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INSIGHT SURVEY CARB LANDSCAPE REPORT

COMPILED: APRIL 2015

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REPORT OVERVIEW

The Carbohydrate Landscape Report (124 pages) provides a dynamic synthesis

of primary and secondary research, including extensive interviews with relevant

stakeholders and industry experts across the value chain: from organisational

bodies to manufacturers, retailers and leading academics.

For example, the first-hand feedback includes insights from:

Petru Fourie: Agricultural

Economist (Inputs/Production)

at Grain SA

Funzani Sundani: Market

Research at Grain SA

Rudolf Badenhorst: Head of

Market Development at

Potatoes SA

Professor Salome Kruger: Centre

of Excellence for Nutrition at

North West University

Johan Stapelberg: Owner of

Butterfield Bakery Franchise

Lufefe Nomjana: Owner of

Espinaca township bakery

This comprehensive Carbohydrate Landscape Report examines the carbohydrate industry from a

uniquely holistic perspective, providing detailed analysis and insights into the entire value chain:

from harvesting to storage, processing, packaging, sales and consumption.

REPORT OVERVIEW

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For the Wheat, Maize, Potato, and Rice commodities:

What are the key factors that are restraining and driving the growth of the local and global markets?

What are the local and global supply and production trends and predictions?

What are the local and global demand and consumption trends and predictions?

What are local and global pricing trends and predictions?

What are the local and global import and export trends and predictions?

For the Manufacturing and Retail sectors:

What were their overall financial performances for 2014?

What are their areas of key strategic focus for 2015?

What are their footprint and market expansion plans for 2015?

In terms of Consumer Insights and Trends:

What are the consumption trends between 2007-2014 in the following carbohydrate sectors: rice;

pasta; mealie meal; bread; potato chips; breakfast cereal; frozen potato products?

Has the media hype surrounding a ‘low-carb’ diet impacted on demand across the various LSM’s?

What are the local and global expert opinions on the consumer ‘’Banting’ trend?

SOME KEY QUESTIONS THE REPORT WILL HELP YOU TO ANSWER:

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SCREENSHOTS FROM REPORT

124 page report filled with detailed charts, graphs, tables and insights

SAMPLE FROM REPORT: GLOBAL WHEAT SUPPLY AND PRODUCTION

Source:

http://www.igc.int/en/downloads/grainsupdate/igc_5yrprojections2014.pdf

After a fall in 2015/16, world

production to move higher, but

gains limited by competition for

land from other crops.

Although autumn planting conditions have

been largely favourable, the 2015/16 world

wheat crop is projected to drop below the

record levels of the past two seasons.

A small increase in harvested areas is

assumed, mainly in the US and Argentina,

but average yields may not be as good,

decreasing overall output.

Thereafter, only a modest gain in world

planted area is anticipated, constrained by

competition from other crops, especially

maize and oilseeds. Area expansion in the CIS moderately exceeds the pace of other

major growing regions, bolstered by rising local feed needs as

well as export demand.

After falling by about 3% in 2015/16 from the high level in the

previous season, average world yields resume an upward trend

in the remainder of the period, increasing by roughly 1% annually.

Together with a small rise in area, production is expected to

surpass the current year’s record by 2018/19 and reach 732m t

in the following season, a 2% net gain compared with 2014/15.

600

620

640

660

680

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720

740

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

World Wheat Production (Million Tons)

World Wheat Production (mt)


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SAMPLE FROM REPORT:LOCAL MAIZE DEMAND AND CONSUMPTION

It is projected that marginal increases in demand will

continue in the 2014/15 MY (Market Year), as South

Africa’s economy is expected to grow by less than three

percent in 2015, due to labour unrest, upward inflationary

pressures and electricity constraints.

The total local demand for maize is projected at 10 125

000 tons. This includes 4 780 000 tons processed for

human consumption, 4 900 000 tons processed for animal

and industrial consumption, 53 000 tons for gristing, 130

000 tons withdrawn by producers, 230 000 tons released

to end-consumers, a balancing figure of 30 000 tons (net

receipts and net dispatches) and a deficit of 2 000 tons.Source:

http://www.namc.co.za/upload/SupplyAndDemandReports/SASDE%20Report%2028%20Nov%202014.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Pretoria_South%20Africa%20-

%20Republic%20of_3-14-2014.pdf

0

1 000

2 000

3 000

4 000

5 000

6 000

12/13 13/14 14/15

Domestic Maize Consumption (‘000 t)

Human Animal Other

The commercial demand for corn for food

increased on average by 2% per year the past

15 years, while the commercial demand for

feed corn increased on average by 3% per year.

http://www.namc.co.za/upload/SupplyAndDemandReports/SASDE Report 28 Nov 2014.pdf

http://gain.fas.usda.gov/Recent GAIN Publications/Grain and Feed Annual_Pretoria_South Africa - Republic of_3-14-2014.pdf

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SAMPLE FROM REPORT:LOCAL AVERAGE WEEKLY POTATO PRICES

Prices may still experience further upward

pressure over the short term.

January till end of March: Prices were under downward

pressure. The rainfall experienced during the last week of

March resulted in less volumes going to the markets which

pushed prices higher.

Normally after Easter prices will decline slightly. Thereafter

prices will move sideways over the medium term.

April/May/June: average prices will be higher than 2014 as

a result of drought.

Source:

http://www.potatoes.co.za/SiteResources/documents/Markkommentaar%20Market%20Comment%20April%202015%20(2).pdf

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5

10

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30

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50

J J F F MM A A MM J J J J A A S S O O N N D D

R p

er 1

0kg

Local Average Weekly Potato Price –all markets and all classes

2013 2014 2015 2012

Factors that could play a role in the market

place 2015:

Rainfall can result in upward pressure on prices when

producers cannot lift potatoes – see last week of March.

Lower temperatures may improve the quality of potatoes

(better keeping ability) resulting in higher prices.

http://www.potatoes.co.za/SiteResources/documents/Markkommentaar Market Comment April 2015 (2).pdf

8Source:

http://www.igc.int/en/downloads/grainsupdate/igc_5yrprojections2014.pdf, https://www.worldriceproduction.com/

SAMPLE FROM REPORT:GLOBAL RICE SUPPLY AND PRODUCTION

460

465

470

475

480

485

490

495

500

505

13/14 14/15 15/16 16/17 17/18 18/19 19/20

World Rice Production

Production volume (million tons)

A poor seasonal output in Asia is mainly behind a 1.6 million ton decline in global paddy

production in 2014.

Production shortfall remains forecast to arise from cuts in Asia, where various important producers have been

negatively impacted by a combination of late and insufficient rains and/or floods.

Global rice output is projected to trend higher in the five years to 2019/20, but the rate of increase will be slower than in

the past amid likely limited growth in China.

Growth will moderate significantly owing to an expected steep drop in China’s purchases of white rice.

Thailand is likely to remain the world’s top exporter throughout the medium term.

40%

28%

10%

9%

8%5%

Rice Production by Country (main producers)

China India Indonesia Bangladesh Vietnam Thailand


https://www.worldriceproduction.com/

Woolworths Food has 302 stores throughout

South Africa, 60 Engen stores and 25 stores in

the rest of Africa.

Woolworths Holdings Limited acquired one of the oldest

and most prominent department stores in Australia,

David Jones. The acquisition is expected to create

significant value for a wide range of stakeholders.

Woolworths has a vision to grow their already

meaningful business in Africa to become a more

substantial contributor to the group sales and profit.

Woolworths intends to open 8 new stores in the next

three years and will aggressively seek new space and

invest capital in store extensions and modernisations.

.

SAMPLE FROM REPORT:WOOLWORTHS FOOTPRINT AND EXPANSION

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Woolworths vs Market Growth

(3mma)

Woolworths price movement

CPI (Food & Non-alcoholic Beverages)

Woolworths sales growth (3mma)

Growth in Nielsen Defined Basket (3mma)

Source:

http://www.woolworthsholdings.co.za/

Woolworths has recently completed the process of

buying back franchise stores in Botswana, Namibia,

Swaziland and Ghana. Through this acquisition they

have achieved critical mass on which they can leverage

processes and systems within their supply chain.

http://www.woolworthsholdings.co.za/

TRENDS

Packaged/industrial bread in South Africa is experiencing a decline in volume sales in comparison to 2013. Rising input costs

have resulted in prices rising above the rate of inflation, thus hampering consumer demand. Some price-sensitive consumers are

reverting back to products that offer value for money, such as mealie meal.

COMPETITIVE LANDSCAPE

Pioneer Foods continues to lead the category in 2014 with a value share of 26%, closely followed by Tiger Consumer Brands.

Artisanal products hold third position overall with a value share of 18%. Premier Foods ranks fourth with a 15% share. The

positions of the three leading manufacturers can be attributed to the strength of their respective packaged/industrial bread

brands, namely Sasko, Albany and Blue Ribbon.

PROSPECTS

Health is a key trend within baked goods in South Africa. Consumers, and particularly those in middle to upper LSM groups, will

pay higher prices for products that offer health benefits such as a low GI (Glycaemic Index), a high fibre content or fortification

with added vitamins. However, such products also carry a higher unit price than white bread which is why, combined with a taste

preference for white bread, lower LSM groups continue to support white bread.

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SAMPLE FROM REPORT:LOCAL BREAD INDUSTRY/CONSUMER TRENDS

Source:

http://www.euromonitor.com/bakery-in-south-africa/report ; http://www.namc.co.za/upload/food_price_monitoring/NAMC%20--Food%20Price%20Monitor-February-

%202015.pdf;http://www.potatoes.co.za/SiteResources/documents/Marketing%20%20Investigating%20the%20innovativeness%20of%20the%20potato%20product%20offeri

ng%20to%20South%20African%20consumers%20from%20a%20food%20preference%20trend%20perspective.pdf

Mega-trend: Manifestation example:

Mainstream or niche:

Examples of associatedprice premiums:

Health High fibre Low GI

Mainstream +65% above

Indulgence Commercial ‘farm’ breadSeed bread

Niche +105% above

Convenience Sliced, pre-packed bread

Mainstream +37% above

Between January

2014 and January

2015;

Domestic wheat

price up 36.32%

Brown bread 700g

price up 8.66%

White bread 700g

price up 8.87%

http://www.euromonitor.com/bakery-in-south-africa/report

http://www.namc.co.za/upload/food_price_monitoring/NAMC --Food Price Monitor-February- 2015.pdf

http://www.potatoes.co.za/SiteResources/documents/Marketing Investigating the innovativeness of the potato product offering to South African consumers from a food preference trend perspective.pdf

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TABLE OF CONTENTS

1. Executive Summary:

Wheat

1.1 Key facts regarding Local and Global Wheat Industry

1.2 Drivers and Restraints in Local Wheat Industry: Wheat and Flour

1.3 Drivers and Restraints in Local Wheat Industry: Bread and Pasta

1.4 Dashboard illustrating Key Statistical Trends in Local and Global Wheat Industry

Maize

1.5 Key facts regarding Local and Global Maize Industry

1.6 Drivers and Restraints in Local Maize Industry: Maize and Mielie Meal

1.7 Dashboard illustrating Key Statistical Trends in Local and Global Maize Industry

Potato

1.8 Key facts regarding Local and Global Potato Industry

1.9 Drivers and Restraints in Local Potato Industry

1.10 Dashboard illustrating Key Statistical Trends in Local and Global Potato Industry

Rice

1.11 Key facts regarding Local and Global Rice Industry

1.12 Drivers and Restraints in Local Rice Industry

1.13 Dashboard illustrating Key Statistical Trends in Local and Global Rice Industry

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TABLE OF CONTENTS

2. Wheat:

Global Wheat Overview

2.1 Global Supply and Demand Trends and Predictions

2.2 Global Supply and Production

2.3 Global Demand and Consumption

2.4 Global Trade

Local Wheat Overview

2.5 Local Supply and Demand Trends

2.6 Local Production and Consumption

2.7 Local Price Trends

2.8 Local Imports and Exports

2.9 Local Wheat Value Chain

2.10 Local Wheat Producers SWOT

2.11 Local Milling Industry SWOT

2.12 Interview with Petru Fourie: Agricultural Economist at Grain SA

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TABLE OF CONTENTS

3. Maize:

Global Maize Overview

3.1 Global Supply and Demand Trends and Predictions



3.4 Global Trade

3.5 Global Price Trends

Local Maize Overview

3.6 Local Supply and Production

3.7 Local Demand and Consumption



3.10 Local Maize Value Chain

3.11 Interview with Funzani Sundani: Market Research at Grain SA

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4. Potatoes:

Global Potato Overview

4.1 Global Potato Overview

Local Potato Overview

4.2 Local Production and Consumption Trends

4.3 Local Average Weekly Potato Prices

4.4 Local Market Happenings: Sales Volumes

4.5 Local Market Happenings: Import of Frozen French Fries

4.6 Local Market Happenings: Impact of Xenophobic Riots



4.9 Local Potato Value Chain

4.10 Interview with Rudolf Badenhorst from Potatoes SA

TABLE OF CONTENTS

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TABLE OF CONTENTS

5. Rice:

Global Rice Overview



5.3 Global Trade

5.4 Global Price Trends

Local Rice Overview

5.5 Local Production and Consumption Trends


5.7 Local Rice Value Chain

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6. Manufacturers:

Premier

6.1 Brands

6.2 Financial Summary and Strategy

6.3 Footprint and Market

Pioneer

6.4 Brands


6.6 Food Divisions

6.7 Footprint and Market

Foodcorp

6.8 Brands


Tiger Brands

6.10 Brands


6.12 Grains Division and Nigeria Acquisition

TABLE OF CONTENTS

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7. Retailers:

Woolworths


7.2 Footprint and Expansion

Spar



Pick n Pay



Shoprite



Massmart



TABLE OF CONTENTS

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8. Consumer Trends:

8.1 Consumption Trends 2007-2014

8.2 Global Consumer Trends Reflected in South African Food Sector 2015

Bread

8.3 Companies and Brands

8.4 Trends, Competitive Landscape and Prospects

8.5 Trends and Interview with Brand Manager of leading SA Bread Manufacturer

8.6 Interview with Lufefe Nomjana - owner of Espinaca township bakery

8.7 Interview with Johan Stapelberg – owner of Butterfield Bakery

8.8 SWOT Analysis of Local Bakers

Pasta



Rice



Mielie Meal



Potatoes



Topical Carbohydrate Consumer Trend: Banting

8.17 Low-Carb Banting

8.18 Interview with Professor Salome Kruger from North West University

TABLE OF CONTENTS

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