|                         | T       | 23   | 22,737 | 22,873 |       |
| Mixed and mixtures      |         | ,276 |        |        | 1     |
|                         | T       |      | 6,939  | 6,907  | 3,901 |
| Instant coffee (pure    |         | 22   |        |        |       |
| and mixtures)           |         | ,173 |        |        | 4,828 |
|                         |         |      |        |        |       |
| Tea -- blended and      |         | 5    |        |        |       |
| packed for the retail   |         | ,241 |        |        |       |
| trade                   |         |      |        |        |       |
|                         |         |      |        |        |       |
| Rooibos tea             |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| FOOD PRODUCTS NOT       | Kl      | 7    | 6,556  | 9,961  | 5,577 |
| ELSEWHERE CLASSIFIED:   |         | ,234 |        |        |       |
|                         | T       |      | 25,827 | 25,322 | 1     |
| Flavoring essences      |         | 23   |        |        | 7,307 |
|                         | T       | ,997 | 10,182 | 10,216 |       |
| Potato chips            |         |      |        |        | 5,086 |
|                         | T       | \-   | \-     | \-     |       |
| Corn chips              |         |      |        |        | \-    |
|                         | T       | \-   | 3,231  | 3,610  |       |
| Spices and condiments   |         |      |        |        | 1,701 |
|                         | T       | 3    | 2,402  | 2,955  |       |
| Custard and pudding     |         | ,921 |        |        | 1,523 |
| powder                  | T       |      | \-     | \-     |       |
|                         |         | 2    |        |        | \-    |
| Jelly powder            |         | ,829 |        |        |       |
|                         |         |      |        |        |       |
| Soups (tinned and       |         | \-   |        |        |       |
| powdered)               |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| ANIMAL FEEDS:           | T       | 90   | 85,284 | 76,688 | 4     |
|                         |         | ,315 |        |        | 8,996 |
| Farm Feed Mixtures      | T       |      | 16,168 | 9,688  |       |
|                         |         | 16   |        |        | 7,532 |
| Cattle and Sheep Feeds  | T       | ,095 | 2      | 1      |       |
|                         |         |      | 00,125 | 86,317 | 10    |
| Cattle finisher feed    | T       | 174  |        |        | 9,727 |
| and winter feed         |         | ,589 | 3      | 4      |       |
|                         | T       |      | 96,900 | 03,560 | 25    |
| Complete cattle feed    |         | 374  |        |        | 7,767 |
|                         | T       | ,826 | 1      | 2      |       |
| Dairy Cattle Feeds      |         |      | 98,115 | 09,794 | 14    |
|                         | T       | 224  |        |        | 7,575 |
| Complete dairy feed     |         | ,511 | 1      | 1      |       |
|                         | T       |      | 16,049 | 18,710 | 8     |
| Concentrated dairy meal |         | 100  |        |        | 5,742 |
|                         | T       | ,302 | 52,573 | 66,653 |       |
| Dog and Cat Foods       |         |      |        |        | 4     |
|                         | T       | 51   | 5      | 5      | 3,751 |
| Poultry Feeds           |         | ,900 | 24,650 | 31,746 |       |
|                         | T       |      |        |        | 35    |
| Fowl (egg production)   |         | 541  | 1      | 1      | 2,068 |
|                         | T       | ,879 | 69,843 | 73,030 |       |
| Growing mash            |         |      |        |        | 11    |
|                         | T       | 175  | 3      | 3      | 2,549 |
| Developers mash         |         | ,054 | 25,451 | 42,035 |       |
|                         | T       |      |        |        | 23    |
| Laying mash             |         | 336  | 7      | 7      | 9,613 |
|                         |         | ,700 | 73,089 | 16,936 |       |
| Other                   |         |      |        |        | 48    |
|                         |         | 748  | 3      | 4      | 5,622 |
| Fowl (broiler           |         | ,773 | 78,072 | 32,149 |       |
| production)             |         |      |        |        | 24    |
|                         |         | 399  | 1      | 1      | 5,267 |
| Starter mash            |         | ,498 | 38,415 | 46,796 |       |
|                         |         |      |        |        | 7     |
| Finisher mash           |         | 125  | 40,717 | 50,222 | 6,198 |
|                         |         | ,415 |        |        |       |
| Other                   |         |      |        |        | 3     |
|                         |         | 40   |        |        | 7,817 |
| Pig Feeds               |         | ,600 |        |        |       |
|                         |         |      |        |        |       |
| Growth meal             |         |      |        |        |       |
|                         |         |      |        |        |       |
| Other                   |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| **BEVERAGES:**          |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| Distilleries and        | (Bulk)  | 177  | 1      | 2      | 14    |
| Wineries:               |         | ,743 | 97,087 | 01,930 | 4,630 |
|                         | kl      |      |        |        |       |
| Finished Products       |         | 8    | 7,567  | 9,771  | 5,965 |
|                         | kl      | ,872 |        |        |       |
| Natural wines, still    |         |      | 17,524 | 17,915 | 1     |
|                         | kl      | 18   |        |        | 0,463 |
| Sparkling wines         |         | ,792 | 3,438  | 2,999  |       |
|                         | kl      |      |        |        | 2,079 |
| Other Finished Products |         | 2    | 1,879  | 2,183  |       |
|                         | kl      | ,228 |        |        | 1,920 |
| Brandy (finally         |         |      |        |        |       |
| blended)                |         | 2    |        |        |       |
|                         |         | ,135 |        |        |       |
| Gin                     |         |      |        |        |       |
|                         |         |      |        |        |       |
| Liqueurs                |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+
| SOFT DRINKS AND         | 1,000   | 2    | 2,133  | 2,317  | 1,470 |
| CARBONATED WATER        | kl      | ,076 |        |        |       |
| INDUSTRIES:             |         |      |        |        |       |
|                         |         |      |        |        |       |
| Aerated water and soda  |         |      |        |        |       |
| syphons                 |         |      |        |        |       |
+-------------------------+---------+------+--------+--------+-------+

Source: Statistics South Africa

# 2.2 Advantages and Challenges for US exporters

+-----------------------------------+-----------------------------------+
| Advantages                        | Challenges                        |
+-----------------------------------+-----------------------------------+
| South Africans are developing a   | Consumers may need to be educated |
| taste for western foods and are   | in preparing and eating products. |
| willing to try new products.      |                                   |
+-----------------------------------+-----------------------------------+
| The growing retail food industry  | Already acquired tastes and       |
| needs imported food and beverage  | preferences for traditional       |
| products.                         | locally produced products.        |
+-----------------------------------+-----------------------------------+
| Already established               | While sophisticated for a         |
| Agroprocessing industry.          | 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 importers seek      | Challenges for U.S. suppliers to  |
| suppliers who can offer reliable  | respond to trade inquiries in a   |
| and quality products at           | time fashion, also South Africa   |
| competitive prices.               | is a smaller market and may not   |
|                                   | be able to deal in the volumes    |
|                                   | that U.S. companies are used to.  |
+-----------------------------------+-----------------------------------+
| South Africa is a gateway for     | Competition is stiff from other   |
| regional markets.                 | countries and locally produced    |
|                                   | products.                         |
+-----------------------------------+-----------------------------------+
| South African consumers view U.S. | Limited knowledge of retailers    |
| products as high quality.         | and consumers of the variety and  |
|                                   | quality of U.S.                   |
|                                   |                                   |
|                                   | products.                         |
+-----------------------------------+-----------------------------------+
| English is one of the 12 official | Companies already have            |
| South African languages and       | long-standing relationships with  |
| virtually everyone is proficient  | European suppliers due to         |
| in English.                       | historical trends.                |
+-----------------------------------+-----------------------------------+

####### Section 3. Road Map for Market Entry

# 3.1 Entry Strategy

New-to-market U.S. exporters need to fully understand the food
processors' demand needs and how best to meet their purchasing
requirements and specifications. They should consider the flowing when
planning to enter the market:

-   The price competitiveness of U.S. products compared to other major
    suppliers. South Africa imports food ingredients, additives, and
    chemicals from all over the world, including Australia, USA, New
    Zealand, the EU, Argentina and Brazil, as well as having a strong
    domestic industry.

-   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 the local agents are better positioned to deal with
    any quality problems encountered by the buyer on an immediate basis.

-   The financial strength of the targeted food processors, the
    geographical spread of their target markets, their level of demand
    for imported food ingredients, the level of their R&D activities and
    investments into new product introduction and their level of
    interest in using new ingredients from the USA.

# 3.2 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.

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

Most South African food processing companies are not "large" in the
American sense of the word. They prefer to purchase from local agents
because they can:

-   Obtain a better service from the local agent who buys large
    quantities from overseas

-   They require small quantities of food ingredients.

-   The overseas supplier is not sympathetic about the quality problems
    encountered by the user. In this case, the local agent, being
    in-country, is often better able to deal with these problems.

# 3.3 Company Profiles

The table below provides information on the major food processing
companies involved in the sector.

+------------------+--------+-------------+-------------+-------------+
| Company          | Sales  | End-use     | Production  | Procurement |
|                  |        |             |             |             |
| (Product types)  | (US\$  | Channels    | Location    | Channels    |
|                  | mil    |             |             |             |
|                  | lions) |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Nestle (Dairy,   | 109    | Retail and  | South       | Direct and  |
| juices,          | (co    | HRI         | Africa      | via agents  |
| fortified food,  | mbined |             | (12),       |             |
| drinks, sauces,  | A      |             | Mozambique  |             |
| chocolate,       | frica, |             | (1),        |             |
| soups, coffee,   | O      |             | Zimbabwe    |             |
| breakfast        | ceania |             | (1)         |             |
| cereals)         | & Asia |             |             |             |
|                  | f      |             |             |             |
|                  | igure, |             |             |             |
|                  | f      |             |             |             |
|                  | urther |             |             |             |
|                  | segmen |             |             |             |
|                  | tation |             |             |             |
|                  | not    |             |             |             |
|                  | avai   |             |             |             |
|                  | lable) |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| South African    | 1,209  | Retail and  | Botswana,   | Direct and  |
| Breweries (beer, | (co    | HRI         | Malawi,     | via agents  |
| water, wine,     | mbined |             | South       |             |
| spirits, coke)   | Africa |             | Africa,     |             |
|                  | & Asia |             | Swaziland,  |             |
|                  | f      |             | Tanzania,   |             |
|                  | igure, |             | Zambia,     |             |
|                  | f      |             | Zimbabwe)   |             |
|                  | urther |             |             |             |
|                  | segmen |             |             |             |
|                  | tation |             |             |             |
|                  | not    |             |             |             |
|                  | avai   |             |             |             |
|                  | lable) |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Unilever         | 45.1   | Retail and  | South       | Direct and  |
| (processed       |        | HRI         | Africa (13) | via agents  |
| foods,           |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Parmalat (milk,  | 6.83   | Retail and  | Botswana,   | Direct and  |
| yogurt, ice      |        | HRI         | Mozambique, | via agents  |
| cream, fruit     |        |             | South       |             |
| beverages)       |        |             | Africa,     |             |
|                  |        |             | Swaziland   |             |
+------------------+--------+-------------+-------------+-------------+
| Danone (dairy    | N/A    | Retail and  | South       | Direct and  |
| products,        |        | HRI         | Africa      | via agents  |
| packaged         |        |             |             |             |
| cookies,         |        |             |             |             |
| non-alcoholic    |        |             |             |             |
| beverages)       |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Kellogg          | N/A    | Retail and  | South       | Direct and  |
| (breakfast       |        | HRI         | Africa      | via agents  |
| cereal,)         |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| H.J. Heinz       | N/A    | Retail and  | South       | Direct and  |
| (frozen French   |        | HRI         | Africa (2), | via agents  |
| fries, pet       |        |             | Botswana    |             |
| foods,           |        |             | (1),        |             |
| condiments,      |        |             | Zimbabwe    |             |
| vegetable oil,   |        |             | (1)         |             |
| bakers fat,      |        |             |             |             |
| canned foods,    |        |             |             |             |
| margarine)       |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| P                | N/A    | Retail and  | South       | Direct and  |
| illsbury/General |        | HRI         | Africa      | via agents  |
| Mills            |        |             |             |             |
| (refrigerated    |        |             |             |             |
| dough products,  |        |             |             |             |
| frozen prepared  |        |             |             |             |
| meals, retail    |        |             |             |             |
| baking mixes,    |        |             |             |             |
| frozen meats,    |        |             |             |             |
| food service     |        |             |             |             |
| preparations)    |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| C                | N/A    | Retail and  | South       | Direct and  |
| adbury-Schweppes |        | HRI         | Africa      | via agents  |
| (chewing gum,    |        |             |             |             |
| chocolate,       |        |             |             |             |
| confections)     |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| McCain Foods     | N/A    | Retail and  | South       | Direct      |
| (frozen potato   |        | HRI         | Africa (4)  |             |
| products,        |        |             |             |             |
| vegetables,      |        |             |             |             |
| pizzas and       |        |             |             |             |
| desserts)        |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Coca-Cola (soft  | 6.01   | Retail and  | Angola (1)  | Direct      |
| drinks)          | (So    | HRI         | Lesotho (1) |             |
|                  | uthern |             | Mozambique  |             |
|                  | and    |             | (3) Namibia |             |
|                  | East   |             | (1) South   |             |
|                  | A      |             | Africa(31)  |             |
|                  | frica) |             | Swaziland   |             |
|                  |        |             | (1)         |             |
+------------------+--------+-------------+-------------+-------------+
| Dole (fruit      | N/A    | Retail and  | South       | Direct      |
| products)        |        | HRI         | Africa (5), |             |
|                  |        |             | Zimbabwe,   |             |
+------------------+--------+-------------+-------------+-------------+
| Bokomo           | 10.8   | Retail      | South       | Direct and  |
| (breakfast       |        |             | Africa (7)  | via agents  |
| cereal,          |        |             |             |             |
| convenience      |        |             |             |             |
| frozen foods)    |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+
| Tiger Brands     | 1.67   | Retail and  | South       | Direct and  |
|                  |        | HRI         | Africa,     | via agents  |
| (Canned & dry    |        |             | Zimbabwe,   |             |
| pet food, baby   |        |             | Botswana    |             |
| food, spices and |        |             |             |             |
| condiments)      |        |             |             |             |
+------------------+--------+-------------+-------------+-------------+

# 3.4 Sector Trends

According to participants at the SA Institute of Food Science and
Technology conference, the use of **health ingredients** in many foods
and drinks will become increasingly important in the food industry --
and regulators will find it difficult to keep up. Marketers will get
there first; regulators will arrive later. Such challenges will make
this an even more complex industry than in the past.

Leading **flavor** manufacturers concur that South Africans remain
cautious in their taste choices. Old favorites reign supreme across all
food categories, albeit interspaced with more exotic, up-market options
that come and go. Average consumers prefer BBQ, tomato, cheese,
strawberry chocolate and banana, and they like it strong and visible.
The issue of illegal amounts of colorant used in the lower-end savory
snacks industry is cause for concern, with no sign of any industry
consensus on the issue, especially among the smaller operators, and this
is creating anomalies in the market.

**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.

####### SECTION 4. international COMPETITION IN THE SECTOR

Agricultural production in South Africa has almost doubled in the past
30 years although production varies from year to year due to erratic
weather. South Africa is self sufficient in primary foods with the
exception of wheat, oilseeds and rice. South Africa will continue to
import these foods to meet its needs in the short term. The following
table highlights the key products offered in each category of foods and
beverages in 2002.

+------------------+----------------+-----------------+----------------+
| Product          | Import Market  | Major Supply    | Reasons for    |
|                  | Size in 2002   | Countries in    | Strengths of   |
|                  | (Millions of   | 2002            | Key Supply     |
|                  | South African  |                 | Countries      |
|                  | Rand)          |                 |                |
+------------------+----------------+-----------------+----------------+
| Meat and Poultry | 662.1          | Brazil (29%)    | South Africa   |
| products         |                |                 | is a net       |
|                  | Beef (42)      | Australia (19%) | importer of    |
|                  |                |                 | meat and meat  |
|                  | Pork (104)     | Canada (11%)    | products.      |
|                  |                |                 |                |
|                  | Lamb (65)      | France is major | Brazil         |
|                  |                | supplies of     | supplies price |
|                  | Offal (65.8)   | Pork (65%),     | competitive    |
|                  |                | Australia Lamb  | beef.          |
|                  | Poultry Meat   | (94%) and Offal |                |
|                  | (368,317)      | (49%), Brazil   | Australia and  |
|                  |                | major supplies  | Canada         |
|                  | Dried Meat (7) | of Poultry Meat | products are   |
|                  |                | (52%), and 98%  | demanded by    |
|                  |                | of dried meat   | the high end   |
|                  |                | comes from      | food service   |
|                  |                | Zimbabwe.       | sector.        |
|                  |                |                 | Opportunities  |
|                  |                | USA is a minor  | in this sector |
|                  |                | supplies of 7%  | exist mainly   |
|                  |                | of offal, 4% of | for frozen     |
|                  |                | Poultry meats,  | boneless beef  |
|                  |                | and .13% of     | forequarter    |
|                  |                | pork products.  | cuts, turkey,  |
|                  |                |                 | frozen whole   |
|                  |                |                 | chicken,       |
|                  |                |                 | frozen         |
|                  |                |                 | boneless       |
|                  |                |                 | poultry cuts   |
|                  |                |                 | and prepared   |
|                  |                |                 | poultry cuts.  |
|                  |                |                 | In July 2000,  |
|                  |                |                 | South Africa   |
|                  |                |                 | imposed        |
|                  |                |                 | prohibitive    |
|                  |                |                 | anti-dumping   |
|                  |                |                 | duties of U.S. |
|                  |                |                 | chicken leg    |
|                  |                |                 | quarters, an   |
|                  |                |                 | action that    |
|                  |                |                 | has virtually  |
|                  |                |                 | cut off U.S.   |
|                  |                |                 | chicken meat   |
|                  |                |                 | exports to     |
|                  |                |                 | South Africa.  |
+------------------+----------------+-----------------+----------------+
| Fish and Seafood | 273            | Mozambique      | South Africa   |
|                  |                | (21%)           | is a net       |
|                  | Crustaceans    |                 | exporter of    |
|                  | (96)           | India (10%)     | fish and       |
|                  |                |                 | seafood        |
|                  | Other Seafood  | Norway (9%)     | products.      |
|                  | (67)           |                 | Imports in     |
|                  |                | Mozambique      | this category  |
|                  | Frozen fish,   | supplies 56% of | have been      |
|                  | not fillet     | crustaceans,    | increasing     |
|                  | (59)           | Spain supplies  | steadily over  |
|                  |                | 21% of Other    | the past       |
|                  | Fish fillet    | Seafood, Japan  | years.         |
|                  | (19)           | supplies 28% of | Opportunities  |
|                  |                | frozen fish,    | do exist. The  |
|                  |                | and Argentina   | majority of    |
|                  |                | supplies 33% of | imports are    |
|                  |                | fish fillet.    | canned tuna,   |
|                  |                |                 | frozen shrimp  |
|                  |                | US is a minor   | and prawns,    |
|                  |                | supplies of     | and frozen     |
|                  |                | 1.3% of         | fillets.       |
|                  |                | Crustaceans,    |                |
|                  |                | .20% of Other   | Mozambican     |
|                  |                | seafood, 1.75%  | goods are      |
|                  |                | of Fish Fillet, | traded to      |
|                  |                | and 5% of       | South Africa   |
|                  |                | Frozen Fish.    | free of duty   |
|                  |                |                 | and quotas in  |
|                  |                |                 | terms of the   |
|                  |                |                 | trade          |
|                  |                |                 | agreement.     |
+------------------+----------------+-----------------+----------------+
| Dairy products   | 339,742        | France (20%)    | South Africa   |
|                  |                |                 | is net         |
|                  | Milk & Cream   | New Zealand     | exporter of    |
|                  | concentrated   | (17%)           | dairy          |
|                  | (144)          |                 | products.      |
|                  |                | Switzerland     | Opportunities  |
|                  | Cheese and     | (10%)           | exist for the  |
|                  | Curd (94)      |                 | import of      |
|                  |                | Switzerland     | cheese, whey,  |
|                  | Whey (61)      | supplies 21% of | concentrated   |
|                  |                | Milk & Cream,   | milks milk     |
|                  |                | New Zealand     | powders, and   |
|                  |                | supplies 35% of | butter. New    |
|                  |                | Cheese and      | Zealand has a  |
|                  |                | Curd, and       | 66% share of   |
|                  |                | France supplies | the cheese     |
|                  |                | 81% of Whey.    | market.        |
|                  |                |                 |                |
|                  |                | US is at        |                |
|                  |                | present a minor |                |
|                  |                | supplier of     |                |
|                  |                | .01% of Milk    |                |
|                  |                | and Cream, 2%   |                |
|                  |                | of Cheese &     |                |
|                  |                | Curd, and .02%  |                |
|                  |                | of Whey.        |                |
+------------------+----------------+-----------------+----------------+
| Edible           | 309,996        | China (37%)     | South Africa   |
| Vegetables       |                |                 | is a net       |
|                  | Dried legumes  | Canada (14%)    | importer of    |
|                  | (235)          |                 | dried legumes. |
|                  |                | Netherlands     | Imports jumped |
|                  | Dried          | (10%)           | from R35       |
|                  | vegetables     |                 | million in     |
|                  | whole cut (39) | China supplies  | 2001 to        |
|                  |                | 42% of Legumes, | 309,996 in     |
|                  | Frozen         | and 28.4% of    | 2002.          |
|                  | vegetables     | dried           | Opportunities  |
|                  | (24)           | vegetables.     | exist for the  |
|                  |                |                 | import of      |
|                  |                | US supplies     | kidney beans   |
|                  |                | 28.2% of dried  | and other      |
|                  |                | vegetables and  | dried beans.   |
|                  |                | 5% of legumes.  | China supplies |
|                  |                |                 | price          |
|                  |                |                 | competitive    |
|                  |                |                 | white kidney   |
|                  |                |                 | beans, has 90% |
|                  |                |                 | of the local   |
|                  |                |                 | market share.  |
+------------------+----------------+-----------------+----------------+
| Edible Fruits    | 202,377        | Italy (11.43%)  | South Africa   |
| and Nuts         |                |                 | is a net       |
|                  | Coconuts,      | US (11.42%)     | exporter of    |
|                  | Brazil nuts &  |                 | dried fruits   |
|                  | cashew nuts    | Turkey (10%)    | and a net      |
|                  | (64)           |                 | importer of    |
|                  |                | Italy supplies  | nuts. However, |
|                  | Other nuts     | 85% of fruit    | a small market |
|                  | (58)           | and nuts        | exists for     |
|                  |                | temporarily     | dried exotic   |
|                  | Fruit & nuts   | preserved; US   | fruits, and    |
|                  | temporarily    | supplies 38% of | opportunities  |
|                  | preserved (24) | other nuts and  | exist for      |
|                  |                | .04% of         | shelled        |
|                  |                | coconuts,       | hazelnuts,     |
|                  |                | brazils &       | desiccated     |
|                  |                | cashew nuts;    | coconut,       |
|                  |                | Brazil supplies | cashew nuts    |
|                  |                | 21% of          | and shelled    |
|                  |                | coconuts,       | almonds.       |
|                  |                | brazil and      |                |
|                  |                | cashew nuts.    |                |
+------------------+----------------+-----------------+----------------+
| Spices, Coffee,  | 517,061        | Malawi (15%)    | South Africa   |
| and Tea          |                |                 | is a net       |
|                  | Coffee (192)   | Zimbabwe (12%)  | importer of    |
|                  |                |                 | spices. Local  |
|                  | Tea (171)      | Indonesia (11)  | coffee and tea |
|                  |                |                 | production is  |
|                  | Spices:        | Indonesia       | insufficient   |
|                  |                | supplies 24 %   | to meet local  |
|                  | \- Pepper (45) | coffee; Malawi  | demand.        |
|                  |                | supplies 43%    |                |
|                  | \- Seeds of    | Tea; and on the | In terms of    |
|                  | various spices | spices India    | the bilateral  |
|                  | (42)           | supplies 46%    | trade          |
|                  |                | seed of various | agreements all |
|                  | \- Other       | spices, 54% of  | goods of       |
|                  | spices (34)    | other spices    | Malawi origin  |
|                  |                | and 37% Nutmeg; | enter South    |
|                  | \- Cloves (13) | Singapore       | Africa         |
|                  |                | supplies 17%    | duty-free.     |
|                  | \- Nutmeg (13) | Pepper and 47%  |                |
|                  |                | Cloves.         |                |
|                  |                |                 |                |
|                  |                | US supplies     |                |
|                  |                | 0.33% Tea,      |                |
|                  |                | 0.36% Pepper,   |                |
|                  |                | 1.18% Other     |                |
|                  |                | Spices and      |                |
|                  |                | insignificant   |                |
|                  |                | amount of       |                |
|                  |                | coffee, seed of |                |
|                  |                | various spices, |                |
|                  |                | cloves and      |                |
|                  |                | nutmeg.         |                |
+------------------+----------------+-----------------+----------------+
| Prepared Meat,   | 228,127        | Philippines     | India supplies |
| Fish, etc        |                | (32.4%)         | price          |
|                  | Fish and       |                 | competitive    |
|                  | Caviar (170)   | Thailand (32%)  | Shrimps and    |
|                  |                |                 | Prawns.        |
|                  | Crustaceans    | Philippines     | Philippines    |
|                  | (49)           | supplies 43%    | and Thailand   |
|                  |                | fish and        | supplies tuna. |
|                  | Meat Offal (7) | caviar; India   |                |
|                  |                | supplies 41%    |                |
|                  |                | Crustaceans;    |                |
|                  |                | and Zimbabwe    |                |
|                  |                | supplies 58% of |                |
|                  |                | Meat offal.     |                |
|                  |                |                 |                |
|                  |                | US is a minor   |                |
|                  |                | supplier 2%     |                |
|                  |                | fish caviar,    |                |
|                  |                | and is non      |                |
|                  |                | significant in  |                |
|                  |                | crustaceans and |                |
|                  |                | meat offal.     |                |
+------------------+----------------+-----------------+----------------+
| Beverages        | 1,006,622      | UK (52%)        | South Africa   |
|                  |                |                 | is a net       |
|                  | Spirit         | Austria (9%)    | exporter of    |
|                  | Beverages      |                 | alcoholic      |
|                  | (742)          | US (5%)         | beverages.     |
|                  |                |                 | This market is |
|                  | Non alcoholic  | UK supplies 69% | dominated by   |
|                  | beverages      | spirit          | well known     |
|                  | (119)          | beverages,      | brands from    |
|                  |                | Austria         | the UK.        |
|                  | Wine of Fresh  | supplies 71%    |                |
|                  | grapes (80)    | non alcoholic   | Opportunity    |
|                  |                | beverages,      | exists for     |
|                  | Undenatured    | Argentina       | imports of     |
|                  | alcohol (28)   | supplies 43%    | specialty      |
|                  |                | undenatured     | brand name     |
|                  |                | alcohol; and    | bourbon and    |
|                  |                | France supplies | whisky.        |
|                  |                | 37% wine of     |                |
|                  |                | fresh grapes.   |                |
|                  |                |                 |                |
|                  |                | US supplies few |                |
|                  |                | products in     |                |
|                  |                | this category.  |                |
+------------------+----------------+-----------------+----------------+
| Fats and Oils    | 2,109,479      | Malaysia (33%)  | South Africa   |
|                  |                |                 | is a net       |
|                  | Palm oil (765) | Brazil (17%)    | importer of    |
|                  |                |                 | edible fats    |
|                  | Soybean oil    | US supplies 99% | and oils.      |
|                  | (435)          | of Pig &        | Local          |
|                  |                | Poultry fats    | producers are  |
|                  | Bovine (141)   | and oils and is | unable to meet |
|                  |                | a minor         | total          |
|                  | Coconut (140)  | supplies of the | requirements   |
|                  |                | rest of the     | due to limited |
|                  | Ani            | products in     | crop sizes.    |
|                  | mal/vegetables | this category.  |                |
|                  | (128)          | Malaysia        |                |
|                  |                | supplies 60% of |                |
|                  | Margarine      | Palm oil,       |                |
|                  | edible mix     | coconut,        |                |
|                  | (99)           | an              |                |
|                  |                | imal/vegetable, |                |
|                  | Olive oil (69) | and margarine   |                |
|                  |                | edible mix.     |                |
|                  | Pig poultry    | Argentina       |                |
|                  | (22)           | supplies 59%    |                |
|                  |                | soybean oil,    |                |
|                  |                | Australia       |                |
|                  |                | supplies 79%    |                |
|                  |                | Bovine, and     |                |
|                  |                | Italy supplies  |                |
|                  |                | 43% Olive oil.  |                |
+------------------+----------------+-----------------+----------------+
| Cocoa            | 303,193        | Cote d'Ivoire   | Cocoa is not   |
|                  |                | (34%)           | grown in South |
|                  | Butter, Fat    |                 | Africa and     |
|                  | and Oil (77)   | Indonesia (17%) | thus offers    |
|                  |                |                 | good           |
|                  | Cocoa Beans    | US (2%)         | opportunities  |
|                  | (65)           |                 | for potential  |
|                  |                | Cote d'Ivoire   | exporters.     |
|                  | Cocoa Paste    | supplies 100%   |                |
|                  | (53)           | of cocoa beans, |                |
|                  |                | and 49% of      |                |
|                  | Cocoa Powder   | cocoa paste;    |                |
|                  | (48)           | Indonesia       |                |
|                  |                | supplies 48%    |                |
|                  |                | Butter, fat and |                |
|                  |                | oil; and        |                |
|                  |                | Singapore       |                |
|                  |                | supplies 30%    |                |
|                  |                | cocoa powder.   |                |
+------------------+----------------+-----------------+----------------+
| Baking Related   | 278            | Ireland (21%)   | Products in    |
|                  |                |                 | this category  |
|                  | Food prep of   | Italy (18%)     | are regarded   |
|                  | flour (97)     |                 | as South       |
|                  |                | US (2.3%)       | African staple |
|                  | Bread, pastry, |                 | food,          |
|                  | cake, etc (78) | Italy supplies  | especially     |
|                  |                | 67% pasta       | bread,         |
|                  | Pasta,         | couscous;       | therefore      |
|                  | couscous (61)  | Ireland         | growth is      |
|                  |                | supplies 60%    | assured.       |
|                  | Food prep from | food prep of    | Current trends |
|                  | cereal (41)    | flour; UK       | are in-house   |
|                  |                | supplies 54%    | bakeries       |
|                  |                | food prep from  | stores in      |
|                  |                | cereal; and     | convenience    |
|                  |                | United Arab     | retail stores  |
|                  |                | Emirates        | and hotels.    |
|                  |                | supplies 22%    |                |
|                  |                | bread, pastry,  |                |
|                  |                | and cakes.      |                |
|                  |                |                 |                |
|                  |                | US is a minor   |                |
|                  |                | supplier of all |                |
|                  |                | products in     |                |
|                  |                | this category,  |                |
|                  |                | but could       |                |
|                  |                | improve here.   |                |
+------------------+----------------+-----------------+----------------+
| Sugar            | 237            | Brazil (16%)    | South Africa   |
|                  |                |                 | is a net       |
|                  | Other sugars   | Zimbabwe (15%)  | exporter of    |
|                  | (102)          |                 | sugar. The     |
|                  |                | US (7%)         | majority of    |
|                  | Confection     |                 | imports are in |
|                  | (74)           | Zimbabwe        | the category   |
|                  |                | supplies 57%    | of other sugar |
|                  | Cane/beet (57) | Cane/beet and   | products in    |
|                  |                | 44% Molasses;   | solid form,    |
|                  | Molasses (4)   | Brazil supplies | such as cane   |
|                  |                | 47% confection  | and beet       |
|                  |                | and New Zealand | sugar.         |
|                  |                | supplies 23%    |                |
|                  |                | other sugars.   |                |
|                  |                |                 |                |
|                  |                | US is a minor   |                |
|                  |                | suppliers of    |                |
|                  |                | all products    |                |
|                  |                | except          |                |
|                  |                | molasses.       |                |
+------------------+----------------+-----------------+----------------+
| Preserved Food   | 156            | Italy (17.3%)   | Italy supplies |
|                  |                |                 | price          |
|                  | Prep vegetable | China (17%)     | competitive    |
|                  | (45)           |                 | products.      |
|                  |                | Netherlands     |                |
|                  | Fruit &        | (13)            |                |
|                  | vegetable      |                 |                |
|                  | juice (43)     | Italy supplies  |                |
|                  |                | 86% of tomatoes |                |
|                  | Other fruit    | without         |                |
|                  | nut (33)       | vinegar; China  |                |
|                  |                | supplies 37% of |                |
|                  | Tomatoes no    | fruit &         |                |
|                  | vinegar (22)   | vegetable       |                |
|                  |                | juice; US       |                |
|                  |                | supplies 24%    |                |
|                  |                | Other fruit nut |                |
|                  |                | and is minor    |                |
|                  |                | supplies of all |                |
|                  |                | products in     |                |
|                  |                | this category;  |                |
|                  |                | and Netherlands |                |
|                  |                | supplies 12%    |                |
|                  |                | Prep.           |                |
|                  |                | Vegetables.     |                |
+------------------+----------------+-----------------+----------------+
| Food Waste,      | 1,398,241      | Argentina (71%) |                |
| Animal Feed      |                |                 |                |
|                  | Soybean        | US (4%)         |                |
|                  | residue (946)  |                 |                |
|                  |                | Argentina       |                |
|                  | Animal feed    | supplies 94%    |                |
|                  | prep. (228)    | soybean         |                |
|                  |                | residues and    |                |
|                  | Other solid    | 36% of other    |                |
|                  | residue (100)  | solid residue;  |                |
|                  |                | Mozambique      |                |
|                  | Bran (38)      | supplies 49%    |                |
|                  |                | Bran, and US    |                |
|                  |                | supplies 21%    |                |
|                  |                | Animal feed     |                |
|                  |                | prep. and is    |                |
|                  |                | minor supplier  |                |
|                  |                | of all products |                |
|                  |                | in this         |                |
|                  |                | category.       |                |
+------------------+----------------+-----------------+----------------+

####### SECTION 5. BEST PRODUCT PROSPECTS

An article in the August 2003 "South African Food Review" states that
the market for **nutritionally dense dairy foods**, such as milk, yogurt
and cheese, has blossomed considerably. Clover Danone, a large dairy
manufacture, reports that the market has grown by 22.4 percent in volume
and 56.1 percent in value, while Parmalat notes that retailers have
increased shelf space to accommodate the explosion of single-serve,
flavored milk or drinking yogurt and multipak yogurts.

The South African **ingredients sector** has really felt the pressure
from cheaper imports. Their technology lags behind that of more
developed countries, making this sector a good opportunity for the right
company.

Industry analysts believe there is a niche for products that have added
**health and energy benefits**. Consumers are looking for foods with
value-added qualities.

Industry sources confided to post that the South African market is ready
for convenience foods with a twist, such as little peppers stuffed with
cheese, whole-wheat pasta, fancy olives, cheese spreads, ready made tuna
salad etc.

#######  SECTION 6. 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](http://www.fas.usda.gov/)

The web page of the South African Association for Food Science and
Technology has some informative papers and information on South African
food legislation.

[http://www.saafost.org.za]{.underline}

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, and individual
company websites.