quarterly economic review of the food and beverages ... a pivotal role in supplying inputs to the...

DIRECTORATE: AGRO-PROCESSING SUPPORT

agriculture,forestry & fisheries

Quarterly Economic Review of the Food

and Beverages Industry in South Africa

April – June 2016________________________________________________________________

Volume 3, Number 1

i

PREFACE

This publication Quarterly Economic Review of the food and beverage Industry in South

Africa: April to June 2016 is the first quarterly review by the Directorate: Agro-processing

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.

ii

CONTENTS

PREFACE ................................................................................................................................................ i

1. INTRODUCTION ........................................................................................................................... 1

2. FOOD PRODUCTS ....................................................................................................................... 1

2.1 PRICE ..................................................................................................................................... 2

2.2 PRODUCTION ...................................................................................................................... 5

2.4 INCOME FROM FOOD SALES IN THE SERVICE INDUSTRY .......................................... 8

2.5 TRADE .................................................................................................................................. 10

2.6 EMPLOYMENT ..................................................................................................................... 20

2.7 OUTLOOK ............................................................................................................................ 21

3. BEVERAGES ................................................................................................................................ 22

3.1 PRICES…………………………………………………………………………………………………………………………….22

3.2 PRODUCTION .................................................................................................................... 23

3.3 VALUE OF SALES ................................................................................................................ 24

3.4 INCOME FROM BAR SALES IN THE SERVICE INDUSTRY ............................................ 25

3.5 TRADE .................................................................................................................................. 26

3.6 EMPLOYMENT…………………………………………………………………………………………………………………..34

3.7 OUTLOOK ............................................................................................................................ 34

4. CONCLUSION ............................................................................................................................ 35

NOTES: ................................................................................................................................................. 37

Compiled by Deborah Makola and Joshua Magomani with inputs from Phiwe Jiba and

Tebogo Clement Sebopetji

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: [email protected]

This publication is also available on the internet at: http://www.daff.gov.za

mailto:[email protected]

http://www.daff.gov.za/

1

1. INTRODUCTION

In 2016, global growth is projected to slow down to 3,1% before recovering to 3,4% in 2017.

The forecast, which is revised down by a 0,1 percentage point for 2016 and 2017 relative to

April, reflects a more subdued outlook for advanced economies following, amongst other

factors, the UK vote in favour of leaving the European Union (Brexit) in June and weaker-

than-expected growth in the United States (IMF, 2016).

However, in the second quarter of 2016, global economic growth moderated, following a

slowdown in activity in both advanced and emerging-market economies. The US economy

has lost momentum over the past few quarters and the expectation of a pickup in the

second quarter of 2016 has not been realized, with growth estimated at 1,1% at a seasonally

adjusted annual rate (IMF, 2016).

Furthermore, among advanced economies, the economic performance of Japan and

Europe was sluggish. Again, the outcome of the Brexit referendum and potential banking

stresses in some European countries further negatively affected the outlook for the United

Kingdom (UK) and the euro area. Output growth in emerging-market economies

decelerated on account of slower growth in India, a contraction in economic activity in

Russia and recessions in several major Latin American economies, with the outlook remaining

mixed (Reserve Bank, 2015).

In South Africa, the real gross domestic product (GDP) in the second quarter of 2016,

increased by 3,3%, following a contraction in the first quarter. The variations in economic

growth from quarter to quarter were mostly the result of fluctuations in the primary and

secondary sectors. The real value added by the mining sector rebounded, while agricultural

production inched lower to record a sixth consecutive quarter of contraction, mainly due to

the effect of drought. Moreover, the volume of manufacturing production picked up

significantly (Reserve Bank, 2015).

The food, beverages and tobacco division employment contracted by 2,2% quarter-to-

quarter, but grew by 6,1% year-on-year. The quarter-to-quarter contraction was driven mainly

by a decline in number of employment in the food component of the division which resulted

in the shedding of 2 986 jobs during the second quarter of 2016. 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 the

second quarter of 2016.

2. FOOD PRODUCTS

According to the Standard Industrial Classification, the food industry incorporates groups of

products which are categorized 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.

2

Hence, food products 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.

2.1 PRICE

Consumer price index (CPI)1

The quarter-to-quarter and year-on-year consumer price index of food products grew by 0,

2% and 0,1%, respectively in the second quarter of 2016. The quarter-to-quarter marginal

growth is driven mainly by the slight growth of food stuffs such as bread and cereals (0,4%),

meat (0,6%), fish (1,7%), and oils and fats (0,6%). However, fruit and vegetables remained in

the negative of 1,8% and 0,6% in the current year (see Table 2.1). Similarly, (fruit, fish, meat)

and sugar sweets and desserts remained positive at 10,8%, 1,7%, 3,4% and 0,2%, respectively.

Table 2:1 Consumer price index of food products

Producer price index (PPI)2

1 Stats SA defines CPI as a current social and economic indicator that is constructed to measure

changes on the general level of prices of consumer goods and services which households acquire, use

or pay for over time.

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.

Food products

Indices % change between

Weight 2015: Q2 2016: Q1 2016: Q2 2015: Q2

and

2016: Q2

2016: Q1

and

2016: Q2

All items (CPI

Headline)

100 111,0 110,9 111,1 0,1 0,2

Food and non-

alcoholic beverages

15,4 111,1 111,6 112,0 0,8 0,4

Food 14,2 111,2 111,8 112,1 0,8 0,3

Processed 6,8 112,4 113,2 113,6 1,1 0,4

Unprocessed 7,4 110,1 110,7 110,9 0,7 0,2

Bread and cereals 3,5 110,3 109,0 109,4 -0,8 0,4

Meat 4,6 108,6 111,6 112,3 3,4 0,6

Fish 0,4 113,1 114,2 115,0 1,7 0,7

3

Source: (Stats SA, 2016a)

The producer price index for final manufactured goods registered an improved contraction

of 0,3%, following a 0,4% negative growth in the last quarter. The following items moderated

in the period: meat and meat products (0,3%), fruit and vegetables (0,1%), oils and fats

(1,3%). However, sugar rebounded by 1,0%, while beverages and bakery products grew by

0,7% and 0,5%, respectively and food products stagnated at 0,2%, (see Table 2.2). On the

other hand, the year-on-year producer price index for final manufactured decelerated by

0,6%, following a 0,2% contraction in the last quarter. Sugar, (oils and fats) recorded a 1,3%

and 3,1%, growth, respectively, while (meat and meat products) and fruit and vegetables

moderated by 7,5% and 1,5%, respectively. In addition, bakery products stagnated at 1,0%,

with fish remaining unchanged as compared to the preceding quarter of a 2,0% negative

growth.

Table 2.2: Producer price index of food products

Milk, eggs and

cheese

1,7 119,8 120,9 121,2 1,2 0,2

Oils and fats 0,5 100,8 100,3 100,9 0,1 0,6

Fruit 0,2 98,5 111,1 109,1 10,8 -1,8

Vegetables 1,6 114,1 111,9 111,2 -2,5 -0,6

Sugar, sweets and

deserts

0,6 115,0 114,9 115,2 0,2 0,3

Other food 0,9 84,1 85,5 85,7 1,9 0,2

Food products


Weight 2015: Q2 2016:

Q1

2016:

Q2

2015: Q2

and

2016: Q2

2016: Q1

and

2016: Q2

Final manufactured

goods (Headline PPI)

100 115,1 114,7 114,4 -0,6 -0,3

Food products 26,3 116,9 118,8 119,2 2,0 0,3

Meat and meat

products

4,5 117,7 126,2 126,5 7,5 0,3

Fish and fish product 1,6 127,5 127,7 127,5 0,0 -0,2

Fruit and vegetables 2,4 112,5 114,0 114,2 1,5 0,1

Oils and fats 0,5 105,8 107,7 109,0 3,0 1,3

Dairy products 3,3 122,4 122,7 122,7 0,2 0,0

Grain mill products 1,8 109,3 108,2 109,5 0,2 1,2

Starch and starch

products and animal

feeds

1,6

117,6 117,4 117,5 -0,1 0,1

4

Source: Stats SA (2016b)

Import unit value index3

Import unit values of selected food products are given in Table 2.3. During the current period,

the import unit value index for food products and oils and fats, grew by 0,2%, however,

contracted by 3,4% year-on-year. In addition, quarter-to-quarter and year-on-year for fats

and oils contracted by 3,6% and 0,1%, respectively. Grain mill products grew year-on-year by

0,5%.

Table 2.3: Import unit value index of food products

Source: Stats SA (2016c)

3 IMF defines export and import unit value index as a measure of the overall change in the prices of

transactions in goods and services between the residents of an economic territory and residents of the

rest of the world. The average unit value is obtained by dividing the value of exported/imported goods

in monetary terms with the respective volume/weight of the goods.

Other food products 0,9 116,3 116,7 117,4 0,9 0,6

Bakery products 6,9 121,9 122,4 123,1 1,0 0,5

Sugar 1,9 103,5 103,7 104,8 1,3 1,0

Food products


2015: Q2 2016: Q1 2016: Q2 2015: Q2

and

2016: Q2

2016: Q1

and

2016: Q2

Food (total) 110,0 106,1 106,3 -3,4 0,2

Fats and oils 101,3 97,8 97,7 -3,6 -0,1

Grain mill products 120,9 116,6 117,2 -3,1 0,5

5

2.2 PRODUCTION

Source: Statistics SA (2016d)

A physical volume of production by the food products division is presented in Figure 2.1. The

quarter-to-quarter physical volume of production of meat and meat products stagnated at

1,3%, dairy contracted by 1,2%, grain mill and bakery products rebounded by 0,2%, while

“other food products’’ decelerated by 0,2% in the second quarter of 2016. However, the

year-on-year volume of production for meat and meat products increased modestly by

3,0%, following a 1,1% growth in the first quarter of 2016. Dairy products moderated by 4,9%,

while grain mill and bakery and “other food products’’ decelerated by 1,7% and 0,1%,

respectively.

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

under-

utilisation

Shortage of Insufficient

demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2015: Q2 82,7 17,3 1,9 1,4 0,2 10,9 3,0

2016: Q1 81,7 18,3 2,2 1,3 0,3 10,7 3,8

50

60

70

80

90

100

110

120

13020

11:

Q2

20

11:

Q3

20

11:

Q4

20

12:

Q1

20

12:

Q2

20

12:

Q3

20

12:

Q4

20

13:

Q1

20

13:

Q2

20

13:

Q3

20

13:

Q4

20

14:

Q1

20

14:

Q2

20

14:

Q3

20

14:

Q4

20

15:

Q1

20

15:

Q2

20

15:

Q3

20

15:

Q4

20

16:

Q1

20

16:

Q2

Ind

ex (

2010 =

100)

Figure 2.1: Seasonally adjusted physical volume of production:

food products

Meat, fish, fruit etc Dairy products

Grain mill products Other food products

6

2016: Q2 81,5 18,5 2,1 1,4 0,2 10,1 4,8

Source: Statistics SA (2016e)

The utilisation of production capacity by large enterprises of food products showed a

marginal decrease year-on-year and quarter-to-quarter (see Table 2.4). Insufficient demand

and other reasons such as low productivity and shortage of raw materials are the main

reasons of underutilisation during the period.

2.3 VALUE OF SALES


In the second quarter of 2016, the quarter-to-quarter seasonally adjusted value of sales of

food products moderated by 0,3%, following a 0,6% growth recorded in the previous quarter.

However, the seasonally adjusted value of sales grew marginally by 1,3% as compared to

1,2% year-on-year of the same period (see Figure 2.2).

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illio

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Figure 2.2: Seasonally adjusted value of sales (current prices):

food products

7


Wholesale and retail sales4

The current value of wholesale and retail sales of food, beverages and tobacco are given in

Figure 2.4. The wholesale and retail sales of food, beverages and tobacco increased

significantly by 9,6% and 17,1%, following growth of 1,0% and 2,6% respectively as recorded in

the previous quarter. Similarly, it grew significantly by 17,4% and 26,1% year-on-year, following

growth of 8,7% and 10,0%, respectively as recorded in the last quarter. As a result of the

positive growths, the current value of income from wholesale and retail sales of food,

beverages and tobacco increased from R69,5 billion and R15,6 billion in the previous quarter

to R76,2 billion and R18,3 billion, respectively in the second quarter of 2016.

4 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.

50

5 050

10 050

15 050

20 050

25 050

30 050

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Ind

ex (

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100)

Figure 2.3: Seasonally adjusted value of sales (current prices):

food products

Meat , fish, fruit etc Dairy products

Grain mill products Other food products

8

Source: Statistics SA (2016f, 2016g)

2.4 INCOME FROM FOOD SALES IN THE SERVICE INDUSTRY6

Table 2,5 below shows the income from food sales5 in the service industry, which includes

food sales in restaurants and coffee shops6, take-away and fast food outlets7 and catering

services8. The quarter-to-quarter and year-on-year current income from food sales in the

service industry increased significantly by 9,4% and 15,4%, following growth of 2,2% and 6,5%,

respectively in the preceding quarter. Owing to the increase in growths, the current value of

income from food sales in the service industry increased modestly from R9,9 billion in the

previous quarter to R10,8 billion in the second quarter of 2016.

5 Income from food sales in the service industry refers to income from the sale of meals and non-

alcoholic drinks.

6 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 Take-away and fast food outlets refer 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.

8 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.

0

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illio

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Figure 2.4: Wholesale and retail trade sales of food, beverages

and tobacco (current prices)

Wholesale Retail

9

Source: Statistics SA (20156)

The current income from food sales in the service industry increased significantly by 9,4%,

following a growth of 2,2% in the preceding quarter. The quarter-to-quarter increase can be

attributed to the growth in restaurants and coffee shops by 10,9% and 12,1% from a 2,9% and

a 1,3% growth in the last quarter. However, catering services contracted by 1,3% as

compared to a 2,9% growth in the preceding quarter. Similarly, the income from food sales

grew significantly by 10,5% from a 2,5% increase registered in the last quarter, driven by

growth in restaurant and coffee shops, take-away/fast food outlets and catering services by

11,5%, 11,6% and 7,8%, respectively (see Figure 2.6). During the quarter under review, the

total income from the restaurants and coffee shops, take-away/fast food outlets and

catering services stands at R5,7 billion, R4,8 billion and R2,1 billion, respectively, which

represents a growth in total income of 9,4% in the current quarter.

Source: Statistics SA (2016h)

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Figure 2.5: Income from food sales in the service industry

5001 0001 5002 0002 5003 0003 5004 0004 5005 0005 500

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Figure 2.6: Income from food sales in the service industry

Restaurants and coffee shops Take-away/fast food outlets

Catering services

10

2.5 TRADE

Main food export destinations and products

Figure 2.7 shows food export destination share of the continents. Africa was the main food

export destination during the second quarter of 2016; it accounted almost half of exports

(49%), followed by the Americas and Asia, which accounted 22% and 21%, respectively, of

the total food export destination. Europe and Oceania, altogether accounted for 8% of the

total food export. The trend during the past five years shows that Africa is by far the biggest

share of food export of more than 50% (see Figure 2.8).

Source: Quantec EasyData (2016)


Africa

49%

Europe

6%

Asia

21%

Americas

22%

Oceania

2%

Figure 2.7: The Food export destinations'share of continents in

2016:Q2

0

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2

%

Figure 2.8: The food export destination's share of the continents

(2011-2016)

Africa Europe Asia Americas

11

Figure 2.9 shows the food export destinations’ share of the main regions9 in the second

quarter of 2016. Among the main regions, SADC (Excluding SACU) accounted the highest

share of food export (26%), followed by SACU, (Excluding RSA) (25,0%), the EU (24%), Eastern

Asia (13,0%), Western Asia and NAFTA with 6,0% each.


9 The main regions which are included in the analysis are the top eight regions: SADC, Western Africa,

EU; NAFTA (North Atlantic Free Trade Area consists consisting of US, (Canada and Mexico); Eastern Asia

(which includes China, Japan, North Korea and South Korea); Western Asia (mostly Middle Eastern

countries); South Central Asia (which includes India, Pakistan and Bangladesh) and Australia and New

Zealand.

SACU

(ExcludinG RSA

25%

SADC

(Excluding

SACU)

26%

European

Union

24%

Western Asia

6%

NAFTA

6%

Eastern Asia

13%

Figure 2.9: The Food export destinations'share of main regions in

2016:Q2

12


Figure 2.10 shows that the five countries that accounted for food export share destinations

during the second quarter of 2016 were from Africa (Zimbabwe (8,6%), Namibia (8,3%),

Botswana (6,9%), Mozambique (5,9%) and Lesotho (4,2%). The European countries that

accounted for huge share of export destinations during the quarter were: Germany (6,0%),

Slovakia (5,5%), and the Netherlands (4,1%). Among the Asian countries, China was the only

country with a huge share of export designation accounting 6,4%. Table 2.5 presents the

major exported food products during the second quarter of 2016 and Table 2.6 show the

year-on-year high and low export performers of food products during the quarter under

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 2016: Q2

HS Code Food product Total amount (R

million)

HST230120 Flours, meals and pellets of fish or of crustaceans,

molluscs or other aquatic invertebrates

589,0

HST190531 Sweet biscuits 135,3

HST170410 Chewing gum, whether or not sugar-coated 94,7

HST150420 Fats and oils and their fractions, of fish, other than

liver oils

87,9

HST190410 Prepared foods obtained by the swelling or roasting

of cereals or cereal products

86,4

HST190420 Prepared foods obtained from unroasted cereal 78,9

0

1

2

3

4

5

6

7

8

9

10

Zim

ba

bw

e

Na

mib

ia

Bo

tsw

an

a

Ch

ina

Ge

rma

ny

Mo

zam

biq

ue

Slo

va

kia

Ve

ne

zue

la

Leso

tho

Ne

the

rla

nd

s

%

Figure 2.10: The share of top ten food export destination countries

in 2016: Q2

13

flakes or from mixtures of unroasted cereal flakes and

roasted cereal flakes or swelled cereals

HST190420 Prepared foods obtained from unroasted cereal

flakes or from mixtures of unroasted cereal flakes and

roasted cereal flakes or swelled cereals

78,9

HST040690 Other cheese 78,6

HST210320 Tomato ketchup and other tomato sauces 62,3

HST210230 Prepared baking powders 30,7

HST040630 Processed cheese, not grated or powdered 28,0

HST210130 Roasted chicory and other roasted coffee substitutes

and extracts, essences and concentrates thereof

25,9

HST180610 Cocoa powder containing added sugar or other

sweetening matter

22,6

HST230110 Flours, meals and pellets of meat or meat offal;

greaves

14,4

HST190510 Crisp bread

11,6

HST040610 Fresh (unripened or uncured) cheese, including whey

cheese and curd

10,9

HST190540 Rusks, toasted bread and similar toasted products 9,8

HST040520 Dairy spreads 4,8

HST040620 Grated or powdered cheese, of all kinds 4,4

HST190220 Stuffed pasta, whether or not cooked or otherwise

prepared

2,9

HST040640 Blue-veined cheese and other cheese containing

veins produced by Penicillium roqueforti

2,6

HST210310 Soya sauce 2,5

HST210220 Inactive yeasts; other single-cell microorganisms,

dead

2,4

HST210210 Active yeasts 2,4

HST190520 Gingerbread and the like 2,4

HST190532 Waffles and wafers 2,1


14

Table 2.6: Export performance of food products

HS Code Food product % Changes

compared to

a year ago

High performers

HST150410 Fish liver oils and their fractions 4594,3

HST170310 Cane molasses 555,2

HST170260 Other fructose and fructose syrup, containing in the dry

state more than 50% by weight of fructose, excluding invert

sugar 374,1

HST110220 Maize (corn) flour 211,9

HST110813 Potato starch 207,5

HST230400 Oilcake and other solid residues, whether or not ground or

in the form of pellets, resulting from the extraction of soya

bean oil 168,0

HST100890 Other cereals 160,2

HST150420 Fats and oils and their fractions of fish, other than liver oils 149,2

HST110814 Manioc (cassava) starch 142,9

HST040610 Fresh (unripened or uncured) cheese, including whey

cheese, and curd 140,3

HST040640 Blue-veined cheese and other cheese containing veins

produced by Penicillium Roqueforti 126,7

HST170220 Maple sugar and maple syrup 116,9


HST210230 Prepared baking powders 102,0


HST090230 Black tea (fermented) and partly fermented tea, in

immediate packings of a content not exceeding 3 kg 74,7

HST230120 Flours, meals and pellets, of fish or of crustaceans, molluscs

or other aquatic invertebrates 63,1

HST190300 Tapioca and substitutes, therefore prepared from starch in

the form of flakes, grains, pearls, siftings or in similar forms. 54,0


HST190540 Rusks, toasted bread and similar toasted products 45,3

HST170230 Glucose and glucose syrup, not containing fructose or

containing in the dry state less than 20% by weight of

fructose 42,6

15


Main source of food imports and imported food products

South Africa’s main source of food import during the second quarter of 2016 is presented in

Figure 2.11. South Africa imported 62% of its food from Asia and Europe combine. The share

of the Americas (27%) was also significant, while that of Africa and Oceania were marginal

at 9,0% and 2,0%, respectively. Figure 2.12 indicates that during the past five years, Europe,

the Americas and Asia have been the largest sources of import, while Africa has been the

least and is still below 15%.

HST180610 Cocoa powder, containing added sugar or other

sweetening matter 40,2


HST180500 Cocoa powder, not containing added sugar or other

sweetening matter 33,5

HST110510 Flour, meal and powder 28,2

HST230110 Flours, meals and pellets of meat or meat offal; greaves 23,9

HST151710 Margarine, excluding liquid margarine 22,3

HST110100 Wheat or meslin flour 21,1

HST040510 Butter 15,8


Low performers

HST150430 Fats and oils and their fractions, of marine mammals -99,7

HST230500 Oil cake and other solid residues, whether or not ground or

in the form of pellets, resulting from the extraction of

ground-nut oil -99,0

HST150300 Lard stearin, lard oil, oleostearin, oleo oil and tallow oil, not

emulsified or mixed or otherwise prepared -95,3

HST170240 Glucose and glucose syrup, containing in the dry state at

least 20% but less than 50% by weight of fructose, excluding

invert sugar -74,7

HST151530: Castor oil and its fractions -58,6

HST190240: Couscous -52,2

HST110819 Other starches -51,3

HST040520 Dairy spreads -37,8

HST190220 Stuffed pasta, whether or not cooked or otherwise

prepared -33,1

HST180400 Cocoa butter, fat and oil -31,8

16



As the main trading region, the EU accounts for 38% of the total food imports, followed by

South America (26%), South Eastern Asia (23%), Eastern Asia (9,0%) and NAFTA (4,0%) during

the second quarter of 2016 (see Figure 2.13).

Africa

9% Americas

27%

Asia

28%

Europe

34%

Oceania

2%

Figure 2.11: The share of continents as a source of food import in

2016:Q2

0

5

10

15

20

25

30

35

40

45

201

1: Q

2

201

1: Q

3

201

1: Q

4

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2: Q

1

201

2: Q

2

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2: Q

3

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2: Q

4

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3: Q

1

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3: Q

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3: Q

3

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3: Q

4

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4: Q

1

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4: Q

2

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4: Q

3

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4: Q

4

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5: Q

1

201

5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

%

Figure 2.12: The share of continents as a source of food import

(2011-2016)

Asia Europe Americas Africa

17



Among the top ten countries as sources of import for South Africa, Argentina was the highest

(15,7%), followed by Indonesia (8,5%), Malaysia (8,4%), the Netherlands (8,3%), Spain (7,4%),

China (7,2%), Gabon (7,2%), Brazil (6,8%), Belarus (3,7%) and the United Kingdom (3,6%)(see

Figure 2.14). Table 2.6 presents the major imported food products during the second quarter

of 2016.

European

Union

38%

NAFTA

4% Eastern Asia

9%

South-Eastern

Asia

23%

South America

26%

Figure 2.11: The share of regions as a source of food import in

2016:Q2

0

2

4

6

8

10

12

14

16

18

Arg

en

tin

a

Ind

on

esi

a

Ma

laysi

a

Ne

the

rla

nd

s

Sp

ain

Ch

ina

Ga

bo

n

Bra

zil

Be

laru

s

Un

ite

d K

ing

do

m

%

Figure 2.14: The share of top ten countries as a source of food

import in 2016: Q2

18

Table 2.7: Top 30 imported food products in 2016: Q2

HS Code Food product Total

amount (R

million)

HST230400 Oil cake and other solid residues, whether or not ground or in the

form of pellets, resulting from the extraction of soya bean oil. 695,8

HST040690 Other cheese 123,3



HST230110 Flours, meals and pellets of meat or meat offal; greaves 72,6

HST040510 Butter 69,0

HST110100 Wheat or meslin flour 62,6

HST180400 Cocoa butter, fat and oil 61,1

HST180500 Cocoa powder, not containing added sugar or other

sweetening matte. 58,9

HST151620 Vegetable fats and oils and their fractions 56,4

HST190230 Other pasta 54,8

HST190531 Sweet biscuits 53,5

HST170310 Cane molasses 43,8

HST210210 Active yeasts 34,9

HST110814 Manioc (cassava) starch 28,9

HST170230 Glucose and glucose syrup, not containing fructose or

containing in the dry state less than 20% by weight of fructose 23,6

HST170240 Glucose and glucose syrup, containing in the dry state at least

20% but less than 50% by weight of fructose, excluding invert

sugar 17,1

HST230120 Flours, meals and pellets, of fish or of crustaceans, molluscs or

other aquatic invertebrates 16,4


HST210500 Ice cream and other edible ice, whether or not containing

cocoa 15,2

HST110812 Maize (corn) starch 13,7

HST210410 Soups and broths and preparations thereof 12,9

HST151530 Castor oil and its fractions 10,5

HST151800 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 15.16; inedible mixtures or pre 8,0

19



Figure 2.15 shows the quarterly trade balance of food products. The quarter-to-quarter food

export and import of food products rebounded by 13,3% and 4,2%, following a 7,1% and

11,6% respective growth in the previous quarter. However, the year-on-year food exports and

imports increased marginally by 19,7% and 11,9%, in the current quarter as compared to the

19,2% and 9,9% respective growth registered in the preceding quarter. As a result, the trade

surplus widened from R11,2 billion in the previous quarter to R12,7 billion during the second

quarter of 2016.

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

20

12

: Q

1

20

12

: Q

2

20

12

: Q

3

201

2: Q

4

201

3: Q

1

201

3: Q

2

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3: Q

3

201

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201

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5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

R m

illio

n

Figure 2.15: Quarterly trade balance of food products

Export Import

HST210310 Soya sauce 7,9

HST040640 Blue-veined cheese and other cheese containing veins

produced by Penicillium roqueforti 6,3



HST040310 Yogurt 5,8

HST110813 Potato starch 5,7

20

2.6 Employment

Source: Statistics SA (2016i)

Figure 2.16 shows the total number of formal employment in the food products division. The

quarter-to-quarter food products division contracted by 1,6% as compared to a 2,4% growth

registered in the preceding quarter. As a result of the decline in growth, the employment in

the division decreased from 190 131 in the last quarter to 187,415 in the second quarter of

2016.

Source: Statistics SA (2016i)

Figure 2.17 shows the number of formal employment of food products division items. The

quarter-to-quarter formal employment of (meat, fish, fruit, vegetables, oils and fats) and

grain mill products contracted by 4,9% and 1,1% as compared to the respective growth of

0,3% and 2,2% recorded in the last quarter. However, dairy products showed an improved

150 000

155 000

160 000

165 000

170 000

175 000

180 000

185 000

190 000

195 000

20

15:

Q2

20

15:

Q3

20

15:

Q4

20

16:

Q1

20

16

: Q

2

Figure 2.16: Total number of formal employment: food

products

0

20 000

40 000

60 000

80 000

100 000

201

5: Q

2

201

5: Q

3

20

15

: Q

4

201

6: Q

1

201

6: Q

2

Figure 2.17: Number of formal employment: food

products

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

21

contraction of 1,0%, following a 4,3% decline recorded in the preceding quarter.

Furthermore, other food products moderated by 0,5% from a 6,2% growth in the first quarter

of 2016. As a result, the other food products is the only division that created jobs in the

quarter under review, of 81 118 from 80 732 jobs in the preceding quarter.

2.7 OUTLOOK

Table 2.8: Net balance10 of BER manufacturing survey: food products

2015: Q4 2016: Q1 2016: Q2 2016: Q3*

Domestic sales volumes -8 3 51 47

Export sales volumes 32 1 22 28

Production volumes -3 18 30 27

Domestic order volumes received -45 23 56 46

Export order volumes received 2 1 14 24

General business conditions -29 -63 -31 2

Number of factory workers 7 -23 -12 -55

Fixed investment -3 -29 -34 -25

Business confidence11 50 16 35

Expected volume of goods imported in

12 months’ time -24 -32 13

Expected volume of goods exported in

12 months’ time 11 32 15

Expected real investment in machinery

and equipment in 12 months’ time -25 0 -19

10 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.

11 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.

22

2015: Q4 2016: Q1 2016: Q2 2016: Q3*

Expected business conditions in 12

months’ time -25 -36 -16

*Expected Source: BER (2016)

A survey of food manufacturing by the Bureau for Economic Research (BER) is presented in

Table 2.7 The survey shows that the year-on-year outlook for the third quarter of 2016 is

positive for all the variables except for fixed investments and employment.

3. BEVERAGES

Beverages according to SIC classification is code 305 and it comprises of 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 below shows the consumer price indices and export unit value of beverages. The

year-on-year and quarter-to-quarter consumer price inflation for alcoholic beverages

moderated by 0,1% and 0,2%, respectively, as compared to the previous quarter. The

quarter-to-quarter consumer price moderation is as a result of moderate growth in wine

(0,9%), hot beverages (0,4%), cold beverages (0,4%) and spirits (0,1%). However, beer

remained unchanged as compared to the previous quarter growth which was 0,1%. On the

other hand, the producer price for beverages remained unchanged for the current quarter,

while the export unit value moderated by 2,6%. The year-on-year moderated growth was

driven by the moderate growth of wine (3,8%), hot beverages (0,9%), non-alcoholic

beverages (0,4%), spirits (0,3%) and cold beverages (0,2%.

Table 3.1: Price indices of beverages

Beverages products


Weight 2015: Q2 2016: Q1 2016:

Q2

2015: Q2

and

2016: Q2

2016:

Q1 and

2016:

Q2

Consumer price indices

All items (CPI

Headline)

100 111,0 110,9 111,1 0,1 0,2

Alcoholic

beverages

3,9 113,6 115,5 116,0 2,1 0,4

Spirits 0,8 109,7 110,0 110,0 0,3 0,1

Wine 0,7 113,4 116,7 117,7 3,8 0,9

23

Source: Stats SA (2016a, 2016b, 2016

3.2 PRODUCTION


Figure 3.1 presents the seasonally adjusted physical volume of production for beverages

division. During the second quarter of 2016, the volume of production for beverages

increased marginally by 1,8% as compared to the 1,2% growth registered in the previous

quarter, however, it rebounded by 1,2% year-on-year following a 0,1% contraction in the last

quarter.

50

60

70

80

90

100

110

120

130

201

1: Q

2

201

1: Q

3

201

1: Q

4

201

2: Q

1

201

2: Q

2

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2: Q

3

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4

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201

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2

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3

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4: Q

4

201

5: Q

1

201

5: Q

2

20

15

: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

Ind

ex (

2010 =

100)

Figure 3.1: Seasonally adjusted physical volume of

production: beverages

Beer 2,5 114,4 114,8 114,8 0,3 0,0

Non-alcoholic

beverages

1,2 109,6 109,7 110,0 0,4 0,3

Hot beverages 0,3 115,9 116,5 117,0 0,9 0,4

Cold beverages 0,9 107,3 107,1 107,5 0,2 0,4

Producer price index

Beverages 8,5 111,3 111,4 111,4 0,1 0,0

Export Unit value

Beverages 135,2 126,4 140,5 144,2 14,1 2,6

24

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

under-

utilisation

Shortage of Insufficient

demand

Other

Raw

materials

Labour

Skilled Semi and

unskilled

2015: Q2 82,8 17,2 2,0 1,5 0,2 8,7 4,9

2016: Q1 85,6 14,4 1,9 0,8 0,2 7,7 3,8

2016: Q2 85,5 14,5 2,0 1,0 0,3 7,7 3,6

Source: Statistics SA (2016e)

Table 3.2 shows that the year-on-year utilisation capacity showed an increase during the

second quarter of 2016 for the beverages division, however, it moderated as compared to

the previous quarter. Insufficient demand remains the main reason for underutilisation during

the period followed by other reasons such as seasonal factors.

3.3 VALUE OF SALES


10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

110 000

201

1: Q

2

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1: Q

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2

20

15

: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

R m

illio

n

Figure 3.2: Seasonally adjusted value of sales (current

prices): beverages

25

The seasonally adjusted value of sales for beverages division stagnated by 1,8% year-on-

year, however, moderated by 0,5% quarter-to-quarter following a1,0% growth recorded in

the preceding quarter (see Figure 4.6).

3.4 INCOME FROM BAR SALES IN THE SERVICE INDUSTRY12

During the second quarter of 2016, income from bar sales in the food and beverages

services industry accelerated by 10,5%, following a 2,5% growth recorded in the preceding

quarter; representing a growth from R1,5 billion previously to R1,6 billion in the current quarter.

The increases are as a result of increase in growth of restaurants and coffee shops, take-

away/fast food and catering services by 11,5%, 11,6% and 7,8%, following growth of 2,9%,

3,0% and 1,1%, respectively in the previous quarter. Similarly, the year-on-year total income

from bar sales in the industry grew by 22,0% for restaurants and coffee shops, take-away/fast

food outlets (10,8%) and catering services (14,8%).


12 Income from bar sales refers to income from liquor sales.

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

201

1: Q

2

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5: Q

3

201

5: Q

4

20

16

: Q

1

201

6: Q

2

R m

illio

n

Figure 3.3: Total income from bar sales in the service industry

26


3.5 TRADE

Main export destinations and food products

Figure 3.5 shows that, during quarter two of 2016, Europe was by far the largest export

destination for South African beverages. It accounted for 43% of the total export, followed by

Africa (35%), then Asia and the Americas at 11% and 10%, respectively. Oceania played a

marginal role as export destination for South African beverages division export. The trend of

the export destination’s share during the past five years indicates that Europe and Africa

have been the two continents that have been playing the most significant roles in beverages

export share destination (see Figure 3.6).


0

200

400

600

800

1 000

1 200

1 400

201

1: Q

2

201

1: Q

3

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1: Q

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5: Q

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5: Q

4

20

16

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1

201

6: Q

2

R m

illio

n

Figure 3.4: Income from bar sales in the service industry

Restaurants and coffee shops Catering services

Take-away/fast food outlets

Africa

35%

Americas

10% Asia

11%

Europe

43%

Oceania

1%

Figure 3.5: The beverage export destination's share of

continents in 2016:Q2

27


Among the main trading region, the EU accounts for most of the total export, followed by

SADC (Excluding SACU) 17,0%) and SACU (Excluding RSA), which accounted for 16,0%.

NAFTA, Eastern Asia and South Eastern Asia accounted for 10,0%, 6,0% and 4,0%, respectively

during the period (see Figure 3.7).


0

10

20

30

40

50

60201

1: Q

2

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1: Q

3

201

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5: Q

2

20

15

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3

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5: Q

4

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6: Q

1

201

6: Q

2

%

Figure 3.6: The beverages export destination's share of the

continents

(2011-2016)

Europe Africa Americas Asia

European

Union

47%

NAFTA

10%

Eastern Asia

6%

South Eastern

Asia

4%

SADC

(Excluding

SACU)

17%

SACU

(Excluding

RSA)

16%

Figure 3.7: The share of top beverage export destination

regions in 2016: Q2

28


Figure 3.8 above shows the share of the top ten beverages export destinations during the

second quarter of 2016. The following are the main countries that beverages were exported

to during the quarter: Saint Vincent and the Grenadines (9,9%), Germany (7,9%), Namibia

(7,4%), the Netherlands (5,6%), Mozambique (4,5%), United States (4,4%), Central African

Republic (4,1%), Denmark (4,0%), Sweden (4,0%) and Canada (3,8%). Table 3.3 presents

major exported beverages during the quarter under review, while Table 3.4 shows high and

low export performers of beverages during the second quarter of 2016 by comparing the

export values of the present quarter to the same quarter of the previous year (year-on-year).

Table 3.3: Major exported beverages products in 2016: Q2

HS Code Beverages products Total amount

(R million)

HST220710 Undenatured ethyl alcohol of an alcoholic strength by

volume of 80% vol. or higher

387,4

HST220210 Waters, including mineral waters and aerated waters,

containing added sugar or other sweetening matter or

flavoured

305,0

HST220600 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

221,9

HST220870 Liqueurs and cordials 167,9

HST220820 Spirits obtained by distilling grape wine or grape marc 89,5


HST220830 Whiskies 67,0

HST220860 Vodka 39,9

0

2

4

6

8

10

12

Sa

int

Vin

ce

nt

an

d

the

Gre

na

din

es

Ge

rma

ny

Na

mib

ia

Ne

the

rla

nd

s

Mo

zam

biq

ue

Un

ite

d S

tate

s

Ce

ntr

al A

fric

an

Re

pu

blic

De

nm

ark

Sw

ed

en

Ca

na

da

%

Figure 3.8: The share of top ten beverages export destination

countries in 2016: Q2

29

HST220850 Gin and Geneva 28,7

HST220840 Rum and other spirits obtained by distilling fermented

sugar-cane products

16,7

HST220900 Vinegar and substitutes for vinegar obtained from

acetic acid

7,7

HST220430 Other grape must 4,2


3.4: Export performance of beverages in 2016: Q2

HS Code Beverages % Change

compared to a

year ago

High performers

HST220840 Rum and other spirits obtained by distilling fermented sugar

cane products 127,8





flavoured 34,6

HST220300 Beer made from malt 25,4

HST200950 Tomato juice 23,4

HST230700 Wine lees 20,0

HST220110 Mineral waters and aerated waters 13,6


volume of 80% vol. or higher 12,3

HST200990 Mixtures of juices 11,9

HST220720 Ethyl alcohol and other spirits, denatured, of any strength 9,5

Low performers

HST220870 Liqueurs and cordials -32,2

HST090240 Other black tea (fermented) and other partly fermented

tea -23,3

HST220410 Sparkling wine -21,7

HST220900 Vinegar and substitutes for vinegar obtained from acetic

acid -15,1

30


Main imported beverage products and the source

Figure 3.9 illustrates the share of continents as a source of beverage import in the second

quarter of 2016. Europe, which accounted 80% import share, was the largest source of

beverages import during the second quarter of 2016. Africa accounted 7% of the import,

while the Americas, Asia and Oceania altogether accounted for 13% of the total beverages

import during the period. Figure 3.10 shows that during the past five years, Europe, followed

by Africa, accounted for a huge share of beverages import, followed by the Americas and

Asia with 8% and 4%, respectively. Oceania’s contribution is very small at 1%.


Africa

7% Americas

8% Asia

4%

Europe

80%

Oceania

1%

Figure 3.9: The share of continent's as a source of beverages

import in 2016: Q2

HST220830 Whiskies -13,1


mead); mixtures of fermented beverages and mixtures of

fermented beverages and non-alcoholic beverages, not

elsewhere specified or included -12,2

HST200981 Cranberry (Vaccinium macrocarpon, Vaccinium

oxycoccos, Vaccinium vitis-idaea) juice -8,2

HST220860 Vodka -4,7

31


Among the top trading regions, the EU (80%) still accounts the largest share followed by

(SACU (Excluding RSA)) (7%), and NAFTA (7%). Western Asia and the Western Europe rest

played a minor role of as a source of import for beverages; they accounted for 3% each (see

Figure 3.10).


0

10

20

30

40

50

60

70

80

90201

1: Q

2

201

1: Q

3

201

1: Q

4

201

2: Q

1

201

2: Q

2

201

2: Q

3

201

2: Q

4

201

3: Q

1

201

3: Q

2

201

3: Q

3

201

3: Q

4

201

4: Q

1

201

4: Q

2

20

14

: Q

3

201

4: Q

4

201

5: Q

1

201

5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

%

Figure 3.10: The share of continents as a source of beverages

import

(2011-2016)

Europe Americas Africa Asia

NAFTA

7% Western Asia

3% Western

Europe Rest

3%

European

Union

80%

SACU

(Excluding

RSA)

7%

Figure 3.11: The share of top regions as a source of beverages

import in 2016: Q2

32


Figure 3.12 above shows the share of the top ten counties as a source of beverages import.

During the period under review, the United Kingdom contributed a huge share of beverage

import (37,3%), followed by France (13,7%), Puerto Rico (8,6%), Cameroon (6,9%), Colombia

(6,3%), Austria (6,0%), Zimbabwe (5,9%), Vietnam (5,5%), Angola (4,7%) and Peru (3,6%).

Table 3.5: Main imported beverages in 2016: Q2

0

5

10

15

20

25

30

35

40

Un

ite

d

Kin

gd

om

Fra

nc

e

Pu

ert

o R

ico

Ca

me

ron

Co

lom

bia

Au

stria

Zim

ba

bw

e

Vie

tna

m

An

go

la

Pe

ru

%

Figure 3.12: The share of top ten countries as a source of

beverages import in 2016: Q2

HS Code Beverages Total amount

(R million)

HST220830 Whiskies 634,4



flavoured 283,2

HST090240 Other black tea (fermented) and other partly fermented tea 209,4

HST220300 Beer made from malt 137,8


HST220410 Sparkling wine 63,6

HST220870 Liqueurs and cordials 32,1

HST220860 Vodka 29,5

HST220840 Rum and other spirits obtained by distilling fermented sugar

cane products 26,9



mead); mixtures of fermented beverages and mixtures of

fermented beverages and non-alcoholic beverages, not 9,8

33



During the second quarter of 2016, the export of beverages rebounded by 19,0%, following a

18,5% contraction in the previous quarter, however, it increased modestly year-on-year by

15,5%, following a 10,5% growth registered in the preceding quarter. On the other hand, the

quarter-to-quarter and the year-on-year import rebounded by 22,7% and 9,6%, following a

contraction of 29,8% and 0,4%, repsectively in the last quarter. As a result, the trade surplus of

beverages industry widened from R2 216,7 million in the previous quarter to R2 591,1 million

during the second quarter of 2016 (see Figure 3.13).

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

201

2: Q

2

201

2: Q

3

201

2: Q

4

201

3: Q

1

201

3: Q

2

201

3: Q

3

201

3: Q

4

201

4: Q

1

201

4: Q

2

201

4: Q

3

201

4: Q

4

201

5: Q

1

201

5: Q

2

20

15

: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

R m

illio

n

Figure 3.13: Quarterly trade balance of beverages

Export Import

elsewhere specified or included

HST220900 Vinegar and substitutes for vinegar obtained from acetic

acid 7,5

HST090230 Black tea (fermented) and partly fermented tea, in

immediate packings of a content not exceeding 3 kg 7,5

HST220110 Mineral waters and aerated waters 6,2

HST200981 Cranberry (Vaccinium macrocarpon, Vaccinium

oxycoccos, Vaccinium vitis-idaea) juice 5,1


volume of 80% vol. or higher 4,8

HST220720 Ethyl alcohol and other spirits, denatured, of any strength 0,1

34

3.6 Employment

Source: Quantec EasyData (2016i)

Figure 3.14 shows the number of formal employment in the beverages and tobacco

products industry. The quarter-to-quarter formal employment of the beverages and tobacco

products divisions contracted by 5,2%, following a growth of 2,4% recorded in the previous

quarter. As a result of the decline in employment growth, the total number of formal

employment of the beverages and tobacco products division decreased from 40 925 in the

previous quarter to 38 790 during the second quarter of 2016.

3.7 OUTLOOK

Table 3.6: Net balance of BER manufacturing survey: Beverages

2015: Q4 2016: Q1 2016: Q2 2016: Q3*

Domestic sales volumes 86 94 36 87

Export sales volumes 76 89 92 40

Production volumes 85 87 83 83

Domestic order volumes received 86 92 35 87

Export order volumes received 76 88 92 44

General business conditions -3 -85 9 60

Number of factory workers 21 3 7 8

37 500

38 000

38 500

39 000

39 500

40 000

40 500

41 000

41 500

201

5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

201

6: Q

2

Figure 3.14: Number of formal employment: beverage and

tobacco products

35

2015: Q4 2016: Q1 2016: Q2 2016: Q3*

Fixed investment 89 -1 2 63

Business confidence 12 9 64

Expected volume of goods imported in

12 months’ time -75 -2 40

Expected volume of goods exported in

12 months’ time 84 96 97

Expected real investment in machinery

and equipment in 12 months’ time 62 93 63

Expected business conditions in 12

months’ time -14 -87 -26

*Expected Source: BER (2016)

The survey of the beverages division by BER shows that the year-on-year outlook for the third

quarter of 2016 is positive for all variables.

4. CONCLUSION

The real gross domestic product (GDP) of South Africa in the second quarter of 2016

increased by 3,3%, following a contraction in the first quarter. The variations in economic

growth from quarter to quarter were mostly the result of fluctuations in the primary and

secondary sectors. The real value added by the mining sector rebounded, while agricultural

production inched lower to record a sixth consecutive quarter of contraction, mainly due to

the effect of the drought. Moreover, the volume of manufacturing production picked up

significantly.

The nominal value of sales of food and beverages industry moderated by 0,2% as compared

to 0,8% growth in the last quarter. Similarly, it moderated by 1,3% year-on-year.

The wholesale and retail sales of food, beverages and tobacco increased significantly

quarter-to-quarter and year-on-year. Income from food sales in the service industry stands at

R10,8 billion during the second quarter of 2016.

In terms of trade, Africa was the main food export destination during the second quarter of

2016; it accounted almost half of total exports followed by the Americas and Asia. Europe is

by far the largest export destination for South African beverages; it accounted for a huge

amount of the total export, followed by Africa then Asia and the Americas.

Furthermore, Europe, followed by Africa accounted for a huge share of beverages import,

followed by the Americas and then Asia.

The food, beverages and tobacco division employment contracted by 2,2% quarter-to-

quarter, however, grew by 6,1% year-on-year. The quarter-to-quarter contraction was driven

mainly by a decline in number of employment in the food component of the division, which

resulted in the shedding of 2 986 jobs during the second quarter of 2016.

36

REFERENCES

BER (2016), Manufacturing Survey. Bureau for Economic Research, University of Stellenbosch.

Quantec EasyData (2016), RSA International Trade. Accessed in December 2016.

Statistics SA (2016a), Consumer Price Index, various issues. Statistics South Africa.

Statistics SA (2016b), Producer Price Index, various issues. Statistics South Africa.

Statistics SA (2016c), Export and Import Unit Value Indices, various issues. Statistics South

Africa.

Statistics SA (2016d), Manufacturing: Production and Sales, various issues. Statistics South

Africa.

Statistics SA (2016e), Manufacturing: Utilisation of Production Capacity by Large Enterprises.

Statistics South Africa.

Statistics SA (2016f), Wholesale Trade Sales, various issues, Statistics South Africa.

Statistics SA (2016g), Retail Trade Sales, various issues, Statistics South Africa.

Statistics SA (2016h), Food and Beverages, various issues, Statistics South Africa.

Statistics SA (2016i), Quarterly Employment Statistics, various issues. Statistics South Africa.

Reserve Bank (2016), Quarterly Bulletin, December 2016, South African Reserve Bank.

37

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quarterly economic review of the food and beverages ... a pivotal role in supplying inputs to the...

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