With South Africa having the most advanced and refined food and beverage market on the African continent, Frost & Sullivan believes in a 4%-7% estimated growth in the sector by 2020. The agricultural, agro-processing and food and beverage industries provide an abundance of opportunity for investors as well as key domestic and new players.
The sustainability of the agriculture and food and beverage industries is dependent on the economical and agricultural production recovery, stimulus programs by government and policy reform outcomes; this is according to Justin Malherbe, Chemical, Food and Beverage consultant at Frost & Sullivan. The South African government, The Department of Trade and Industry (DTI) and the Department of Trade and Investment in South Africa (TISA) have identified these sectors as a focus for local manufacturing opportunities, import substitution, employment as well as export and economic growth, he says.
South Africa’s agricultural sector accounts for approximately 12% of its export earnings with the fruit and vegetable industry showing rapid growth during the past 20 years. Exports reached nearly 60% of local production. With the beverages, spirits, vinegars, sugars and the residue food industry being the most significant contributors to South Africa’s imports in 2017 of approximately R36.6 billion in value, Frost & Sullivan believes that the recovery of the South African economy and the growth and recovery in neighbouring SADC export destinations will result in an increased local demand.
Stock farming also remains a viable investment opportunity for South Africa, with over 80% of the country’s land suitable land for grazing and livestock playing a significant part by contributing 48% towards the country’s output valued at approximately R50 billion.
Agro-processing is South Africa’s largest subsector of manufacturing with 64% – 74% of the raw materials locally sourced. With the agro-processing industry and its products accounting for 19.4% of the employment in the manufacturing industry and 21% of the GDP is from the manufacturing sector, opportunities exist to extend exports to the growing Middle-East and Asia markets, while sustaining growth in exports to the more developed Global North. Value added products like artificial and organic energy drinks or products will see more prominence in the market.
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