Food & Beverages. Executive Summary. Trade. Foreign Direct investment

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1 Food & Beverages Executive Summary This sector fact sheet provides key trade and investment related statistics for the food and beverages sector. Specifically, it shows global trade and investment flows including an analysis of top markets and products for South Africa and the Western Cape. The key highlights in the food and beverages sector are provided below: Trade Largest global food and beverage exporters: United States (ZAR136bn) with 1.3 global share United kingdom (ZAR 841.6bn) with 6.3 global share Germany (ZAR774bn) with 5.8 global share Largest global food and beverage importers: United states (ZAR1162.2bn) with 8.6 global share China (ZAR939.1bn) with 7. global share Germany (ZAR93.2bn) with 6.7 global share Global food and beverage trade in 213 amounted ZAR13.28trn with, the leading traded products being: Soya beans; Wheat and meslin and Other food preparations. South Africa exported food and beverages to the value of ZAR87.8bn in 213 growing by 64 from the previous year. The Western Cape exported food and beverages to the value of ZAR39.3bn in 213 growing by 32.1 from the previous year. The Western Cape s largest food and beverages exports in 213 were: Grape wine (2 share); Citrus fruit (17); and Apples, pears and quinces (14). Foreign Direct investment Between January 23 and February 214 a total of 8,773 FDI projects were recorded into the global food and beverage sector. These projects represent a total capital investment of ZAR2.33trn. Between January 23 and February 214 a total of 47 FDI projects were recorded in the food and beverage sector in South Africa. These projects represent a total capital investment of ZAR13.2bn. Six of these FDI projects in the Western Cape, representing an estimated total capital investment of ZAR93.99m.

2 1. Sector Overview According to FDI.net (212), the food and beverage processing sector refers to the manufacturing, processing and preservation of meat, fish, fruit, vegetables, oils and fats; manufacture of dairy products; manufacture of grain mill products, starches and starch products and prepared animals feeds; manufacture of other food products (e.g. bread, sugar, chocolate, pasta, coffee, nuts and spices); and the manufacture of bottled and canned water, soft drinks, fruit juices, beer, and wines. 1.1 Global overview Declining food prices, deflation or the threat of it in a number of European countries especially and a broad-based sell-off in emerging market assets have been major macro concerns affecting the food and beverage industry. While the Eurozone looks particularly weak with France, Italy and Spain standing out, the outlook for food and drink companies across a number of sub-sectors still looks sound in key markets like the United States and the United Kingdom. Deflation weighed heavily on a number of European food retailers in 214, leading to lower sales and lower margins. Consumer sentiment in the Eurozone area to remain particularly weak with the exception of the United Kingdom. The total amount spent in the United Kingdom food retail stores fell for the first time in July 214 since monthly record-keeping began in This is a direct consequence of how discounters like Aldi and Lidl have changed the status quo with high-volume, low-price models, taking market share away from retailers like Tesco and forcing them into price war terrain. Although the deflation in food retailing in the United Kingdom is different in structure to that in Poland and Spain the end result is the same; United Kingdom retailers are facing unprecedented challenges. Touching on food prices, Business Monitor International (BMI) expects grains prices to continue declining over Q4 214 before finding a base towards the end of the year, following heavy selling action in the third quarter of 214. The global food production rankings can be seen below. The highest production in 212 in terms of tonnage is sugar cane, with million tonnes, more than double the tonnage of maize ( million tonnes) which lies in second place (FAOStat, 214). Rice, wheat and milk produced 738 million, 672 million and 626 million tonnes respectively. The latest Dairy Index from Tetra Pak (214) has found that total global demand for milk is set to overtake the available supply for the first time over the next decade. 2 COMMODITY TOP COMMODITIES IN TERMS OF PRODUCTION S PRODUCTION (USDBN) 211 PRODUCTION (USDBN) 212 GROWTH ( ) PRODUCTION QUANTITY (MILLION MT) Milk, whole fresh cow Rice, paddy Meat indigenous, cattle Meat indigenous, pig Meat indigenous, chicken Wheat Soybeans Tomatoes Sugar cane Eggs, hen, in shell Maize Potatoes Vegetables, fresh nes Grapes Milk, whole fresh buffalo Source: FAOstat, 214

3 Value (USDbn) Price index The product that produced the highest value in 212 was milk, totalling USD187.28bn, followed by rice with a value of USD186bn. This was followed by cattle, pig and chicken meat with USD169bn, USDUSD167bn and USD132bn respectively. The highest growth in value production was seen for chicken. Africa only produces 6 of global meat. Meat prices reached record levels in 213 and a substantial decline in feed costs has set the scene for renewed profitability in the meat sector. The demand for meat products remains firm, largely driven by emerging regions (FAOstat, 214). Business Monitor International (214) expects mergers and acquisitions (M&A) activity to gather pace over the coming year in global food and drink as more companies look to consolidate having focused primarily on growing organically and cutting costs since 28. One industry that has the potential to have one of the biggest deals in global M&A is beer. The global food price index is shown below. It shows that food prices have increased by 16 from 2 to 213, with prices increasing by only 3 from 2 to 27 and by a large 13 from 27 to 213. WORLD FOOD PRICE INDEX, ,55 1,5 1,45 1,4 1,35 1,3 1, index 1,35 1,35 1,35 1,35 1,36 1,36 1,38 1,38 1,41 1,41 1,45 1,47 1,48 1,51 1,51 Source: FAOstat, The graph below gives the retail value of beverages, and the forecast values until 216. Global beverage sales have been driven by alcoholic drinks followed closely by soft drinks. All segments are forecast to experience continued growth in the short-term future Soft Drinks (USDm) Hot Drinks (USDm) Alcoholic Drinks (USDm) Source: Euromonitor, GLOBAL BEVERAGE RETAIL RSP, The largest companies in the food and beverage industry according to Coriolis Management Consulting (213) are listed below. They have been classified into different categories, including red meat, seafood, dairy, fruit and

4 vegetables, processed food and beverages. Global e-commerce companies such as Amazon.com have also entered the food and beverage industry with campaigns such as AmazonFresh. TOP GLOBAL COMPANIES IN FOOD & BEVERAGES, 213 CATEGORY COMPANY NAME LOCATION RED MEAT SEAFOOD DAIRY FRUIT & VEGETABLES PROCESSED FOOD BEVERAGES Source: Coriolis, 214 JBS Tyson Brazil United States GLOBAL SALES, NO. OF EMPLOYEES USD33.1bn 125, employees USD32.3bn 115, employees Cargil United States USD19.6bn (meat 15bn),- Maruha Nichiro Nissui TUF Nestle Lactalis Groupe/ Parmalat Danone Dole Chiquita Del Monte Nestle Pepsico Kraft Foods Pepsico The Coca Cola Company Dr. Pepper Snapple Japan Japan Thailand Switzerland France France United States United States United States Switzerland United States United States United States United States United States USD1.4bn 13,22 employees USD6.9bn employees USD3.2bn 1 24 employees USD87.bn 328 employees USD23.6bn 5 employees USD 17bn 11 employees USD7.2bn 34 5 employees USD3.1bn 21 employees USD employees USD87.bn 328 employees USD66.5bn 297 employees USD54.4bn 126 employees USD66.5bn 297 employees USD employees USD employees KEY PRODUCTS Beef (global no. 1) Pork (Global no. 1) Chicken (Global no. 1) Beef (global no. 2) Chicken (Global no. 2) Grain Beef Pork Wild catch Processed fish Processed food Aquaculture Wild catch Processed fish Processed food Chemicals Wild catch Canned seafood Processed seafood Baby food Dairy products Cheese Milk Infant formula Bottled water Bananas Fresh fruit Fresh vegetables Bananas Other fresh fruit Fruit snacks Fresh & prepared fruit Fresh & prepared juice Baby food Dairy products Food snacks Beverages Cereals Confectionary Biscuits Beverages Food snacks Beverages Cereals Non-alcoholic beverages Soft Drinks 4

5 1.2 South African Overview The South African food production rankings can be seen below. The highest 212 production in terms of tonnage in South Africa is sugar cane, with 17.28m tonnes, 3 more than the tonnage of maize (11.83 million tonnes) which sits in second place. Milk, potatoes and wheat produced 3.37 million, 2.25 million and 1.92 million tonnes respectively. The product that produced the highest value in 212 was cattle meat, totalling USD2.13bn, followed by chicken meat with a value of USD2.12bn. This was followed by maize and grapes with USD1.5bn each. COMMODITY TOP COMMODITIES IN TERMS OF PRODUCTION S PRODUCTION (USDM) 211 PRODUCTION (USDM) 212 GROWTH ( ) PRODUCTION QUANTITY ( MT) Meat indigenous, cattle Meat indigenous, chicken Maize Grapes Milk, whole fresh cow Sugar cane Eggs, hen, in shell Meat indigenous, sheep Apples Potatoes Meat indigenous, pig Oranges Wheat Tomatoes Sunflower seed Source: FAOstat, Although meat was the highest value food source in South Africa in 213, the depreciation in the exchange rate and severe drought conditions in 213 led to South Africa not experiencing the same profitability as other international markets. While income growth remains a key driver of increased meat consumption, relative prices and preferences drive the choice between different meats. Chicken meat consumption is projected to increase by 34 over the next decade (compared to 81 in the past 1 years), it will continue to dominate the meat market, accounting for 73 of additional meat consumed by 223. The demand for beef is expected to increase by 2 in the next decade (compared to 12 in the past 1 years), it will account for 15 of additional meat consumed by 223 (BFAP, 214). SOUTH AFRICAN FOOD & BEVERAGES STRENTHS AND OPPORTUNITIES STRENGTHS South Africa is home to the most sophisticated food processing sector in Africa by some distance. Provides a formidable export base for companies aiming to reach the broader African market, Asia and the EU. A well-developed food retail sector allows food companies to reach middle-and higher-income consumers efficiently. South Africa's alcoholic drinks industry is well developed South Africa is one of the world's top wine exporting countries South Africa has the highest beer consumption in Africa. Source: Business Monitor International, 214 OPPORTUNITIES A number of food segments remain underdeveloped and would benefit from further investment. Demand for processed and convenience foods is rising as lifestyles get busier and the size of the middle class increases. There is still large scope for growth in alcohol, particularly in beer and wine. Preferential access to EU markets is likely to increase export sales of South African exports. Many industry sub-sectors, such as energy drinks, tea and coffee, are far from saturated and would benefit from further investment. Rising health-consciousness is boosting demand

6 Value Food Consumption (ZARbn) Food consumption expenditure in South Africa per person has grown from ZAR3,837 in 25 to ZAR7,657 per annum. This expenditure is forecast to grow to ZAR11,177 in 218f, with consistent yearly growth of around 8 per annum from 213 to 218. Total food consumption growth followed the same pattern as per capita food consumption, with a dip in 21 after the financial crisis. Total food consumption in South Africa is shown in the graph below, growing from ZAR185bn in 25 to ZAR44bn in 213. Food consumption growth is forecast to increase to ZAR69bn in 218, outpacing inflationary growth. Strong growth in food consumption in South Africa is driven in large part by rising disposable incomes and a growing middle class, as the economy continues to expand. The continually growing demand for food, especially in Africa should drive investment in agri-business in South Africa in the upcoming decade. FOOD CONSUMPTION IN SOUTH AFRICA, Food consumption ZARbn 185,1 25,8 231,9 262,8 294,6 36,5 339, 372,7 44,1 435,2 474, 515,8 56, 69,1 Growth () 12,7 11,2 12,7 13,3 12,1 4,1 1,6 9,9 8,4 7,7 8,9 8,8 8,6 8, Growth () Source: BMI, 214 South Africa s beverage sales follow a similar trend as global sales, with alcoholic drinks being the most sold beverage followed by soft drinks. However, unlike global sales there is a vast difference between alcoholic drink sales and soft drink sales growth rates. Fruit/vegetables and bottled water started off at a low base in 29 and have been showing steady growth since. In the future, higher value products such as energy drinks are likely to become more important players across the soft drinks industry SOUTH AFRICAN BEVERAGE SALES, f f 215f 216f 217f 218f Alcoholic drink sales Soft drink sales, carbonated soft drink sales Fruit/vegetable juice sales Bottled water sales Coffee sales Tea sales Source: Business Monitor International, 214 *For a more detailed analysis of the beverages sector please see Wesgro s 214 Beverages publication The table below gives a list of associations in South Africa that can be contacted for further information on the industry, companies, best practice, exports, etc.

7 SOUTH AFRICAN ASSOCIATIONS IN FOOD & BEVERAGES, 213 CATEGORY MEAT SEAFOOD DAIRY FRUIT & VEGETABLES BEVERAGES Source: various, DTI, 214 ASSOCIATIONS Association of Meat Importers and Exporters South African Meat Industry Company South African Poultry Association The Red Meat Producers Organisation SA Feedlot Association Red Meat Abattoir Association South African Pork Producers Association SA African Ostrich Business Chamber Farmed Abalone Export Council Marine Finfish Farmers Association of South Africa Aquaculture Association of SA SA Dairy Foundation Fresh Produce Exporters Forum SA Fruit & vegetable Canners Export Council SA Olive Industry Association Wines of South Africa The top five listed food and beverage companies reported by the Financial Mail s Top Companies in 214 are listed below. These companies are ranked by profit rankings. The sector is dominated by SABMiller, the second largest company on the JSE. It has the most comprehensive footprint of any global brewer, having operations in 75 countries including Peru, China, Columbia and India. Tiger Brands is South Africa s largest listed food company with interests in Kenya, Zimbabwe, Cameroon and Nigeria. Source: Financial Mail, 214 TOP 5 LISTED SOUTH AFRICAN COMPANIES IN FOOD & BEVERAGES COMPANY PROVINCE NET PROFIT TOTAL ASSETS MARKET CAPITALISATION SEP SABMiller Gauteng Tiger Brands Gauteng Tongaat Hulett Kwa-Zulu Natal Illovo Sugar Kwa-Zulu Natal AVI Gauteng Key company developments in the South African food and beverage industry from 212 to 214 include the following: PepsiCo opened a manufacturing plant in KwaZulu-Natal for Simba chips, this extends the existing plants in Gauteng and the Western Cape. Burger King SA opened its first meat production unit in collaboration with Excellent Meat. This unit is located in Elsies River in Cape Town. Nestlé is set to Invest USD2m to revamp local production facilities: Switzerland-based food giant Nestlé will invest about USD2m in the expansion of its coffee factory in South Africa and will also revamp some of its other consumer goods producing facilities, incoming chairman and CEO of the local unit, Ian Donald, told Reuters in September 214. Pizza Hut re-enters South African market: US fast-food group Yum! Brands' chain Pizza Hut Delivery (PHD) is re-entering South Africa after a six-year absence, with the launch of its first new outlet in Johannesburg. The company will focus on delivery meals and use the country as a base for expansion into other parts of the continent, with Zambia and Angola being its likely first targets. Call for South Africa to focus on premium wines to sustain growth: The UK's leading wine suppliers have warned that South Africa needs to focus on the premium wine segment to sustain the impressive growth that has seen sales rise 9.5 to GBP521m in the UK, according to a Nielsen report for the year to August 214.

8 1.3 Western Cape Overview Agriculture in the Western Cape is distinguished in several ways from that in the rest of South Africa, largely because of the physical geographic differences. The winter rainfall region of the Cape Winelands and the yearround rainfall of the Southern Cape provide agricultural conditions that make the crop mix and productive potential unique. One of the primary features of the region s agriculture is production stability, based on stable and relatively adequate winter rainfall, supported by well-developed infrastructure for both input supply and output processing. The Western Cape has a diverse production capacity with 11 commodities contributing significantly to agricultural production. Notably, crop production including fruit, poultry and eggs, winter grains, such as barley, wheat and hops, viticulture and vegetables together contribute more than 75 of the total output. Consequently, the diversity of the agricultural enterprises also contributes to the sector s general stability. The agricultural activity of the Western Cape covers an area of 11, 5 million hectares (ha). Although this is only approximately 12,4 of the total agricultural land available in South Africa, the Western Cape produces between 55 and 6 of South Africa s agricultural exports, which is valued at more than ZAR7bn per year. The Western Cape also contributes approximately 2 towards South Africa s total agricultural production. Major food and beverage companies listed on the JSE that are situated in the Western Cape include: WESTERN CAPE FOOD & BEVERAGES COMPANIES LISTED ON THE JSE COMPANY NAME MARKET CAPITAL (ZAR) Pioneer Foods Rhodes Food Group 2,543,71, Remgro 11,943,128,922 Distell 29,893,728,51 Pick n Pay 26,393,376,95 Woolworths 72,254,114,22 Spur 3,36,381,16 Shoprite 79,56,33,48 Source: Moneyweb, 214 8

9 Value (ZARbn) 2. Trade 2.1 Global trade of food and beverages From two successive periods of negative growth in 29 and 21, following the financial crisis, global food and beverage trade recovered in 211 and continued to grow strongly with growth rates reaching 22.4 in 213. Global trade values reached above crisis levels in 211 due to an increase in food and beverage values, reaching ZAR9.41trn. In 213, global trade in this sector reached a record ZAR13.28trn. GLOBAL TRADE OF FOOD & BEVERAGES, Exports (ZARbn) 458,35 477,89 667, , ,42 788, 946, , ,1 Growth () 7,6 17,6 27,2 41,4-7,6 -,6 19,4 15,3 22,4 Source: TradeMap, Growth () The United States was the largest global exporter of food and beverages to the value of ZAR1.36trn, commanding 1.25 of global exports. The Netherlands (ZAR841.6bn) and Germany (ZAR774.3bn) were the second and third largest export markets. Belgium, the Netherlands and Germany were the fastest growing export markets showing strong growth in 213 in excess of TOP 1 FOOD & BEVERAGE EXPORT MARKETS, 213 EXPORT MARKET Source: TradeMap, (ZARbn) GROWTH SHARE 1 United States Netherlands Germany Brazil France China Spain Canada Belgium Italy South Africa TOTAL EXPORTS The United States (ZAR1.16trn), was the largest import market in 213, however it is still a net exporter of food and beverages accounting for 8.6 of all global imports. China was the second largest import market followed by Germany importing ZAR939.1bn and ZAR93.2bn respectively. Belgium, China and the United Kingdom showed the strongest growth in 213, above 27.

10 TOP 1 FOOD & BEVERAGE IMPORT MARKETS, 213 IMPORT MARKET Source: TradeMap, (ZARbn) GROWTH SHARE 1 United States China Germany Japan Netherlands United Kingdom France Italy Belgium Russia South Africa TOTAL IMPORTS Global food and beverage trade in 213 amounted to ZAR13.28trn with, the leading traded products being: Soya beans; Wheat and meslin; and Other food preparations. HS CODE TOP GLOBALLY TRADED FOOD & BEVERAGE PRODUCTS, 213 PRODUCT 213 (ZARbn) GROWTH Soya beans, whether or not broken (excl. seed for sowing) Wheat and meslin (excl. seed for sowing, and durum wheat) Food preparations nes Maize (corn) nes Grape wines nes,incl fort&grape must,unfermntd by add alc in ctnr</=2l Palm oil and its fractions refined but not chemically modified Rice, semi-milled or wholly milled, whether or not polished or glazed Bovine cuts boneless, frozen Cheese nes Coffee, not roasted, not decaffeinated Communion wafers and other preparations of cereals, flour, starch or milk Refined sugar, in solid form, nes Bovine cuts boneless, fresh or chilled Raw cane sugar, not containing added flavouring or colouring matter (excl ) Beer made from malt TOTAL EXPORTS Source: TradeMap, 214 1

11 Value (ZARbn) 2.2 South African food and beverage trade The South African food and beverage trade has been characterised by a positive trade balance for the past ten years backed by strong export performance. In 213, exports grew by a large 64 from ZAR53.7bn to ZAR87.8bn. Imports grew by a lower 22 in 213 to ZAR62.8bn, increasing the trade balance to ZAR25bn. The food and beverage sector accounted for 9.6 of South African exports in 213. Source: Trademap, SOUTH AFRICAN TRADE IN FOOD & BEVERAGES, Exports (ZARbn) 22,2 25,2 24,6 29,2 43,8 44,4 44,7 49,1 53,7 87,8 Imports (ZARbn) 14,3 14,9 19,1 28, 36,1 32,5 32,5 42,1 51,7 62,8 Trade Balance (ZARbn) 8, 1,3 5,5 1,2 7,7 11,9 12,2 7, 1,9 25, The Netherlands was the largest importer of South African food and beverages, importing an 8.6 share of all South African exports. South Africa s top export markets were predominantly African countries, with Namibia, Botswana and Zimbabwe being the top African markets. Besides the SACU countries, which have been newly introduced into the trade database, the fastest growth in exports was seen to Japan (129.4), mainly due to maize exports, and to Mozambique (49.5) with large increases in sugar, beer and yeast. 11 In 213, South Africa imported food and beverages from Argentina to the value of ZAR5.6bn, followed by Brazil to the value of ZAR4.4bn. This shows the prominence of South America as a source market for food and beverages into South Africa. The only African countries represented in the top 1 import markets are fellow SACU members Namibia (ZAR3.46bn) and Swaziland (ZAR2.53bn). SOUTH AFRICA S EXPORT MARKETS OF FOOD & BEVERAGES, 213 Source: Quantec, 214 DESTINATION MARKETS 213 (ZARbn) GROWTH SHARE 213 SOUTH AFRICA S IMPORT MARKETS FOR FOOD & BEVERAGES, 213 SOURCE MARKETS 213 (ZARbn) GROWTH SHARE Netherlands Argentina Namibia Brazil United Kingdom Thailand Botswana China Zimbabwe United Kingdom Mozambique Namibia Japan India Lesotho Netherlands Angola Indonesia Swaziland Swaziland TOTAL EXPORTS TOTAL IMPORTS

12 Citrus fruit was South Africa s top export valued at ZAR9.34bn followed by wine (ZAR8.34bn) and maize (ZAR7.3bn). The fastest growing exports were cane sugar (167) and maize (126). South Africa s largest food and beverage import was rice, valued at ZAR6.4bn followed by wheat and meslin (ZAR4bn) and meat and edible offal (ZAR3.9bn). The fastest growing imports were cane or beet sugar (247) and food preparations (33). SOUTH AFRICA S EXPORTS OF FOOD & BEVERAGES, 213 SOUTH AFRICA S IMPORTS OF FOOD & BEVERAGES, 213 PRODUCT 213 (ZARbn) GROWTH PRODUCT 213 (ZARbn) GROWTH Citrus fruit, fresh or dried Rice Wine of fresh grapes Wheat and meslin Maize (corn) Meat & edible offal of poultry meat Apples, pears and quinces, fresh Grapes, fresh or dried Cane or beet sugar and chemically pure sucrose, in solid form Fruit & vegetable juices, unfermented Spirits, liqueurs, other spirit beverages, alcoholic preparations Spirits, liqueurs, other spirit beverages, alcoholic preparations Cane or beet sugar and chemically pure sucrose, in solid form Soya-bean oil-cake and other solid residues Palm oil & its fraction Prepared/preserved fish & caviar Preserved fruits nes Soya-bean oil & its fractions Nuts nes Food preparations, nes TOTAL EXPORTS TOTAL IMPORTS Source: Quantec, 214 The table below shows the top food and beverage products exported from South Africa to different trade regions. 12 Wine and grapes are a staple export to international trade regions, such as the BRIC countries, the EU and EFTA, with the BRIC region experiencing high growth rates for these products of around 4 between 29 and 213. The regional trade groups such as SADC and COMESA mostly receive maize and refined sugar exports from South Africa, with refined sugar exports growing by more than 5 for both of these regions between 29 and 213. BRIC EU27 EFTA PARTNER SA EXPORTED PRODUCTS TO DIFFERENT TRADE REGIONS PRODUCT GROWTH RATE () Oranges, fresh or dried Grapes, fresh Wine =/<2l Grapes, fresh Wine =/<2l Wine >2l Oranges, fresh or dried Apples Maize 226 Grapes 81 2 Wine >2l Wines =/<2l 55 3 Grapes, dried 3 8

13 Value SADC COMESA PARTNER Source: BFAP Agricultural Outlook, 214 SA EXPORTED PRODUCTS TO DIFFERENT TRADE REGIONS PRODUCT 2.3 Western Cape trade of food and beverages GROWTH RATE () Maize Refined sugar Food preparations 112 Maize grouts and meal Maize Refined sugar Food preparations Soya-bean oil 595 Wheat flour The Western Cape has been a strong exporter of food and beverages for the past ten years and has continually maintained a trade surplus. Demand for foreign food and beverages has also been increasing since 24 reaching its peak in 29, this import growth was not sustained into 21 with imports deceasing considerably but recovering in 211 and 212 and reaching their peak at ZAR15bn in 213. In 213, exports (ZAR39bn) reached their highest level increasing by 32 from 212 while imports grew by a lower 12. The Western Cape s trade surplus increased by a large 48 in WESTERN CAPE TRADE IN FOOD & BEVERAGES, Exports 1492, , , , ,2 2557, , ,3 2977, ,3 Imports 3717,9 4369, 5265, 7499,4 952,3 131,1 8315,4 1868, , ,4 Trade Balance 1374,4 1225,1 931, , 15353, , , , , ,9 13 Source: Quantec, 214 The United Kingdom was the province s largest food and beverage export market commanding 13.3 of all exports. The Netherlands (ZAR5.12bn) was the province s second largest market followed by Japan (ZAR2.45bn). Angola was the Western Cape s largest African export destination with exports reaching ZAR1.49bn. Export growth to Germany and Japan was greater than 6 from 212 to 213. The high growth in exports to Japan was mainly due to a large shipment of maize in 213. The Western Cape sourced most of its food and beverages from European and Asian markets with Brazil, Argentina and the United States completing the top import markets. The United Kingdom (ZAR2.5bn) was the province s largest import market mainly due to the demand for whiskey. Italy and Brazil were the Western Cape s fastest growing import markets in 213.

14 WESTERN CAPE S EXPORT MARKETS FOR FOOD & BEVERAGES, 213 WESTERN CAPE S IMPORTS FOR FOOD & BEVERAGES, 213 DESTINATION MARKETS 213 GROWTH SOURCE MARKETS 213 GROWTH United Kingdom United Kingdom Netherlands Thailand Japan China Germany Brazil Russia Italy Angola India United States Netherlands United Arab Emirates Argentina Hong Kong United States France Germany TOTAL EXPORTS TOTAL IMPORTS Source: Quantec, 214 The top 5 export destinations and the top products exported to these countries are listed below: United Kingdom Grape Wines (ZAR1.5bn) Apples, pears and quinces (ZAR1.2bn) Grapes, fresh and dried (ZAR786m) Citrus fruit, fresh or dried (ZAR774m) Stone Fruit, fresh (36m) Netherlands Grapes, fresh and dried (ZAR1.6bn) Citrus fruit, fresh or dried (ZAR1bn) Apples, pears and quinces (ZAR865m) Grape Wines (ZAR561m) Stone Fruit, fresh (399m) 14 Japan Maize (ZAR1.5bn) Fruit, nuts and edible plants (ZAR199m) Citrus fruit, fresh or dried (ZAR193m) Grape Wines (ZAR131m) Fruit and vegetable juice (ZAR11m) Germany Grape Wines (ZAR1.1bn) Fruit, nuts and edible plants (ZAR225m) Apples, pears and quinces (ZAR131m) Grapes, fresh and dried (ZAR128m) Citrus fruit, fresh or dried (ZAR117m) Russia Citrus fruit, fresh or dried (ZAR82m) Grape Wines (ZAR25m) Apples, pears and quinces (ZAR229m) Grapes, fresh and dried (ZAR227m) Fruit, nuts and edible plants (ZAR8m)

15 The Western Cape is South Africa s largest grape producing region, it is thus unsurprising that two grape derived products are amongst the top five exports. Grape wines (ZAR7.7bn) was the province s largest export in 213, this was followed by citrus fruit, (ZAR6.6bn), apples, pears and quinces (ZAR5.6bn) and grapes (ZAR4bn). Below are the Western Cape s main exported food and beverages and their export shares: Grape wine, (ZAR7.8bn) accounted for 2 of Western Cape food and beverage exports and 98 of national exports were from the Western Cape. Citrus fruit, (ZAR6.7bn) accounted for 17 of Western Cape food and beverages exports and 71 of national product exports from in the Western Cape. Apples, pears and quinces, (ZAR5.6bn) accounted for 14 of Western Cape food and beverage exports and 94 of national exports were from the Western Cape. Grapes (ZAR4bn) accounted for 1 of Western Cape food and beverage exports and 81 of national exports were from the Western Cape. Maize (ZAR1.8bn) accounted for 5 of Western Cape food and beverage exports and 3 of national exports were from the Western Cape. Liqueur and spirits were the provinces largest imported food and beverage product to the value of ZAR2.8bn. Liqueur accounted for 19 of provincial beverage imports and the Western Cape accounted for 75 of national beverage imports. WESTERN CAPE S EXPORTS OF FOOD & BEVERAGES, 213 WESTERN CAPE S IMPORTS OF FOOD & BEVERAGES FROM, 213 PRODUCT 213 GROWTH PRODUCT 213 GROWTH Grape wines(including fortified) Citrus fruit, fresh or dried Liqueur, spirits and undenatured ethyl alcohol <8 Prepared or preserved fish, fish eggs, caviar Apples, pears and quinces, fresh Wheat and meslin Grapes, fresh or dried Meat, edible offal of domestic poultry Maize (corn) Fruit, nut, edible plant parts nes, prepared/preserved Liqueur, spirits and undenatured ethyl alcohol <8 Fruit and vegetable juices, not fermented or spirited Stone fruit, fresh (apricot, cherry, plum, peach, etc.) Fish fillets, fish meat, mince except liver, roe Fruit and vegetable juices, not fermented or spirited Rice Solid cane or beet sugar and chemically pure sucrose Crustaceans Waters, non-alcoholic sweetened or flavoured beverages Chocolate and other foods containing cocoa TOTAL EXPORTS TOTAL IMPORTS Source: Quantec, 214 The table below shows the top food and beverage products exported from South Africa to different trade regions. Wine and grapes are a staple export to international trade regions, such as the BRIC countries, the EU and EFTA, with the BRIC region experiencing high growth rates for these products of around 4 between 29 and 213. The regional trade groups such as SADC and COMESA mostly receive maize and refined sugar exports from South Africa, with refined sugar exports growing by more than 5 for both of these regions between 29 and

16 PARTNER BRIC EU27 SADC COMESA Source: Quantec, 214 WESTERN CAPE EXPORTED PRODUCTS TO DIFFERENT TRADE REGIONS PRODUCT GROWTH RATE () Citrus Wines Grapes Apples, pears and quinces Crustaceans Wines Grapes Apples, pears and quinces Citrus fruit Stone fruit Spirits and Liqueur Wine Fruit and vegetable juice Apples, pears & quinces Frozen fish Fruit and vegetable juice Wine Apples, pears & quinces Sauces & Condiments 91 4 Food preparations

17 Value 3. Foreign Direct Investment (FDI) 3.1 Global FDI Between January 23 and February 214 a total of 8,773 FDI projects were recorded into the global food and beverages sector. These projects represent a total capital investment of ZAR2.33trn which is an average investment of ZAR265.12m per project. During the period, a total of 2 million jobs were created. GLOBAL FDI INTO THE FOOD & BEVERAGES SECTOR, 23-FEB Projects Capex Projects The United States was the largest investor into the food and beverages sector, the world largest economy invested into 2,67 projects, equating to ZAR66bn in capital expenditure over the past ten years. Germany (1,48 projects and ZAR32bn capex) and France (747 projects and ZAR222bn capex) were the second and third largest global investors respectively. The food and beverage sector received most of its investment from European nations. DESTINATION COUNTRY SOURCE MARKETS FOR GLOBA FDI INTO FOOD & BEVERAGES 23-FEB 214 PROJECTS PROJECTS CAPEX CAPEX COMPANIES COMPANIES 1 United States Germany France United Kingdom Switzerland Japan Netherlands Spain Italy Belgium Other Countries TOTAL

18 Share The United States was also the largest recipient for investment into the food and beverages even though it is a net investor. The United States received 1,114 projects from 621 companies. China was the second largest recipient for projects (696) and capex (ZAR25bn). BRICS countries, China, Russia and India were among the top investment destinations in the food and beverages sector. DESTINATION MARKETS FOR FDI INTO THE FOOD & BEVERAGES SECTOR, 23 FEB 214 DESTINATION COUNTRY PROJECTS PROJECTS CAPEX CAPEX COMPANIES COMPANIES 1 United States China Russia Romania UK Spain Poland India France Bulgaria Other Countries TOTAL The figure below shows investment into the food and beverage sector broken down into subsectors, from January 23 to February 214. Food and beverage stores (4.3) received the lion s share of investment in terms of projects (4.3) and capex (41), followed by food services (7.4 in projects and 7.3 in capex) and fruit, vegetables and specialist food (7.4 in projects and 5.5 in capex). 18 INWARD FDI INTO FOOD & BEVERAGE SUBSECTORS, 23-FEB Food & Beverage Stores Food services Fruits & vegetables & specialist foods Dairy products Grains & oilseed Sugar & confectiona ry products Bakeries & tortillas Animal slaughterin g & processing Coffee & tea projects 4,3 7,4 7,4 6,4 6,3 5,9 4, 3,6 2,8 2,7 13,3 Animal food other subsectors

19 Value The table below lists the companies making the most investments within the beverages sector by number of projects. Soft drink giant Coca-Cola was the largest investor within the sector, with alcohol companies also featuring as prominent investors. COMPANIES INVESTING INTO THE FOOD & BEVERAGES SECTOR, 23- FEB 214 INVESTING COMPANY COUNTRY PROJECTS CAPEX 1 Lidl Germany Carrefour France Aldi Germany Nestle Switzerland Tesco United Kingdom Wal-Mart United States Metro Cash & Carry Germany Metro Germany Kaufland Germany Cargill United States TOTAL South African foreign direct investment Inward foreign direct investment Between January 23 and February 214 a total of 47 FDI projects were recorded in the food and beverage sector in South Africa. These projects represent a total capital investment of ZAR13.2bn which is an average investment of ZAR28.83m per project. During the period, a total of 8,667 jobs were created. 19 INWARD FDI INTO SOUTH AFRICAS FOOD & BEVERAGE SECTOR, 23-FEB Capex 12,5 95,7 947, , 4 89,5 274, ,4 855,5 479, 445,5 Projects Projects The classification of food and beverages by sub-sector is shown in the figures below. The following is seen: Food and beverage stores accounted for 21 share of projects and 1 share of Capex. Sugar and confectionary products accounted for 13 share of projects and 7 Capex. Grains and oilseed accounted for 11 share of projects and 8 Capex. Soft Drinks and ice accounted for 11 share of projects and 4 Capex.

20 share SOUTH AFRICAN FDI INTO FOOD & BEVERAGE SUB-SECTOR, 23-FEB Food & Beverage Stores Sugar & confection ary products Grains & oilseed Soft drinks & ice Snack food Fruits & vegetables & specialist foods Animal food Coffee & tea Breweries & distilleries Wineries projects 21,3 12,8 1,6 1,6 8,5 8,5 4,3 4,3 4,3 2,1 12,8 capex 9,5 6,8 7,7 4,1 24,7 9,9 2, 2, 22,2 1, 1, other sectors In terms of the food and beverage sector classification of FDI by business activity, most FDI went to the following sectors: Manufacturing accounted for 6 share of projects and 85 Capex. Retail accounted for 19 share of projects and 7.2Capex. Sales, marketing and support accounted for 9 share of projects and 2.1 Capex. Logistics, distribution and transportation accounted for 9 share of projects and 4.4 Capex. 2 SOUTH AFRICA'S INWARD FDI INTO THE FOOD AND BEVERAGE SECTOR, 23-FEB 214 Headquarters 1, 2 Design, Development & Testing Logistics, Distribution & Transportation,3 2 4,4 9 Sales, Marketing & Support 2,1 9 capex projects Retail 7,2 19 Manufacturing 6 85, Share

21 The United Kingdom was South Africa s leading source market in terms of investment projects in the food and beverage sector with 1 investment projects, accounting for 21. Switzerland and the United States rank second and third with 8 projects and 6 projects respectively. INWARD FDI INTO SOUTH AFRICA S FOOD & BEVERAGE SECTOR, 23-FEB 214 SOURCE MARKETS PROJECTS PROJECTS CAPEX CAPEX COMPANIES COMPANIES 1 United Kingdom Switzerland United States Netherlands Botswana Australia Italy Canada China Chile TOTAL The top 1 companies investing into South Africa s food and beverage sector are provided below. TOP 1 INVESTING COMPANIES INTO SOUTH AFRICA S FOOD & BEVERAGE SECTOR, 23-FEB 214 INVESTING COMPANY SOURCE COUNTRY NUMBER OF PROJECTS CAPEX 1 Nestle Switzerland Woolworths Australia Choppies Botswana Illovo Sugar Ltd United Kingdom through AB Foods Ferrero Italy McCain Foods Canada Coca-Cola United States Heineken Netherlands Unilever United Kingdom Lindt & Sprungli Switzerland TOTAL

22 Share Value Outward FDI from South Africa Between January 23 and February 214 a total of 51 FDI projects were recorded from the South African food and beverage sector. These projects represent a total capital investment of ZAR9.9bn which is an average investment of ZAR178.34m per project. During the period, a total of jobs were created. SOUTH AFRICAN OUTWARD FDI INTO THE FOOD & BEVERAGE SECTOR, 23-FEB Projects Capex 617, 932,7 434,6 1,2 1 89,2 1 13,3 211,8 67, , ,4 964,8 Projects The classification of food & beverages by subsectors is shown in the figures below, most FDI went into the following sectors: Food and beverage products accounted for 49 share of projects and 35Capex Soft drinks and ice accounted for 1 share of projects and 5 Capex Sugar and confectionary products accounted for 1 share of projects and 29 Capex. Food services accounted for 8 share of projects and 6 Capex. 22 SOUTH AFRICAN OUTWARD FDI INTO THE FOOD & BEVERAGE SECTOR, 23-FEB Food & Beverage Stores Soft drinks & ice Sugar & confectiona ry products Food services Fruits & vegetables & specialist foods Wineries Animal production Animal slaughterin g & processing Animal food projects 49, 9,8 9,8 7,8 5,9 5,9 5,9 2, 2, 2, capex 35,1 5, 28,8 5,9 4,1 5,7 8,9 5,2,7,5 Grains & oilseed

23 Share The classification of food and beverages by business activity is shown in the figures below, most FDI went into the following sectors: Retail accounted for 53 share of projects and 38Capex. Manufacturing accounted for 35 share of projects and 54 Capex. Logistics, distribution and transport accounted for 1 share of projects and 7.8 Capex. Sales, marketing and support accounted for 2 share of projects and.1 Capex. 6 SOUTH AFRICAN OUTWARD FDI INTO THE GLOBAL FOOD & BEVERAGE SECTOR, Logistics, Distribution & Sales, Marketing & Retail Manufacturing Transportation Support projects capex 38, 54,1 7,8,1 Nigeria was the top destination market for FDI from South Africa globally in food and beverages followed closely by Angola, Zambia and Mozambique. Mozambique did however receive the most investment in capex terms, more than double that received by Nigeria. 23 SOUTH AFRICA OUTWARD FDI INTO THE GLOBAL FOOD & BEVERAGE SECTOR, 23-FEB 214 DESTINATION MARKETS PROJECTS PROJECTS CAPEX CAPEX COMPANIES COMPANIES 1 Nigeria Angola Zambia Mozambique Namibia India Ethiopia Congo (DRC) Kenya France TOTAL

24 The top 1 South African companies investing into the global food and beverage sector are provided below. The largest South African investors in this sector in terms of projects are in the retail sector, namely Shoprite, Pick n Pay and Nandos Chickenland. TOP 1 SOUTH AFRICA INVESTING COMPANIES IN THE FOOD & BEVERAGE SECTOR, 23-FEB 214 INVESTING COMPANY SECTOR NUMBER OF PROJECTS CAPEX 1 Shoprite Retail Pick n Pay Retail Nandos Chickenland Retail Tongaat Hulett Manufacturing HL Hall International Sales, Marketing & Support East Africa Bottling Share Manufacturing FoodCorp Manufacturing Fry's Vegetarian (Fry Group Foods) Manufacturing Booker Tate Manufacturing NMI Group Manufacturing TOTAL Western Cape s FDI Inward FDI to the Western Cape Between January 23 and February 214 a total of 6 FDI projects were recorded into the food and beverage sector in the Western Cape. These projects represent an estimated total capital investment of ZAR93.99m which is an average investment of ZAR151.1m per project. All of the projects below were new projects. During the period, a total of 654 jobs were created. 24 The Spar Group invested the largest amount ZAR28m in a distribution warehouse in Sheffield Business Park, Philippi, and Cape Town. The new centre will provide a platform for expected substantial growth of the new generation of SuperSpar, Spar and KwikSpar stores, as well as Spar's Tops and Build-IT outlets. It will supply 171 retail outlets and be the new regional headquarters of Spar in Western Cape. Enza Zaden Seed Operations, a subsidiary of Netherlands-based Enza Zaden, has established a subsidiary in South Africa, based in Oudtshoorn. This was the second largest investment of the period (ZAR129.8m). It was established to support the seed production activities of Enza Zaden Seed Operations in South Africa. Director of Enza Zaden Seed Operations Vincent van Bentum explained: Enza Zaden South Africa brings greater flexibility and independence. Chile-based premium wine producer Vina Concha y Toro opened a new subsidiary company in South Africa in April 212. VCT Africa and Middle East will be located in Cape Town and will focus on trade issues and will promote the Devil's Box, Marques de Casa Concha and Don Melchor brands.

25 DATE INVESTING COMPANY INWARD FDI INTO THE WESTERN CAPE S FOOD & BEVERAGE SECTOR, 23-FEB 214 SOURCE COUNTRY DESTINATION CITY Feb 212 Vina Concha y Toro Chile Cape Town Wineries Feb 212 Enza Zaden Seed Operations May 211 Lindt & Sprungli Switzerland Cape Town SUB-SECTOR INDUSTRY ACTIVITY Sales, Marketing & Support CAPEX JOBS Netherlands Not Specified Crop production Manufacturing Sugar & confectionary products Sales, Marketing & Support Jan 21 Nespresso Switzerland Cape Town Food services Retail Nov 29 Woolworths Australia Cape Town Food & Beverage Stores Retail Sep 26 Spar Netherlands Cape Town Food & Beverage Stores Logistics, Distribution & Transportation TOTAL Outward FDI from the Western Cape Between January 23 and February 214 a total of 31 FDI projects were recorded from the Western Cape into the global food and beverage industry. These projects represent a total capital investment of ZAR4.88bn which is an average investment of ZAR157.16m per project. During the period, a total of 5,584 jobs were created. The table below shows Western Cape s outward investment from 21 onwards. The largest investment was by Remgro via Booker Tate in 211 into Sri Lanka in the food and beverage manufacturing sector. The table also clearly shows the African expansion strategies of food and beverage retailers such as Shoprite and Pick n Pay. Shoprite plans to expand its business across Nigeria by opening 44 new stores. The expansion is part of a wider international growth strategy which will also see 21 new stores established in Angola. The retailer expects the new outlets to be open by 217. Pick n Pay has opened two stores in Lusaka, Zambia. Pick n Pay plans to open a further four or five stores in Zambia by 215. It also aims to establish a presence in Malawi, Angola and the Democratic Republic of the Congo. 25 DATE INVESTING COMPANY WESTERN CAPE S OUTWARD FDI INTO THE FOOD & BEVERAGE SECTOR, 23-FEB 214 DESTINATION COUNTRY SUB-SECTOR INDUSTRY ACTIVITY CAPEX Aug 213 Shoprite Nigeria Food & Beverage Stores Retail Aug 213 Shoprite Angola Food & Beverage Stores Retail Jun 213 Shoprite Nigeria Food & Beverage Stores Retail May 213 Rainbow Chicken Zambia Food & Beverage Stores Manufacturing Nov 212 Pick n Pay Zambia Food & Beverage Stores Retail Aug 212 Shoprite Angola Food & Beverage Stores Logistics, Distribution & Transportation Aug 212 Shoprite Nigeria Food & Beverage Stores Logistics, Distribution & Transportation Jun 212 Shoprite Nigeria Food & Beverage Stores Retail Apr 212 Pick n Pay Congo (DRC) Food & Beverage Stores Retail Nov 211 Pick n Pay Zambia Food & Beverage Stores Retail Sep 211 Pick n Pay Malawi Food & Beverage Stores Retail Sep 211 Pick n Pay Angola Food & Beverage Stores Retail Mar 211 Pick n Pay Zambia Food & Beverage Stores Retail Feb 211 Shoprite Mozambique Food & Beverage Stores Retail Feb 211 Shoprite Malawi Food & Beverage Stores Retail Feb 211 Shoprite Angola Food & Beverage Stores Retail Jan 211 Booker Tate Sri Lanka Sugar & confectionary products JOBS Manufacturing