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The Manufacture of Pasta
This report focuses on the South African pasta manufacturing industry, a small sector that employs fewer than 1,000 people and produces an estimated 72,000 tons of pasta annually. The sector is dominated by two major manufacturers, Tiger Brands and Pioneer Foods, companies that are vertically integrated, both upwards and downwards and involved either directly or indirectly in every step of the pasta value chain. The International Trade Administration Commission of South Africa (ITAC) asserts that these two companies control approximately 55% per cent of the local pasta market and are responsible for more than half of South Africa’s total exports of pasta.
Opportunities and Challenges
Despite low economic growth and reduced disposable income, there has been growth in the sector. This is illustrated by the entrance of a new pasta manufacturer and continued investment and expansion by large and small companies. Industry growth locally and in neighbouring sub-Saharan African countries is being fuelled by increasing urbanisation, a growing middle class and the convenience of pasta and ready-made pasta meals. However input costs are rising and import tariffs on wheat increased by 480% during the course of 2015. Although the depreciation of the Rand combined with the duty of 40% on imported pasta have assisted the local manufacturing sector to some extent, the two market leaders in the dry pasta manufacturing sector believe that imports remain the single largest threat to the local manufacturing sector.
The Manufacture of Pasta highlights current conditions and factors influencing the success of the sector. Nine industry players are profiled, including new entrant GWK which opened a pasta and biscuit factory near Kimberley in 2015. Also profiled are Libstar Operations (Pty) Ltd through Noodle Master, which manufactures 600,000kg of instant noodles per annum, and FG La Pasta, which from its pasta manufacturing and vegetable processing plants, manufactures pasta meals for international airline customers.