This report focuses on the manufacture and wholesale of non-alcoholic beverages which include carbonated soft drinks, bottled water, energy drinks, sports drinks, cordials and concentrates, health and functional beverages (drinks with a health benefit) and dairy and fruit blends. It describes the industry and the factors that influence it, including new regulations such as the sugar tax and relaxing of regulations on the use of cannabis. There are comprehensive profiles of 30 companies. These include Long4Life, which owns Inhle Beverages and which bought Chill Beverages in March 2018 for R493m, and Little Green Beverages which bought Pepsi bottler SoftBev.
The Manufacture and Wholesale of Non-Alcoholic Beverages
Expenditure on non-alcoholic beverages (NABs) totalled R13.4bn, contributing 6.7% to total manufacturing in February 2019 and increasing 14.5% year-on-year, partly driven by the increase in VAT in April 2018. The effect of the sugar tax that was implemented in April 2018 is still to be quantified. Almost 70% of NABs sold in South Africa in 2017 were carbonated soft drinks, while fruit juice accounted for almost 12% of all NAB sales. Carbonated soft drinks sales grew by 4.2% between 2017 and 2018 while volumes produced increased by 4.7%.
Role players in the value chain are experiencing the effects of inflation as the cost of electricity, water and transportation increases. The sugar and fruit industries, which are the major providers of raw materials to NAB manufacturers, are facing challenges related to the ongoing drought. Concentrates are the fastest-growing segment of sugar-sweetened beverages, with consumption almost doubling in the past seven years. The demand for products with no artificial ingredients or chemicals, the use of exotic flavours in carbonated drinks, cannabis-infused drinks and energy drinks continue to result in new product innovation.