Manufacture of Breakfast Cereals
South Africa’s breakfast cereals sector is increasingly mature and competitive and dominated by a few large companies. Despite two of the largest cereal manufacturers reporting higher revenues and volume improvements, operating profits and margins are under pressure. Protracted low GDP growth and high unemployment will continue to affect the industry as low income consumers substitute cereals for lower-priced maize options, and health-conscious consumers opt for breakfasts with higher protein content. The coronavirus pandemic will add further pressure as supply chains are strained and as consumers’ incomes decline.
South Africa’s breakfast cereal consumption is low compared to developed markets, and the poor economy, high unemployment and decreasing disposable incomes are affecting consumer spending. During tough times, price-sensitive consumers switch cereals for cheaper carbohydrates such as bread or maize or between brands based on promotional prices, different pack sizes or cheaper variants.
There is rising demand for convenient on-the-go meals and snacks. Companies producing cereal and porridge have repackaged and reformulated their products to make them more portable and developed on-the-go breakfast products. Manufacturers are adding organic and healthy ingredients such as superfoods, quinoa and probiotics to breakfast cereals. Low carb, low sodium, gluten-free or grain-free breakfast cereal options are popular. Due to rising rates of obesity worldwide and a backlash against cereals containing high levels of sugar, manufacturers have introduced sugar-free or no-sugar-added cereals.
This report focuses on The Manufacture of Breakfast Cereals and includes information on the state of the sector and factors that influence it including consumer trends and the performance of the major players. There are profiles of 18 companies including the major players such as Pioneer Foods, Tiger Brands, Kellogg’s and Nestlé, as well as Future Life, which makes cereal with healthy additives and muesli manufacturers such Alpen Food and Paul’s Muesli.