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The Manufacture of Breakfast Cereals
This report focuses on the manufacture of breakfast cereals in South Africa, which has an estimated value of R4.3bn a year. The breakfast cereals market is dominated by three large companies, Tiger Brands, Pioneer Foods and Kellogg’s South Africa, who together have cornered more than 70% of the market.
Like other manufacturing sectors, this sector is operating under challenging trading conditions as a result of rising input costs and weaker consumer demand due to a lack of disposable income. Tough conditions have been exacerbated by the drought and recently introduced regulations that aim to limit the amount of salt and sugar used in breakfast cereals as well as the use of genetically modified wheat and maize. However, the functional food category has shown growth as more consumers become more health conscious and companies introduce new products in an attempt to remain competitive and gain market share.
The Manufacture of Breakfast Cereals describes current conditions, the growing trend towards food with less sugar and salt and other factors influencing the success of the sector. Twelve industry players are profiled, ranging from the three major companies to smaller companies such as Alpen Food Company South Africa (Pty) Ltd, based in the Western Cape, which employs 54 people and is jointly owned by the Pioneer Food Company and Weetabix Limited, headquartered in the United Kingdom. Also profiled is FutureLife, which was originally established as “a social project to help improve the lives of malnourished and disadvantaged people in sub-Saharan Africa.” The company focuses on the concept of functional foods that provide ‘additional health benefits’ and in 2015 Pioneer Foods acquired a 50% shareholding in the company.