Food producers chewing on lean earnings diet
Battle for market share hots up as consumers count their pennies
The pressure on the South African consumer and the lingering effects of the drought are making life difficult for food producers, sparking an intense battle for market share. Cassie Treurnicht, an analyst at Gryphon Asset Management, said all three major food producers - Tiger Brands, Rhodes Food and Pioneer Foods - were feeling the effects of consumer strain amid low economic growth. While consumer inflation slowed to 5.1% in June from 5.4% in May, shoppers remain cash-strapped. The problem is partly due to the fall in the maize price, which is likely to remain around current levels as South Africa expects its biggest maize crop on record following improved weather conditions. The harvest is predicted to come in at 15.97 million metric tons this season. Fanie Brink, an independent agricultural economist, said the estimated crop had already caused the spot price of maize to plummet to R1,811 a ton for white maize from more than R5,000 a ton in early 2016. Brink said the drop had alr...
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