Rooibos helps AVI brew up solid results
Groceries fare well but Green Cross is still struggling
AVI says rooibos input costs and selling prices are at record highs. In the first half of the group’s financial year, raw material costs increased by R61m, or about 70%, and selling prices in the category spiked 40% as a result. Rooibos can be cultivated only in the Cederberg in the Western Cape and the drought has resulted in many plantations dying. Industry players estimate there is a supply shortage of between 25% and 30%, so producer prices have soared. AVI CEO Simon Crutchley said there had been some volume pressure in the tea category as a whole. "The important thing is that our brands performed well. Overall demand has been resilient," said Crutchley. "We are seeing a little bit of drifting by some consumers who are under pressure and some of them are buying down to Trinco from Five Roses … so there’s nothing obviously alarming, but I guess [it is] inevitable in this environment." He said the outlook for input costs for the rest of the year was not promising. "Once the raw ma...
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