Quarterly Economic Review of the Food and Beverages Industry in South Africa October to December 2016 Volume 3, number 2 DIRECTORATE: AGRO-PROCESSING SUPPORT agriculture, forestry & fisheries
PREFACE This Quarterly Economic Review of the Food and Beverage Industry in South Africa: October to December, 2016 publication is the second quarterly review by the Directorate: Agroprocessing Support to provide an overview of the economic performance of the food and beverage industry in South Africa. The Food and beverages industry in South Africa is one of the sub-sectors of agro-processing that plays a dominant role in terms of output and employment in the agro-processing sector. By adding value to the primary agriculture and fisheries production, the food and beverages industry stimulates output and job creation in the primary sector and contributes directly to the food security of the country. In addition, it played a pivotal role in supplying inputs to the food and beverage service industry, wholesale and retail sectors. One of the core businesses of the Directorate: Agro-processing Support is to provide timely and updated economic information regarding the food and beverages industry to monitor its performance and provide insight into the effects of economic policies and exogenous factors on the industry. The main economic indicators reviewed are the changes in prices, production, capacity utilisation, value of sales, formal employment and trade. An outlook of the industry for the next quarter is also presented. In addition, some indicators of the food and beverages service industry, wholesale and retail sectors are reviewed to evaluate the forward linkages of the food and beverages industry. Any comments and suggestions on the content of the publication are most welcome. Victor Thindisa Director: Agro-processing Support Pretoria Disclaimer: The Department of Agriculture, Forestry and Fisheries did everything to ensure the accuracy of the information reported in this publication. The department will, however, not be liable for the results of action based on this publication. i
CONTENTS PREFACE... i 1. INTRODUCTION... 1 2. FOOD PRODUCTS... 1 2.1 PRICE... 2 2.2 PRODUCTION... 4 2.3 VALUE OF SALES... 5 2.4 INCOME FROM FOOD SALES IN THE SERVICE INDUSTRY... 7 2.5 TRADE... 9 2.6 EMPLOYMENT... 19 2.7 OUTLOOK... 20 3. BEVERAGES... 21 3.1 PRICE... 21 3.2 PRODUCTION... 22 3.3 VALUE OF SALES... 23 3.4 INCOME FROM BAR SALES IN THE SERVICE INDUSTRY... 24 3.5 TRADE... 25 3.6 EMPLOYMENT... 34 3.7 OUTLOOK... 34 4. CONCLUSION... 35 5. REFERENCES... 37 Compiled by: Directorate: Agro-processing Support Department of Agriculture, Forestry and Fisheries Sefala Building 503 Belvedere Street, Arcadia, South Africa All correspondence can be addressed to: Director: Agro-processing Support Private Bag X416, Pretoria 0001, South Africa Tel.: +27 (12) 319 8457 Fax: +27 (12) 319 8093 E-mail: VictorTH@daff.gov.za This publication is also available on the internet at: http://www.daff.gov.za ii
1. INTRODUCTION The global economic activity improved in, with growth improvement observed in developed economies. The economic performance, with respect to emerging markets and developing economies, has remained mixed. China s growth remained strong, reflecting continued policy support, while economic activity has slowed in India as a result of the impact of the currency exchange initiative. Brazil continued with a negative growth trajectory, leading to a deep recession (IMF, 2017). During, the South African economy contracted at an annualised rate of 0,3%, following a marginal growth of 0,4% in the preceding quarter. The disappointing performance, amongst other reasons, is attributed to weak consumer demand, acceleration in consumer price inflation, stagnant formal sector employment, persistent subdued business and consumer confidence levels that suppressed fixed investment and the adverse effects of the prolonged drought conditions experienced in many parts of the country (Reserve Bank, 2017). During, the seasonally adjusted physical volume of production of the food and beverages industry stagnated by 1,4% quarter-to-quarter, however, it decelerated by 0,3% following a 0,3% contraction previously. Sales for food and beverages moderated by 0,5% from a 3,0% growth in the last quarter, representing a nominal value increase of R30 826 697 in the current period from R30 658 186 million in 2016: Q3. The trade deficit of food and beverages expanded by R933,4 million in the current period of review from a R525,2 million registered in the last quarter. The employment in the food and beverages and tobacco divisions of the agro-processing sector rebounded by 3,4% quarter-to-quarter, however, moderated by 7,1% year-on-year. This represents 244 448 jobs created in the current period as compared to 240 278 jobs created previously. This quarterly review assesses the economic performance of the food and beverages industry, given a moderate global economic growth and a contraction of domestic economic activities recorded during. 2. FOOD PRODUCTS According to the Standard Industrial Classification, the food industry incorporates groups of products which are categorised into the following four codes: Code 301 refers to manufacturing, processing and preservation of meat, fish, vegetables, fruits, oils, and fats Code 302 refers to manufacturing, processing and preservation of dairy products Code 303 refers to manufacture of grain mill products, starch products and prepared animal feeds Code 304 refers to manufacture of other food products like bread, sugar, chocolate, pasta, coffee, nuts and spices. Hence, food products will refer to those primary agricultural and fisheries products that have undergone some form of change through manufacturing and processing or performed some value addition activities such as preservation. 1
2.1 PRICE Consumer Price Index (CPI) 1 Table 2.1 below shows the consumer price index of food products during. The yearon-year total CPI index of food grew by 6,9% during the period. Similarly, the quarter-toquarter CPI increased by 0,9%. During the quarter, most of the items recorded a positive growth except for oils and fats which declined by 0,3%. On the other hand, the year-on-year growth of most CPI agro-processed products increased during the current period. Table 2:1 Consumer price Index of food products Food products All items (CPI Headline) Food and nonalcoholic beverages Indices Weight 2015: Q4 2016: Q3 2015: Q4 and % change between 2016: Q3 and 100 116,4 123,3 124,4 6,9 0,9 15,4 117,5 130,1 132,4 12,7 1,8 Food 14,2 117,7 130,7 133,0 13,0 1,8 Processed 6,8 118,9 131,2 133,4 12,2 1,7 Unprocessed 7,4 116,6 130,3 132,6 13,7 1,8 Bread and cereals 3,5 118,0 138,1 139,9 18,6 1,3 Meat 4,6 115,6 120,4 123,3 6,7 2,4 Fish 0,4 122,5 133,1 135,0 10,2 1,4 Milk, eggs and cheese 1,7 123,3 134,7 135,7 10,1 0,7 Oils and fats 0,5 112,8 127,0 126,6 12,2-0,3 Fruit 0,2 104,4 123,6 129,2 23,8 4,5 Vegetables 1,6 116,3 129,5 131,5 13,1 1,5 Sugar, sweets and 0,6 124,5 148,2 153,2 23,1 3,4 deserts Other food 0,9 88,6 97,6 99,8 12,6 2,3 Source: (Stats SA, 2016a) 1 Stats SA defines CPI as a current social and economic indicator that is constructed to measure changes over time in the general level of prices of consumer goods and services that households acquire, use, or pay for. 2
Producer price index (PPI) 2 The consumer price index for food products grew by 6% year-on-year and by 1,7% quarterto-quarter. The producer price index for meat and meat products, fish and fish products, fruit and vegetables, food products, (Starch and starch products, animal feeds), bakery and sugar grew by 6,0%, 4,9%, 2,8%, 1,7%, 1,4%, 0,5% and 0,1%, respectively during the period under review, while the grain mill products and fats and oils producer price index contracted by 4,3% and 0,1%, respectively during the period under review. The year-on-year producer price of the most of agro-processing products grew during the current quarter. Table 2.2: Producer price index of food products Food products Final manufactured goods (Headline PPI) Indices Weight 2015: Q4 2016: Q3 2016: Q4 % change between 2015: Q4 and 2016: Q3 and 100 120,4 127,3 128,6 6,8 1,0 Food products 26,3 125,3 138,4 140,8 12,4 1,7 Meat and meat products 4,5 127,2 129,2 136,9 7,6 6,0 Fish and fish products 1,6 135,4 148,9 156,2 15,4 4,9 Fruit and vegetables 2,4 117,6 129,0 132,6 12,8 2,8 Oils and fats 0,5 121,1 134,4 134,2 10,8-0,1 Dairy products 3,3 122,6 139,0 139,0 13,4 0,0 Grain mill products 1,8 121,0 144,2 138,0 14,0-4,3 Starch and starch products, animal feeds 1,6 127,4 140,3 142,3 11,7 1,4 Other food products 0,9 125,7 142,5 143,2 13,9 0,5 Bakery products 6,9 131,8 146,7 147,4 11,8 0,5 Sugar 1,9 114,1 140,8 141,0 23,6 0,1 Source: Stats SA (2016b) 2 OECD defines the producer price index (PPI) as a measure of the change in the prices of goods either as they leave their place of production or as they enter the production process. The PPI can be used as an economic indicator of inflation, as an escalator in contracts and as a deflator in the calculation of the national accounts. 3
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 Index (2010 = 100) Table 2.3 shows import unit values of selected food products. During the current period, the imported unit values for total food product and grain mill products registered a negative growth of 5,7% and 14,0%, respectively, while fats and oils grew by 1,2% Table 2.3: Import unit value index of food products Food products Indices 2015: Q4 2016: Q3 and % change between 2016: Q3 and Food (total) 100,8 110,7 104,4 3,6-5,7 Fats and oils 94,7 100,7 101,9 7,6 1,2 Grain mill products 110,4 125,6 108,0-2,2-14,0 Source: Stats SA (2016c) 2.2 PRODUCTION Figure 2.1: Seasonally adjusted physical volume of production: food products 130 120 110 100 90 80 70 60 50 Meat, fish, fruit etc Grain mill products Dairy products Other food products Source: Statistics SA (2016d) Figure 2.1 presents a physical volume of production for food products division items from 2011: Q4 to. The quarter-to-quarter physical volume of production of dairy products decelerated by 2,% from a 1,3% contraction in, other food products contracted by 0,2% as compared to a 1,1% growth previously, grain mill products rebounded by 1,2% from 1,9% in the last quarter and meat and meat products registered an improved negative growth of 1,2% from a 2,4% contraction registered in. 4
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R'million Production capacity Table 2.4: Utilisation and reasons for underutilisation of production capacity by large enterprises: Food products (percentage) Period Utilisation Reasons for underutilisation Total underutilisation Shortage of Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2015: Q4 81,7 18,3 1,9 1,1 10,8 10,8 4,5 2016: Q3 83,2 16,8 2,2 1,0 9,7 9,7 3,7 82,4 17,6 1,8 1,5 9,7 9,7 4,3 Source: Statistics SA (2016e) The utilisation of production capacity by large enterprises of food products showed a marginal increase year-on-year and marginal decrease quarter-to-quarter (see Table 2.4). Insufficient demand and a shortage of semi and unskilled labour were the main reasons for underutilisation during the current period. 2.3 VALUE OF SALES Figure 2.2: Seasonally adjusted value of sales (current prices): food products 25 020 000 20 020 000 15 020 000 10 020 000 5 020 000 20 000 Source: Statistics SA (2016d) Figure 2.2 above shows the seasonally adjusted value of sales for the food products division. During, the value of sales for food products moderated by 0,5% as compared to the 3,0% growth registered in the previous quarter. Similarly, the year-on-year value of sales moderated by 10,7% following a 13,2% previously. The graph illustrates a pattern of sales performance over a period of five years. It can be seen that value of sales for food products over the years has been increasing steadily. Figure 2.3 shows the performance of food items 5
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 Index (2010 = 100) under the food products division during the current period. The dairy and other food products division moderated by 0,6% and 0,4% as compared to growth of 1,5% and 6,2%, respectively in the last quarter. However, dairy products moderated by 0,6%, while grain mill products increased by 1,6% during the period. Figure 2.3: Seasonally adjusted value of sales (current prices): food products 14 000 050 12 000 050 10 000 050 8 000 050 6 000 050 4 000 050 2 000 050 50 Meat, fish, fruit etc Grain mill products Dairy products Other food products Source: Statistics SA (2016d) Wholesale and retail sales 3 The current value of wholesale and retail sales of food, beverages and tobacco are given in Figure 2.4. During, the quarter-to-quarter wholesale of food, beverages and tobacco grew by 11,9% following a growth of 7,0% in the last quarter, however, it moderated by 6,0% year-on-year. Similarly, the quarter-to-quarter retail sales of food, beverages and tobacco grew by 24,9%, as compared to a 7,4% growth previously and moderated by 13,8% year-on-year. As a result, the quarter-to-quarter value of income of wholesale and retail sales of food, beverages and tobacco increased from R25 754,3 million and R5 765,6 million in the last quarter to R28 831,0 million and R7 198, 6 million, respectively during the period. 3 Statistics South Africa (Stats SA) conducts a monthly survey covering enterprises in the wholesale and retail trade industry. The results of the monthly wholesale and retail trade sales survey are used to compile estimates of the gross domestic product (GDP) and its components, which are used in monitoring the state of the economy and formulation of economic policy. These statistics are also used in the analysis of comparative business and industry performance. 6
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million Figure 2.4: Wholesale and retail trade sales of food, beverages and tobacco (current prices) 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 Wholesale Retail Source: Statistics SA (2016f, 2016g) 2.4 INCOME FROM FOOD SALES IN THE SERVICE INDUSTRY 6 Figure 2.5 and Figure 2.6 below shows the income from food sales 4 in the service industry which includes food sales in restaurants and coffee shops 5, take-away and fast food outlets 6 and catering services 7. Figure 2.5 indicates that during, the income from food sales in the service industry accelerated by 11,7% following 5,6% growth registered in the previous quarter, however, it moderated by 8,8% year-on-year as compared to 9,0% growth previously. As a result, the total income increased from R3 892,0 million in the last quarter to R4 346,8 million in the current period. Figure 2.6 below illustrates the breakdown in total income growth for service industries, i.e., restaurants and coffee shops 8, take-away and fast food outlets 9 and catering services. During the period under review, the restaurants and coffee shops 10, take-away and fast food outlets grew by 16,4% and 12,3% as compared to the 5,5% and 5,4% respective growth recorded previously. However, catering services contracted by 1,7% from a 6,4% growth in the last quarter. On the other hand, the year-on- 4 Income from food sales in the service industry refers to income from the sale of meals and non-alcoholic drinks. 5 Restaurants and coffee shops refers to enterprises involved in the sale and provision of meals and drinks, ordered from a menu, prepared on the premises for immediate consumption and with provided seating. 6 Take-away and fast food outlet refers to enterprises involved in the sale and provision of meals and drinks, ordered from a menu, prepared on the premises for takeaway purposes in a packaged format, at a stand or in a location, with or without provided seating. 7 Catering services refers to enterprises involved in the sale and supply of meals and drinks prepared on the premises on a contract basis and brought to other premises chosen by the person ordering them, to be served for immediate consumption to guests or customers. Catering services also include bars, taverns, other drinking places, ice-cream parlours, etc. 8 Restaurants and coffee shops refers to enterprises involved in the sale and provision of meals and drinks, ordered from a menu, prepared on the premises for immediate consumption and with provided seating. 9 Take-away and fast food outlet refers to enterprises involved in the sale and provision of meals and drinks, ordered from a menu, prepared on the premises for takeaway purposes in a packaged format, at a stand or in a location, with or without provided seating. 10 Restaurants and coffee shops refers to enterprises involved in the sale and provision of meals and drinks, ordered from a menu, prepared on the premises for immediate consumption and with provided seating. 7
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million 2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million year restaurants and coffee shops grew by 11,6%, take-away and fast food outlets moderated by 9,6% and catering services contracted by 1,2%. Figure 2.5: Income from food sales in the service industry 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 Source: Statistics SA (2016h) 2 500 Figure 2.6: Income from food sales in the service industry 2 000 1 500 1 000 500 Restaurants and coffee shops Catering services Take-away/fast food outlets Source: Statistics SA (2016h) 8
2.5 TRADE Main food export destinations and products Figure 2.7 below shows food export destination share of the continents. During, Africa constituted the main export destination of food by 58%, followed by Asia and Europe by 20% and 16%, respectively. The Americas and Oceania altogether accounted for 6% of the total food export. The trend during the past five years shows that Africa still remains the biggest share of the continent when it comes to food export, while the Americas and Asia s share still remains marginal over the period (see Figure 2.8). Figure 2.7: The food export destinations' share of continents in Europe 16% Oceania 2% Asia 20% Americas 4% Africa 58% 80 70 60 50 40 30 20 10 0 Figure 2.8: The food export destination's share of the continents (2011: Q4 ) Africa Europe Asia Americas 9
Namibia Botswana Mozambique Zimbabwe Lesotho Zambia Swaziland China Hong Kong Germany % Figure 2.9 shows the food export destinations share of the main regions 11 in. Among the main regions, SACU (Excluding, RSA) (32%), accounted for the highest share of food export, followed by SADC (Excluding SACU) by 27%. NAFTA, Eastern Asia, South Eastern Asia, Western Asia and (Australia and New Zealand) accounted for 25% combined of the total share, while the European Union accounted for 16% of the share during the period. Western Asia 6% Southeastern Asia 3% Eastern Asia 11% Figure 2.9: The food export destinations' share of main regions in European Union 16% NAFTA 3% Australia and New Zealand 2% SADC (excluding SACU) 27% SACU (Excluding RSA) 32% 12 10 8 Figure 2.10: The share of top ten food export destination countries in 6 4 2 0 Figure 2.10 above shows the top four countries for food export destinations during. During the period under review four African countries, Namibia, Botswana, Mozambique, 11 The main regions which are included in the analysis are the top eight regions: SADC, Western Africa, EU; NAFTA (North Atlantic Free Trade Area consisting of the USA, Canada and Mexico); Eastern Asia (includes China, Japan, North Korea, South Korea); Western Asia (mostly Middle East countries); South Central Asia (include India, Pakistan and Bangladesh) and Australia and New Zealand. 10
Zimbabwe, Zambia and Lesotho had the highest share of food export, while from Asia it was China and Hong Kong, while from Europe, it was Germany. Table 2.5 presents the major exported food products during and Table 2.6 show the year-on-year high and low export performers of food products during the current quarter of review by comparing the export values of the present quarter to the same quarter of the previous year (year-on-year). Table 2.5: Major exported food products in HS Code Food product Total amount (R Million) HST100630 Semi-milled or wholly milled rice, whether or not polished or glazed 206,9 HST210410 Soups and broths and preparations 184,6 HST040690 Other cheese 91,71 HST210500 Ice cream and other edible ice, whether or not containing cocoa 90,9 HST110220 Maize (corn) flour 86,9 HST100640 Broken rice 84,6 HST210320 Tomato ketchup and other tomato sauces 76,8 HST190110 Preparations for infant use, put up for retail sale 52,5 HST190120 Mixes and doughs for the preparation of bakers' wares of heading 47,6 HST190230 Other pasta 47,1 HST151800 Animal or vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas 31,1 HST210330 Mustard flour and meal and prepared mustard 15,0 HST210130 Roasted chicory and other roasted coffee substitutes and extracts, essences and concentrates thereof 14,2 HST100890 Other cereals 13,6 HST230110 Flours, meals and pellets, of meat or meat offal; greaves 11,5 HST040510 Butter 6,3 11
HST190532: Waffles and wafers 4,6 HST100620 Husked (brown) rice 3,9 HST190220 Stuffed pasta, whether or not cooked or otherwise prepared 3,6 HST110510 Flour, meal and powder 2,9 HST110520 Flakes, granules and pellets 2,0 HST190300 Tapioca and substitutes therefor prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms. 1,1 HST110814 Manioc (cassava) starch 1,0 HST150410 Fish-liver oils and their fractions 0,7 HST151550 Sesame oil and its fractions 0,6 HST170250 Chemically pure fructose 0,5 HST151530 Castor oil and its fractions 0,2 Table 2.6: Export performance of food products HS Code Food product Changes compared to a year ago (R million) High performers HST150420 HST180400 HST190300 HST151620 HST180500 Fats and oils and their fractions of fish, other than liver oils Cocoa butter, fat and oil Tapioca and substitutes therefor prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms Vegetable fats and oils and their fractions Cocoa powder, not containing added sugar or other sweetening matter 210 340,3 3 228,5 88,5 44,9 34,9 12
HST190420 HST190410 HST210230 HST151710 HST180610 HST210500 HST190220 HST210410 HST210320 HST110510 HST190531 HST190120 HST210310 HST151800 HST230110 HST190532 HST210330 HST170410 Prepared foods obtained from unroasted cereal flakes or from mixtures of unroasted cereal flakes and roasted cereal flakes or swelled cereals Prepared foods obtained by the swelling or roasting of cereals or cereal products Prepared baking powders Margarine, excluding liquid margarine Cocoa powder, containing added sugar or other sweetening matter Ice cream and other edible ice, whether or not containing cocoa Stuffed pasta, whether or not cooked or otherwise prepared Soups and broths and preparations therefor Tomato ketchup and other tomato sauces Flour, meal and powder Sweet biscuits Mixes and doughs for the preparation of bakers' wares of heading Soya sauce Low performers Animal or vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading inedible mixtures Flours, meals and pellets, of meat or meat offal; greaves Waffles and wafers Mustard flour and meal and prepared mustard Chewing gum, whether or not sugar-coated 26,9 25,8 20,8 19,6 16,2 13,5 12,0 11,5 9,4 9,4 4,9 2,5 2,1-0,4-4,5-6,0-18,5-18,7 13
HST190110 HST151530 HST151550 HST152110 HST230320 Preparations for infant use, put up for retail sale Castor oil and its fractions Sesame oil and its fractions Vegetable waxes Beet-pulp, bagasse and other waste of sugar manufacture -22,6-50,3-69,2-94,3-96,2 Main source of food imports and imported food products South Africa s main source of food import during 2016:Q4 is presented in Figure 2.11. South Africa imported 38% of its food from Europe, followed by Asia (32%). The share of the Americas (24%) is also substantial as a source of imports then followed by Africa with a share of 5%. Oceania s contribution is very marginal at 1%. Figure 2.12 indicates that during the past five years, Europe and Asia has become the major source of food imports while Africa is still below 15%. Figure 2.11: The share of continents as a source of food import in Oceania 1% Africa 5% Europe 38% Americas 24% Asia 32% 14
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 Figure 2.12: The share of continents as a source of food import (2011: Q4 ) 45 40 35 30 25 20 15 10 5 0 Africa Americas Asia Europe As the main trading region, the EU accounts approximately 38% of the total food imports, followed by South Eastern Asia (23%), South America (21%), Eastern Asia (8%) and NAFTA (3%) during the period. SACU (Excluding RSA) accounted 4% share during (see Figure 2.13). Figure 2.13: The share of regions as sources of food imports in Others 4% SACU (Excluding RSA) 4% European Union 38% South America 21% NAFTA 3% Eastern Asia 8% Southeast Asia 22% 15
Argentina Indonesia Spain China Malaysia Brazil Thailand United Kingdom Germany United States % Figure 2.14: The share of top ten countries as sources of food import in 16 14 12 10 8 6 4 2 0 The significant share of food imports were sourced from Argentina (14,8%), Indonesia (8,7%), Spain (10,5%), China (8,7%), Malaysia (8,2%), Brazil (5,4%), Thailand (2,8%), the United Kingdom (2,8%), Germany (2,4%) and the United States (2,4%)(see Figure 2.14). Table 2.6 presents the major imported food products during. Table 2.6: Top 30 imported food products in HS Code Food product Total amount (R million) HST230400 HST230910 HST170290 HST040630 HST170410 HST180400 HST040690 HST190531 Oil-cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soya bean oil Dog or cat food, put up for retail sale Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50% by weight of fructose Processed cheese, not grated or powdered Chewing gum, whether or not sugar-coated Cocoa butter, fat and oil Other cheese Sweet biscuits 672,6 191,3 140,2 83,9 78,5 68,1 66,4 66,4 16
HST110100 HST180500 HST040410 HST100640 HST190532 HST210500 HST040610 HST110812 HST210310 HST040620 HST210330 HST200990 HST110520 HST190540 HST040640 HST040310 HST151000 HST190510 HST190300 Wheat or meslin flour Cocoa powder, not containing added sugar or other sweetening matte Whey and modified whey, whether or not concentrated or containing added sugar or other sweetening matter Broken rice Waffles and wafers Ice cream and other edible ice, whether or not containing cocoa Fresh (unripened or uncured) cheese, including whey cheese and curd Maize (corn) starch Soya sauce Grated or powdered cheese, of all kinds Mustard flour and meal and prepared mustard Mixtures of juices Flakes, granules and pellets Rusks, toasted bread and similar toasted products Blue-veined cheese and other cheese containing veins produced by Penicillium roqueforti Yogurt Other oils and their fractions, obtained solely from olives, whether or not refined, but not chemically modified, including blends of these oils or fractions with oils or fractions of heading. Crispbread Tapioca and substitutes, therefor prepared from starch, in the form of flakes, grains, pearls, siftings or in similar forms 55,3 53,9 36,4 35,5 21,2 16,0 13,6 10,4 10,3 9,8 6,5 5,3 5,2 4,9 4,6 4,2 3,9 2,4 1,8 17
2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million HST110510 Flour, meal and powder 0,5 HST040510 Butter 0,3 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 Figure 2.15: Quarterly trade balance of food products Export Import During, quarter-to-quarter exports of food products decelerated by 0,9% following a contraction of 0,3% previously. However, it moderated by 4,1% year-on-year. On the other hand, the quarter-to-quarter and year-on-year imports for food products moderated by 5,0% and 7,9% following an 11,5% and 17,7% growth registered in the last quarter. As a result, the quarter-to-quarter trade deficit for food products expanded from R2 533,6 million in 2016: Q3 to R3 411,4 million in the current quarter. (see Figure 2.16). 18
2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 2.6 EMPLOYMENT 210 000 200 000 190 000 180 000 170 000 160 000 Figure 2.16: Total number of formal employment: food products 150 000 Source: Statistics SA (2016i) Figure 2.17: Number of formal employment: food products 100 000 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats Dairy products Grain mill products, starches and starch products and prepared animal fat Other food products Source: Statistics SA (2016i) Figure 2.17 shows the number of formal employment of the food products division. The yearon-year, formal employment of meat, fish, fruit, vegetables, oils and fats, grain mill products and other food products moderated by 4,3%, 3,6% and 7,4% as compared to the growth of 4,9%, 4,2% and 12,6%, respectively as recorded in the previous quarter. Whereas the yearon-year for dairy products grew by 0,7% following a 0,2% growth in the last quarter. On the 19
other hand, the quarter-to-quarter, formal employment of food products division rebounded by 10,6% for meat, fish, fruit, vegetables, oils and fats, grew by 4,1% for dairy products, moderated by 1,1% for grain mill products and decelerated by 0,1% for other food products. As a result in the rebound of total food products by 3,7% as compared to a contraction of 0,9% previously, it represented a total number of 7 361 jobs created in the food division under the period from 1 758 jobs shed in the last quarter. 2.7 OUTLOOK Table 2.7: Net balance 12 of BER manufacturing survey: food products 2016: Q2 2016: Q3 2017: Q1* Domestic sales volumes 51 34 24-6 Export sales volumes 22 37 24 33 Production volumes 30 28 19-25 Domestic order volumes received 56 35 11-9 Export order volumes received 14 25 7 21 General business conditions -31 10-28 -16 Number of factory workers -12-19 2-24 Fixed investment -34-5 -30-51 Business confidence 13 35 62 40 Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time 13-5 -13 15 38 28-19 10-41 12 BER calculates the net balance statistics by subtracting the percentage of the respondents replying down from the percentage replying up to a particular question. Respondents are asked to compare the current quarter s experience to that of a year ago. A positive net balance implies an improvement (i.e., positive year-on-year growth) and vice versa. Therefore, the net balance varies from -100 to 100 where -100 is the most negative response; 0 is a situation of no change and 100 is the most positive response. 13 BER calculates the business confidence index by asking respondents to rate current business conditions as satisfactory or unsatisfactory. Then the index is derived as a gross percentage of the respondents replying satisfactory. A value of 50 is indicative of neutrality, 100 indicative of extreme confidence and 0 of extreme lack of confidence. An index greater than 50 shows the majority of respondents are satisfied with the prevailing economic conditions. 20
2016: Q2 2016: Q3 2017: Q1* Expected business conditions in 12 months time -16 24-28 * Expected Source: BER (2016) A survey by the Bureau for Economic Research (BER) on food manufacturing is presented in Table 4.5. The survey shows that the year-on-year outlook for 2017: Q1 is negative for most variables except sales volumes. 3. BEVERAGES According to SIC classification, beverages are coded 305 and it comprises the following beverage products: Distilling, rectifying and blending of spirits; ethyl alcohol production from fermented materials; manufacture of wine Manufacture of beer and other malt liquors and malt Breweries, except sorghum beer breweries Sorghum beer breweries Manufacture of malt Manufacture of soft drinks; production of mineral waters. 3.1 PRICE Table 3.1 shows the consumer price indices and export unit value of beverages. The year-onyear and quarter-to-quarter consumer price inflation for alcoholic beverages grew by 6,9% and 0,9%, respectively in the period under review. The consumer price indices for alcoholic beverages grew by 0,5% during the quarter. Items that increased under the alcoholic beverages are spirits and wine, amongst others, which grew by 0,6% and 1,0%, respectively. Similarly, the non-alcoholic beverages grew by 1,5% during the period. Amongst the items under the category was hot beverages and cold beverages that grew by 1,5% and 1,3%, respectively. The table below also depicts the producer price index of beverages which grew by 2,5% in the current quarter. However, the export unit value of beverages registered a negative growth of 2,1% in the same period. 21
2010: Q4 2011: Q1 2011: Q2 2011: Q3 2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 Index (2010 = 100) Table 3.1: Price indices of beverages Beverages products Indices Weight 2015: Q4 2016: Q3 2016: Q4 % change between 2015: Q4 2016: Q3 and and Consumer price indices All items (CPI 100 116,4 123,3 124,4 6,9 0,9 headline) Alcoholic 3,9 124,2 130,4 131,0 5,4 0,5 beverages Spirits 0,8 117,0 122,5 123,2 5,3 0,6 Wine 0,7 125,9 132,1 132,2 5,0 0,1 Beer 2,5 119,8 125,7 125,8 5,0 0,1 Non-alcoholic beverages 1,2 114,0 123,2 124,9 9,5 1,4 Hot beverages 0,3 123,2 141,9 144,1 17,0 1,5 Cold beverages 0,9 110,7 116,3 117,8 6,5 1,3 Producer price index Beverages 8,5 119,4 125,8 128,9 8,0 2,5 Export unit value Beverages 135,2 104,9 102,8 100,6-4,2-2,1 Source: Stats SA (2016a, 2016b, 2016 3.2 PRODUCTION 120 Figure 3.1: Seasonally adjusted physical volume of production: beverages 110 100 90 80 70 60 50 Source: Statistics SA (2016d) 22
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million Figure 3.1 presents the seasonally adjusted physical volume of production for beverages. During 2015: Q4, the volume of production for beverages contracted year-on-year and quarter-to-quarter by 0,8% and 0,5% in the current quarter, following growths of 0,1% and 1,1%, respectively as recorded in the previous quarter. Production capacity Table 3.2: Utilisation and reasons for underutilisation of production capacity by large enterprises: Beverages division (percentage) Period Utilisation Reasons for underutilisation Total underutilisation Shortage of Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2015: Q4 88,3 11,7 1,0 0,8 10,8 7,2 2,6 2016: Q3 85,1 14,9 2,4 1,4 9,7 6,6 4,3 88,1 11,9 2,1 1,0 9,7 6,3 2,1 Source: Statistics SA (2016e) Table 3.2 shows that the year-on-year and quarter-to-quarter utilisation capacity grew during. Insufficient demand and shortage of semi and unskilled labour remained the main reasons for underutilisation in the period under review. 3.3 VALUE OF SALES 12 010 000 10 010 000 Figure 3.2: Seasonally adjusted value of sales (current prices): beverages 8 010 000 6 010 000 4 010 000 2 010 000 10 000 Source: Statistics SA (2016d) 23
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million During, the seasonal adjusted value of sales of beverages rebounded by 0,6% quarter-to-quarter following a 0,4% contraction registered in the last quarter. However, it moderated by 5,5% year-on-year as compared to a 5,6% growth previously. (see Figure 4.6). Due to the strong linkages between agro-processing and primary agriculture, the growth of the beverages division during the period can be attributed to the bountiful harvest experienced by farmers in the current season. 3.4 INCOME FROM BAR SALES IN THE SERVICE INDUSTRY 14 Figure 3.3 shows the income from bar sales in the food and beverages service industry in. During this period, the quarter-to-quarter income from bar sales in the services industry grew modestly by 11,7% as compared to a 5,6% growth registered previously. However, it moderated by 8,8% following a 9,0% growth in the last quarter. That resulted in the total income growth of R 4 346,8 million in the current quarter from R3 892,0 million registered in 2016: Q3. Figure 3.3: Income from food sales in the service industry 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 Source: Statistics SA (2016h) 14 Income from bar sales refers to income from liquor sales. 24
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million 2 500 Figure 3.4: Income from food sales in the service industry 2 000 1 500 1 000 500 Restaurants and coffee shops Catering services Take-away/fast food outlets Source: Statistics SA (2016h) Figure 3.4 shows the services performance of the food sales in the services industry. The services are restaurants and coffee shops, take aways/fast food outlets and catering services. During the current review period, the restaurants and coffee shops, take aways/fast food outlets accelerated by 16,4% and 12,3% following growths of 3,5% and 5,4%, respectively. However, the catering services contracted by 1,7% as compared to a 6,4% registered in the last quarter. The year-on-year restaurants and coffee shops increased substantially by 11,6%, take aways/fast food outlets moderated by 9,6% and catering services contracted by 1,2%. 3.5 TRADE Main export destinations and food products Figure 3.5 shows during the quarter under review; Africa is by far the largest export destination for South African beverages. It accounted for 58% of the total export followed by Asia (20%), Europe (16%), the Americas (4%) and Oceania (2%). The trend of the export destination s share during the past five years shows that Africa was the biggest, followed by Europe and Asia. The Americas and Oceania share were marginal. (see Figure 3.6). 25
% Figure 3.5: The beverages export destination's share of continents in Europe 16% Oceania 2% Asia 20% Africa 58% Americas 4% 60 50 40 30 20 10 0 Figure 3.6: The beverages export destination's share of the continents in (2011-2016) Europe Africa Americas Asia Among the main trading regions, the European Union (36%) accounted for most of the total beverages export share, followed by SADC (Excluding SACU), which accounted for 19%, followed by NAFTA (9%), Eastern Asia (8%), Southeast Asia (3%) and Eastern Europe (2%). (see Figure 3.7). 26
Namibia United Kingdom Germany Botswana Mozambique China United States Netherlands Zambia Canada % Figure 3.7: The share of top beverages export destination regions in European Union 36% SADC (Excluding SACU) 19% Eastern Europe 2% SACU (Excluding RSA) 23% Southeast Asia 3% Eastern Asia 8% NAFTA 9% Figure 3.8: The share of top ten beverages export destination countries in 12 10 8 6 4 2 0 Figure 3.8 above shows the top ten countries that South Africa exported beverages to during. The following are the main countries that constituted a huge share of beverages export during the quarter: Namibia (9,6%), the United Kingdom (9,1%), Germany (6,9%), Botswana (5,5%), Mozambique (5,4%), China (4,8%), the United States (4,7%), the Netherlands (4,4%), Zambia (3,5%) and Canada (3,5%). Figure 3.4 shows high and low export performers of beverages during by comparing the export values of the present quarter to the same quarter of the previous year (year-on-year). 27
Table 3.3: Major exported beverages products in HS Code Food product Total amount (R million) HST220710 HST220600 Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included 329,3 248,7 HST220300 Beer made from malt 246,4 HST220410 Sparkling wine 104,1 HST220720 Ethyl alcohol and other spirits, denatured, of any strength 102,0 HST220830 Whiskies 100,3 HST220820 HST220860 Spirits obtained by distilling grape wine or grape marc Vodka 88,5 80,3 HST220850 Gin and Geneva 36,2 HST220110 Mineral waters and aerated waters 28,3 HST220840 HST220900 Rum and other spirits obtained by distilling fermented sugar cane products Vinegar and substitutes for vinegar obtained from acetic acid 27,3 10,5 3.4: Export performance of beverages in HS Code Beverages Changes compared to a year ago (R million) High performers HST090230 HST220850 Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg Gin and Geneva 113,9 75,1 28
HST220860 HST220840 HST220210 HST220900 HST220870 Vodka Rum and other spirits obtained by distilling fermented sugar cane products Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured Vinegar and substitutes for vinegar obtained from acetic acid. Liqueurs and cordials 74,1 46,2 26,1 4,9 1,5 HST220710 HST220720 HST090210 HST220820 Low performers Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher Ethyl alcohol and other spirits, denatured, of any strength Green tea (not fermented) in immediate packings of a content not exceeding 3 kg Spirits obtained by distilling grape wine or grape marc -0,3-0,3-1,5-5,9 HST220300 Beer made from malt -6,6 HST220110 Mineral waters and aerated waters -8,9 HST220830 Whiskies -11,8 HST220600 HST220410 HST090240 HST090220 HST090300 Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included Sparkling wine Other black tea (fermented) and other partly fermented tea Other green tea (not fermented) Maté -17,9-21,6-44,9-48,9-88,6 29
2011: Q4 2012: Q1 2012: Q2 2012: Q3 2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 Main imported beverage products and the source Figure 3.9 illustrates the share of continents as a source of beverage import in. Europe, which accounted 69% import share, was the largest source of beverage import during 2014: Q4, followed by Africa (15%), while the Americas, Asia and Oceania altogether accounted for 16% of the total beverages import during the period. Figure 3.10 shows that during the past five years, Europe, followed by Africa, is the key source of beverages imports. Both continents contributed to an average of 74% of the total beverages imports from 2011-2016. Figure 3.9: The share of continent's as a source of beverages import in Oceania 1% Africa 15% Americas 11% Europe 69% Asia 4% Figure 3.10: The beverages import destination's share of the continents (2011 2016) 90 80 70 60 50 40 30 20 10 0 Africa Americas Asia Europe 30
United Kingdom France Namibia Austria Netherlands Ireland Argentina Belgium Mexico Germany % Among the top trading regions, the EU (70%) still accounts as the largest share of beverages import followed by SACU (Excluding SADC) (15%) and NAFTA (6%). Western Asia and SADC (Excluding SACU) played a minor role as a source of import for beverages; they accounted for 2% contribution each (see Figure 3.11). Figure 3.11: The share of top regions as a source of beverages import in SACU (Excluding RSA) South America 15% 5% European Union 70% NAFTA 6% Western Asia 2% Western Europe Rest 2% 30 25 20 Figure 3.12: The share of top ten countries as a source of beverages import in 15 10 5 0 31
Figure 3.12 shows the share of the top ten countries as a source of beverages import in 2016: Q4. Five of the top ten countries that contributed to the share of import beverages in the world are from the European countries: United kingdom (25,%), France (19,1%) the Netherlands (4,1%), Belgium (3,0%) and Germany (2,8%), while two are from Latin America, another two from Oceania, Ireland (4,0%) and Austria (4,2%) and Namibia from Africa (14,0%). Table 3.5: Main imported beverages in HS Code Food product Total amount (R million) HST220830 HST220300 HST220210 Whiskies Beer made from malt Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured 601,1 349,0 231,4 HST220820 Spirits obtained by distilling grape wine or grape marc 122,1 HST220410 HST090240 HST220870 HST220860 HST220710 HST220600 HST220850 HST220840 HST220900 HST220110 Sparkling wine Other black tea (fermented) and other partly fermented tea Liqueurs and cordials Vodka Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included. Gin and Geneva Rum and other spirits obtained by distilling fermented sugar cane products Vinegar and substitutes for vinegar obtained from acetic acid Mineral waters and aerated waters 106,5 99,0 62,6 35,0 27,6 26,5 21,3 14,8 9,5 7,9 HST090230 Black tea (fermented) and partly fermented 5,9 32
2012: Q4 2013: Q1 2013: Q2 2013: Q3 2013: Q4 2014: Q1 2014: Q2 2014: Q3 2014: Q4 2015: Q1 2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 R million HST090210 HST090220 tea, in immediate packings of a content not exceeding 3 kg Green tea (not fermented) in immediate packings of a content not exceeding 3 kg Other green tea (not fermented) 4,1 2,8 Figure 3.13: Quarterly trade balance of beverages 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Export Import During, the quarter-to-quarter exports of beverages rebounded by 7,4% as compared to a contraction of 1,2% recorded in the previous quarter. However, it inreased marginally by 2,6% year-on-year. On the other hand, the quarter-to-quarter imports decelerated by 7,9% following a 33,1% growth in the last quarter and increased marginally by 5,6% year-on-year. As a result, the trade surplus of the beverages division expanded from R2 008,4 million in the previous quarter to R2 478,0 million during (see Figure 3.13). 33
2015: Q2 2015: Q3 2015: Q4 2016: Q1 2016: Q2 2016: Q3 3.6 EMPLOYMENT 45 000 44 000 43 000 42 000 41 000 40 000 39 000 38 000 Figure 3.14: Number of formal employment: beverage and tobacco products 37 000 Source: Quantec EasyData (2016i) Figure 3.14 shows the number of formal employment of beverages and tobacco products industry. The quarter-to-quarter of formal employment of beverages and tobacco products divisions increased marginally by 1,9% following a growth of 1,5% in the previous quarter. However, the year-on-year and formal employment of beverage and tobacco products moderated by 2,6% as compared to a 5,6% growth registered in the preceding quarter. As a result, the total number of formal employment in beverages and tobacco products industries increased from 42 783 in the previous quarter to 43 592 in. 3.7 OUTLOOK Table 3.6: Net balance of BER manufacturing survey: Beverages 2016: Q2 2016: Q3 2017: Q1* Domestic sales volumes 36 91 49 30 Export sales volumes 92 80-57 -3 Production volumes 83 86 16 31 Domestic order volumes received 35 90 40 57 Export order volumes received 92 67-42 2 34
2016: Q2 2016: Q3 2017: Q1* General business conditions 9 5-43 -52 Number of factory workers 7 2 15 19 Fixed investment 2 89 40 16 Business confidence 64 88 44 Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business conditions in 12 months time 40-68 31 97 91 48 63 2 30-26 56-69 *Expected Source: BER (2016) The survey of the beverages division by BER shows that the year-on-year outlook for 2017: Q1 is positive for all variables except export volumes and general business conditions. 4. CONCLUSION The global economic activity has witnessed improvement in, which was observed in developed economies. The economic performance with respect to emerging market and developing economies has remained mixed. However, during, the South African economy contracted at an annualised rate of 0,3%, following a marginal growth of 0,4% in the preceding quarter. During the period, the share of continents as a source of food exports was largely constituted by Africa, then Asia and Europe. On the other hand, Europe, followed by Asia and the Americas, constituted a huge share of continents share of food imports whereas Oceania and Africa constituted a minimal share. In terms of beverages, Africa, Asia and Europe contributed a large share of beverages exports during the period, whereas Europe, followed by Africa then the Americas constituted a huge share of beverages imported during the period to a total of 95% combined. During, the seasonally adjusted physical volume of production of the food and beverages industry stagnated by 1,4% quarter-to-quarter, however, it decelerated by 2,9% following a 0,3% contraction previously. Sales for food and beverages moderated by 0,5% from a 3,0% growth recorded in the last quarter, representing a nominal value increase of R30 826 697 in the current period from R30 658 186 million in 2016: Q3. Despite the stagnant growth in physical volume of production, the trade deficit of food and beverages widened by R933,4 million in the current period of review from a R525,2 million registered in the last quarter. 35