This technical document aims to guide exporters in developing countries - mainly in Africa - on how to enter the newly established agri-food market in South Africa. South African International Trade Administration Commission (ITAC) National Plant Protection Organization of South Africa (NPPOSA) Pakco (Pty) Ltd.
Executive summary
The domestic market: an overall view
- Domestic production: outputs, shortfalls and opportunities for external suppliers
- International trade 1 1. Imports
- Volume and value: a rapidly expanding trade
- Composition: concentration on 10 tariff headings
- Origins: six countries provide 70% of all imports
- Exports
- Market size
Composition of South African imports of processed fruit, vegetables and other products, percentage share by volume, 2009. South Africa is a net exporter of fruit but a net importer of all other agri-food products.
Import tariffs, taxes and preferential trade regimes
Upon implementation, the EFTA countries abolished all customs duties on goods originating in SACU, and SACU has accepted a gradual reduction of all customs duties.
Non-tariff barriers
- Special import regulations
- Freight forwarding and other transport requirements
- Labelling requirements
It may be imported from Zimbabwe only in accordance with and subject to a permit issued by the Directorate General, Ministry of Agriculture, Marketing Administration, and the permit of the Directorate of Plants and. Subject to MMA (Minimum Market Access) approval from Ministry of Agriculture, Marketing Administration. It can only be imported based on the permits of the Directorate General, Ministry of Agriculture, Marketing Administration and Directorate of Plants and Plants.
Imports from Zimbabwe in December and January are prohibited except under an MMA permit from the DG, Department Agriculture, Marketing Administration and a permit from the Directorate of PQC. May only be imported from Zimbabwe in January, February, March and April with the permission of the DG. Peaches and plums may only be imported from Zimbabwe from 1 November to 31 December on the basis of a license issued by the DG, Department of Agriculture, Marketing Administration and a permit from the Directorate of PQC.
Subject to an MMA permission from DG, Department Agriculture, Marketing Administration and Directorate, PQC. Imports are subject to permits from the DG, Department of Agriculture and the Directorate for Plants.
Expected market developments
The Food, Cosmetics and Disinfectants Act of 1972 governs the labeling and advertising of food, and its regulations have been in place for many years. They are very specific about things like the name of the food, size of letters, prohibited statements, ingredients, nutrition claims and nutrition information format. New regulations (as an amendment to the Act) on the labeling and advertising of food were recently published in the State Gazette of 1 March 2010 (State Notice R. 146).
They provide clear guidance on what should and should not be done in providing information on labels and in food advertising. The labels must contain information on the country of origin, and the labels of all imported foodstuffs must bear the inscription "Product from...". Labels must contain the name of the food, the name and address of the manufacturer, if necessary, instructions for use, a list of ingredients and information on special storage conditions and net content.
Spar has the largest share of the domestic brand retail market and is also the fastest growing brand in the country. The food service industry in South Africa is well developed and is the fastest growing sector of the food market, fueled by increased household incomes, a growing middle class and tourism.
The domestic market: a micro view
- Key market players
- Retailers
- Speciality stores and wholesalers
- Importers
- Food processors and packers
- Procurement practices
- Consumer preferences
Purchasing practices Just over 95% of all fruit and vegetables sold through the Group's outlets were sourced directly from 550 growers in South Africa last year. Product range Complete range of groceries, confectionery, bakery, fresh/frozen fruit and vegetables, processed foods, fresh/chilled/frozen meat and fish. Individual Spar stores also buy fresh fruit and vegetables directly from local producers and suppliers.
Shops in upscale areas often stock a wide range of imported products on their shelves and usually stock a wider range of fruit and vegetables, including imported products out of season. It does not import fruits and vegetables directly and its suppliers buy imported/off-season fresh produce from brokers and fresh produce markets. It also has a wholesale and catering business, which offers the catering industry a range of exotic fruits and vegetables in prepackaged or bulk form.
Fresh produce market agents, who handle sufficient quantities to warrant imports, are major importers of fruits and vegetables. Most fresh produce is sourced locally, but imports of off-season and out-of-season fruits and vegetables are gaining ground.
Case studies: Woolworths and Shoprite-Freshmark
The opening up of the South African economy over the past decade and a half has had a profound impact on the food and beverage market. With the expansion of the middle and upper income groups and the rise of tourism, the market has become increasingly sophisticated. In particular, the development of the black middle class has created a demand for a wider range of products both on supermarket shelves and in restaurants.
This is evident from the fact that a large part of the turnover in the retail sector goes to the middle and lower income groups. The lower end of the market is extremely price sensitive and most imported foodstuffs would not be marketed at this level. Currently, more than 50% of Woolworth's fresh produce is grown according to the initiative's guidelines, and the new farming techniques will be rolled out at all Woolworths' suppliers across the country.
With this infrastructure, Freshmark is one of the largest buyers of fresh produce in South Africa. Given Shoprite Group's commitment to Africa, Freshmark would be interested in importing products from the continent based on seasonal conditions or high demand.
Niche markets and product groups to be targeted
Despite the company's footprint in the rest of Africa, Shoprite currently imports very little from the continent. This is because it is unable to obtain SPS permits for African products in the absence of PRA arrangements. The South African Department of Agriculture is particularly strict in preventing the importation of any agricultural product that may pose a risk to South African production.
Freshmark advises exporters to lobby their governments to address regional sanitary and phytosanitary requirements, as this will certainly go a long way in opening up the South African market. African exporters should be able to compete with China to penetrate this South African market. The South African market for private label or own brand products is far from saturated.
Private labels offer retailers an opportunity for differentiation in an increasingly competitive situation, and the number of private label products is growing rapidly. Therefore, spice exporters need to create a package with which to approach the South African market.
Integration of exporters into the overall value chain
Products that could be dedicated to private label include canned vegetables, canned beans, out-of-season fruit, fine vegetables and spice mixes. Opportunities can only be realized if prospective suppliers are able to establish a close working relationship with retailers and gain an understanding of their specific requirements and price points. African exporters have an opportunity to meaningfully penetrate this market, but they must be able to offer what the market demands.
Recommendations for exporters from African developing countries
A subscription to South Africa's journal for the food and beverage industry, the Food and Beverage Reporter (www.developtechnology.co.za) will be a useful way of keeping track of trends and developments in the South African food sector. . Useful contact s Company/government institution Website Telephone Fax Email Contact activity State Department of Trade and Industry www.dti.gov.za Department of Agriculture, Forestry and Fisheries www.daff.gov.za International Trade Administration Commission (ITAC) www.itac.org.za National Plant Protection Organization of South Africa (NPPOSA) www.daff.gov.za [email protected] Ms Anita Snyman Responsible for Pest Risk Assessments Private sector AG Morris International www.agmorris.com [email protected], Import Manager Distributors of canned fruit and vegetables, fresh herbs Bokomowww. bokomo.co.za [email protected] Giani Manufactures muesli and c bars Cape Herb and Spicewww.capeherb.co.za [email protected]. Crown National www.crownnational.co.za [email protected] Chancellor, Spice Buyer Food ingredient supplier impo spices.
DCL Food Distributorswww.dclfoods.co.za [email protected] SchultzDCL is a supplier of perishables and food items for hotel a. Freshmark / Shopritewww.shoprite holdings.co.za [email protected] Venter, Import Manager Shoprite Group Fresh Produce Division. Metcash Africa www.metro.co.za n/[email protected] ; [email protected] ;Nick Griffin; Willie Van der Walt Metcash Africa is the largest FMCG distributor on the A continent.
Company/Government Institution WebsiteTelephoneFaxEmailContact Activity Mistros Catering Supplieswww.mistro.co.za [email protected] Mistry. SOUTH AFRICA: A POTENTIAL MARKET FOR AGRI-FOOD PRODUCTS FROM AFRICA 38SC-10-1 Company/Government Institution Website Telephone Fax Email Contact Activity The Fruitspot www.fruitspot.co.za [email protected] Unilever Distributors of fresh fruit and vegetables www. unilever.co.za [email protected] ChettyManufacturing soup and stew Woolworthswww.woolworths.co.za [email protected] de Wet; Graham Williams Major Retailer.
Strawberries, uncooked/steamed/boiled, frozen, whether or not with added sugar/other sweeteners. Citrus fruit preparations (except homogenised), prepared by boiling, whether or not containing added sugar/other sweetening matter. Edible parts of plants, prepared/preserved, whether or not containing added sugar/other sweetening matter/spirits, n.e.s.
Orange juice, frozen, unfermented and without added spirits, whether or not containing added sugar/other sweeteners. Grapefruit juice, with a Brix value not >20, unfermented and without added spirits, either added sugar/other sweeteners. Grapefruit juice (excl. from 2009.21), unfermented and without added spirit, whether or not containing added sugar/other sweetening matter.
Tomato juice, unfermented and without added spirit or added sugar/other sweeteners. Apple juice, with a Brix value not >20, unfermented and without added spirit or added sugar/other sweeteners. Apple juice (excl. of 2009.71), unfermented and without added spirits, whether/not with added sugar/other sweetening matter.
Mixtures of juice, unfermented and without added spirits, whether or not containing added sugar/other sweeteners.
South Africa: import tariffs on agri-food products
PAPER
SOUTH AFRICA
A POTENTIAL MARKET FOR AGRI- FOOD PRODUCTS FROM AFRICA
