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Beverages

Executive Summary

This sector fact sheet provides key trade and investment related statistics for the beverages sector. Specifically, it
shows global trade and investment flows including an analysis of top markets and products for South Africa and
the Western Cape. The key highlights in the beverages sector are provided below:

Trade

Largest global beverage exporters:


 France (ZAR146bn) with 17% global share
 United kingdom (ZAR 89.1bn) with 10.4% global share
 Italy (ZAR65.8bn) with 7.7% global share

Largest global beverage importers:


 United states (ZAR168.7bn) with 19.5% global share
 United kingdom (ZAR68.7bn) with 7.9% global share
 Germany (ZAR64bn) with 7.4% Global share

Global beverage trade in 2012 amounted to ZAR864.9bn with, the leading traded products were:
 Grape wines
 Beer from malt
 Whiskies

 South Africa exported beverages to the value of ZAR11.8bn in 2013 growing by 31.45% from the previous
year.
 Beverages accounted for 1.5% of total South African exports in 2013 an improvement from 1.28% in 2012.
 Western Cape beverage exports made up 10.19% of provincial exports and accounted for 59% of South
African beverage exports.
 South Africa is the 21st largest beverage export market and the 34 th largest import market.
 South Africa has the highest beer consumption in Africa.
 South Africa is the 11th largest exporter of grape wines in the world.
 Since 2003, South Africa and the Western Cape have been net exporters of beverages, with the United
Kingdom being their largest trade partner.
 South Africa’s fastest growing African export markets in 2013 were Angola (16.72% growth) and Mozambique
(136.84%).

The Western Cape’s largest beverages exports in 2012 were:


 Fortified wine (51% share)
 Alcoholic Grape wines (29%)
 Liquors and Cordials (8) %

Foreign Direct investment


Between January 2003 and January 2014, a total of 1,232 FDI projects were recorded into the beverages sector,
and soft drink as well as breweries and distilleries were the largest recipients of beverage foreign direct investment.
Between January 2003 and January 2014, a total of 6 FDI projects were from South Africa amounting to a total
capital investment of ZAR705.9m creating a total of 383 jobs. Three of the projects were from the Western Cape.
1. Sector Overview

1.1 Global overview

Global beverage sales have been driven by alcoholic drinks followed closely by soft drinks, these two segments
are projected to grow at a considerable rate in the near future. The United States and Western Europe are drinking
less mainstream beer on average and the wider beer industry seems to have been re-invigorated by the success
of craft beer, which as an industry has had more success in capturing the evolution of consumers' tastes and
preferences. The ability of craft beer to register sales growth despite this trend reflects its favourable performance.

While commercial beer is on the decline in developed countries, beer has generally done quite well across most of
the big developing economies over recent years (with the exception of Russia). Russia which has been supported
by SABMiller's business model focusing on emerging markets. While the average Sub-Saharan African and Asian
consumer is either drinking more beer or drinking more expensive beer, the average Western European is drinking
less beer than in recent years. Premium whisky has been alcohol's best performing global areas over the past few
years. It is no surprise that global spirits giants Diageo and Pernod Ricard are increasing their investment into
whisky. Premium blends of Scotch whisky are particularly popular in countries such as China and India.

Global Long-Term Beverage Outlook

 Whisky, particularly Scotch whisky, will be outperformers in global premium spirits while energy drinks will
provide considerable opportunities globally.
 Bottled water, juices and energy drinks will be outperformers in global soft drinks.
 Government legislation will play an increasing role in marginalising unhealthy beverage products.
 Governments will increasingly pursue alcohol as an effective means of raising revenue through higher
taxes.
 Companies with strong emerging market exposure will largely continue to outperform in sales growth,
although the best opportunities may now be beyond the BRIC countries of Brazil, Russia, India and China. 2
 Emerging-market-based firms will increasingly pursue developed-market investments for the purposes of
diversification and access to stellar brands.

GLOBAL BEVERAGE RETAIL VALUE RSP, 2007-2016

1 800

1 600

1 400

1 200
Value (USDbn)

1 000

800

600

400

200

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Soft Drinks (USDm) 380 131 415 569 414 351 450 551 498 389 531 248 562 085 595 390 630 431 667 548
Hot Drinks (USDm) 88 614 98 866 98 774 109 143 125 920 133 972 141 533 149 761 158 260 167 470
Alcoholic Drinks (USDm) 491 924 539 475 526 444 564 820 612 416 644 415 677 054 714 096 754 851 802 004

Source: Euromonitor, 2012


1.2 South Africa Overview

South Africa’s beverage sales follow a similar trend with global sales, with alcoholic drinks are once again being
the most sold beverage followed by soft drinks. However, unlike global sales there is a vast difference between
alcoholic drink sales and soft drink sales. Fruit/vegetables and bottled water started off at a low base in 2009 and
have been showing steady growth since, these beverage categories are poised for significant growth in the future.

South Africa’s carbonated drinks industry is well developed, with high per capita consumption (of 40 litres in 2012),
Business Monitor International (2013), sees bottled water and juices growing at a much faster rate in volume terms
than carbonated drinks. By 2017, per capita consumption is expected to reach 28 and 22 litres respectively. While
South Africa is the most developed consumer economy in Africa, there is still great growth potential. In future,
higher value products such as energy drinks are likely to become more important players across the soft drinks
industry.

SOUTH AFRICAN BEVERAGE SALES, 2009-2018f

150 000

120 000
Value (ZARm)

90 000

60 000

30 000

3
0
2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f
Alcoholic drink sales (ZARm) 61 180 69 616 76 865 84 460 92 590 101 492 111 209 122 108 134 724 149 739
Soft drink sales,(ZARm) 23 894 28 460 32 977 37 340 41 261 46 472 51 709 57 598 63 948 71 138
carbonated soft drink sales (ZARm) 15 528 17 007 18 918 20 844 22 651 24 443 26 721 29 208 31 859 34 821
Fruit/vegetable juice sales (ZARm) 5 152 6 635 8 496 10 211 11 674 13 150 15 180 17 550 20 142 23 121
Bottled water sales (ZARm) 3 215 4 817 5 563 6 285 6 936 8 879 9 807 10 839 11 948 13 196
Coffee sales (ZARm) 3 950 4 171 4 443 4 739 5 046 5 362 5 737 6 117 6 512 6 939
Tea sales (ZARm) 2 385 2 493 2 623 2 776 2 940 3 099 3 280 3 457 3 636 3 824

Source: Business Monitor International, 2014

1.2.1 Alcoholic drinks

South Africa's alcoholic drinks industry is dominated by the beer and wine sectors. South Africa's wine industry,
based almost exclusively in the Western Cape, has a global reputation for output and quality. The top five high-
priced brands all come from the Distell Group. Distell Group currently has around a 40% share of South Africa's
premium and super-premium wine markets. It has an annual production capacity of around 180 million litres.

SABMiller dominates the beer industry with a market share of nearly 90% through its South African Breweries unit
with competition coming from Heineken. In early 2009, Heineken joined forces with alcoholic drinks major Diageo
in a 75:25 joint venture to enter South Africa. Although not very well documented, craft beer has seen an increase
availability, consumption and marketing, also suggesting the evolving tastes of the higher income consumers.

Despite being a large exporter of alcoholic beverages, producing some of the most globally recognised brands,
domestic consumption of alcohol remains relatively low, and the prominence of the informal sector continues to be
a concern. Rising household incomes over the long term should feed through to the beer sector in particular,
especially since SABMiller is making a concerted effort to source local materials to reduce the cost of beer in a
continued effort to meet the needs of low-income consumers. The growth of the middle class should also provide
domestic impetus to the wine industry.

1.2.2 Soft drinks

The soft drinks industry is dominated by carbonates, led by Coca-Cola. SABMiller-owned Amalgamated Beverage
Industries (ABI) accounts for around 60% of Coca-Cola's sales in South Africa. PepsiCo’s products are bottled by
Pioneer Foods and hold a market share of approximately 5%. South African based Shoreline Beverages is fairly
well established and, led by its Coo-ee brand, is particularly strong in the KwaZulu-Natal region.

Traditional carbonates remain the most popular and affordable segment among South Africa’s low-income majority.
But this trend is set to be challenged by the growth of health consciousness and rise of the non-carbonates sector,
specifically fresh juices, bottled waters and energy drinks. Ceres, based in the Western Cape, accounts for about
50% of the fruit juice market.

Among higher income consumers, the diversity of the industry is comparable to that of a developed market, with a
considerable range of choice available across the entire soft drinks line.

1.2.3 Hot drinks

The hot drinks market in South Africa is dominated by coffee. Per capita consumption is estimated to be around
0.7kg per annum, followed by tea (0.5kg). Both markets are unsaturated by Western standards in terms of per
capita consumption volumes.

1.2.4 Wine industry

 According to FAO (2013), South Africa’s wine production was estimated at 965,500 tons in 2011 compared
to 921,700 tons in 2010, increasing by 5%. South Africa is ranked the 9 th largest global producer of wine
and accounts for 3.4% of global wine production. 4
 According to SAWIS (2013), currently there are 100,568 hectares of vines producing wine grapes under
cultivation in South Africa over an area some 800 kilometres in length. White varietals constitute 55.6% of
the plantings for wine, while red varietals account for 44.4% of the national vineyard.
 According to Western Cape Business (2013), there are over 3,500 wine producers in South Africa, with the
large majority located in the Western Cape.
 The European region accounted for over 65% of South Africa’s exports of wine in 2013. The United Kingdom
was South Africa’s largest export market for wine in 2012, accounting for 19%.
 According to Western Cape Business (2013), the Western Cape’s wine sector’s contribution to regional
GDP is estimated at ZAR26.2bn. South Africa’s wine sector contributes ZAR4.5bn indirectly to tourism.

SOUTH AFRICAN BEVERAGES STRENTHS AND OPPORTUNITIES


STRENGTHS OPPORTUNITIES
 South Africa's alcoholic drinks industry is well  There is still plenty of scope for growth in alcohol,
developed, particularly the beer and wine categories. particularly in beer and wine.
 South Africa is one of the world's top wine exporting  Impending preferential access to EU markets is likely to
countries
increase export sales of South African wineries.
 South Africa has the highest beer consumption in
Africa.  The country's growing middle class is likely to drive
growth in the alcoholic and soft drinks segments.
 Many industry sub-sectors, such as energy drinks, tea
and coffee, are far from saturated and would benefit
from further investment.
 Rising health-consciousness is boosting demand for
low calorie soft drinks
Source: Business Monitor International, 2014
2. Trade

2.1 Global trade of beverages

From two successive periods of negative growth in 2003 and 2004, global beverage trade recovered in 2005 and
continued to grow strongly until 2008. The positive growth trend ended in 2009 as the effect of decreased global
demand did not spare the beverage trade resulting in a 10.9% and 5.3% decline in 2009 and 2010 respectively.
Trade has since recovered to its highest level in 2012 with ZAR865bn which was an 18.3% increase from the
previous year.

GLOBAL BEVERAGE TRADE, 2003-2012

1 000 30%

900 25%

800 20%

700 15%

Percentage Change
Value (ZARbn)

600 10%

500 5%

400 0%

300 -5%

200 -10%

100 -15%

0 -20%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
5
Trade (ZARbn) 360,1 352,3 382,8 462,2 575,3 733,5 653,5 618,8 731,2 864,9
% Change -16,7% -2,2% 8,7% 20,7% 24,5% 27,5% -10,9% -5,3% 18,2% 18,3%

Source: TradeMap, 2014

Wine producing giant, France was the largest global exporter of beverages to the value of ZAR146bn commanding
17% of global beverage exports. The United Kingdom (ZAR89.1bn) and Italy (ZAR65.8bn) were the second and
third largest export markets. Singapore, Belgium, Spain and Mexico were the fastest growing export markets
showing strong growth in 2012 in excess of 18%.

TOP 10 BEVERAGE EXPORT MARKETS, 2012


VALUE %
%
RANK EXPORT MARKET 2012 GROWTH
SHARE
(ZARbn) 2011-2012
1 France 146.0 15.42% 17.02%
2 United Kingdom 89.1 12.37% 10.39%
3 Italy 65.8 12.59% 7.67%
4 United States 56.5 0.94% 6.58%
5 Germany 49.9 9.62% 5.81%
6 Netherlands 42.5 10.79% 4.95%
7 Spain 38.2 21.72% 4.45%
8 Mexico 28.0 18.28% 3.27%
9 Belgium 25.6 25.43% 2.99%
10 Singapore 21.9 29.01% 2.55%
TOTAL EXPORTS 858.1 15.97% 100.00%
Source: TradeMap, 2014
The United States (ZAR168.7bn), was the largest import market in 2012 making it a net importer of beverages
accounting for 20% of all global beverage imports. The United Kingdom was the second largest import market
followed by Germany importing ZAR68.7bn and ZAR64.0bn respectively. China, Russia and Japan showed the
strongest growth in 2012.

TOP 10 BEVERAGE IMPORT MARKETS, 2012


VALUE %
%
RANK IMPORT MARKET 2012 GROWTH
SHARE
(ZARbn) 2011- 2012
1 United States 168.7 26.30% 19.50%
2 United Kingdom 68.7 16.41% 7.94%
3 Germany 64.0 8.53% 7.40%
4 Canada 40.4 19.47% 4.67%
5 Netherlands 32.7 11.44% 3.78%
6 France 32.0 6.94% 3.70%
7 Japan 30.2 21.20% 3.49%
8 Belgium 25.5 16.70% 2.94%
9 China 25.3 38.04% 2.93%
Russian
10 25.2 28.91% 2.92%
Federation
TOTAL IMPORTS 864.9 18.29% 100.00%
Source: TradeMap, 2014

Global beverage trade in 2012 amounted to ZAR864.9bn with, the leading traded products being:
 Grape wines
 Beer from malt
 Whiskies
6
TOP GLOBALLY TRADED BEVERAGE PRODUCTS, 2012
VALUE %
HS
RANK PRODUCT 2012 GROWTH
CODE
(ZARbn) 2011-2012
1 220421 Grape wines nes,incl fort&grape must,unfermntd by add alc in ctnr</=2l 197.4 14.08%
2 220300 Beer made from malt 101.6 19.91%
3 220830 Whiskies 87.6 17.91%
4 220210 Waters incl mineral&aeratd,containg sugar o sweeteng matter o flavourd 62.8 18.89%
5 220290 Non-alcoholic beverages nes,excludg fruit/veg juices of headg No 20.09 62.7 23.15%
6 220710 Undenaturd ethyl alcohol of an alcohol strgth by vol of 80% vol/higher 54.4 17.71%
7 220820 Spirits obtained by distilling grape wine or grape marc 48.0 40.36%
8 220410 Grape wines, sparkling 43.9 13.78%
9 220429 Grape wines nes,incl fort&grape must,unfermntd by add alc,in ctnr > 2l 32.7 25.06%
10 220860 Vodka 29.9 15.73%
11 220870 Liqueurs and cordials 27.6 14.23%
12 220890 Undenatrd ethyl alc <80% alc cont by vol&spirit,liqueur&spirit bev nes 26.4 16.87%
13 220720 Ethyl alcohol and other spirits, denatured, of any strength 26.3 25.04%
14 220110 Mineral&aerated waters not cntg sugar or sweeteng matter nor flavoured 17.8 -0.20%
15 220840 Rum and tafia 13.2 11.89%
16 220600 Fermented beverages nes (for example, cider, perry, mead, etc) 11.6 18.51%
TOTAL EXPORTS 864.9 18.29%
Source: TradeMap, 2014
2.2 South African beverage trade

The South African beverage trade has been characterised by a positive trade balance for the past ten years backed
by strong export performance. Between 2008 and 2012, South Africa exported beverages in the region of ZAR8bn,
however in 2013 exports increased significantly by 31.45% while imports increased by a lessor 23 .36%, resulting
in a 38.28% improvement in the trade balance. Beverages exports in 2013 accounted for 1.50% of total exports,
compared to 1.28% in the previous year.

SOUTH AFRICAN WORLD BEVERAGE TRADE, 2004-2013

14 000

12 000

10 000
Value (ZARm)

8 000

6 000

4 000

2 000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Exports (ZARm) 4 710,2 4 995,1 4 926,0 6 309,4 8 574,1 8 575,2 8 516,3 8 097,0 8 988,8 11 815,8
Imports(ZARm) 1 224,8 1 473,4 1 974,4 2 996,3 3 626,0 3 804,0 3 027,2 3 504,9 4 114,1 5 075,1
Trade Balance (ZARm) 3 485,5 3 521,7 2 951,6 3 313,1 4 948,1 4 771,1 5 489,1 4 592,1 4 874,7 6 740,6

Source: Quantec, 2014


7
The United Kingdom was the largest importer of South African beverages, importing 13% of all South African
beverages. South Africa’s top export markets were predominantly European countries, with Angola and
Mozambique being the top African markets. France and Mozambique were the strongest growing export markets,
with both markets growing in excess of 130%.

In 2013, South Africa imported beverages from the United Kingdom to the value of ZAR2.4bn, making the European
nation the largest import market. South Africa currently has a trade deficit with the United Kingdom as its beverage
imports exceeded its exports in 2013. European nations were once again the top import markets and Zimbabwe
the largest African market. Imports from Italy, the Netherlands and Switzerland grew considerably in 2013.

SOUTH AFRICA’S EXPORT MARKETS OF BEVERAGES, 2013 SOUTH AFRICA’S IMPORT MARKETS FOR BEVERAGES, 2013
VALUE % % VALUE % %
DESTINATION SOURCE
RANK 2013 GROWTH SHARE RANK 2013 GROWTH SHARE
MARKETS MARKETS
(ZARm) 2012-2013 2013 (ZARm) 2012-2013 2013
1 United Kingdom 1 491.5 27.98% 12.62% 1 United Kingdom 2 386.0 20.23% 47.01%
2 Germany 1 167.6 40.00% 9.88% 2 Italy 519.1 130.27% 10.23%
3 United States 764.0 37.46% 6.47% 3 France 442.9 47.50% 8.73%
4 Sweden 664.1 17.73% 5.62% 4 Ireland 290.9 23.19% 5.73%
5 France 656.8 282.93% 5.56% 5 United States 286.3 -14.60% 5.64%
6 Netherlands 635.0 28.51% 5.37% 6 Netherlands 246.2 156.31% 4.85%
7 Angola 627.9 16.72% 5.31% 7 Austria 178.8 -32.30% 3.52%
8 Canada 496.1 18.35% 4.20% 8 Germany 142.5 49.27% 2.81%
9 Mozambique 380.1 136.84% 3.22% 9 Switzerland 83.9 102.47% 1.65%
10 Denmark 359.7 38.26% 3.04% 10 Zimbabwe 77.9 54.55% 1.54%
TOTAL EXPORTS 11 815.8 31.45% 100.00% TOTAL IMPORTS 5 075.1 23.36% 100.00%
Source: Quantec, 2014
Beverages produced from grapes were South Africa top exports as fortified wine < 2l (ZAR4.6bn) was the largest
beverage export and accounted for 39% of all South Africa’s beverage exports.

In 2013 the following products exhibited the strongest growth:


 Spirits obtained by distilling grape wine, grape marc, 250%
 Grape wines, alcoholic grape must, 45%
 Ethyl alcohol and other spirits, denatured, 33%
 Beer made from malt, 34%

Whiskeys, were South Africa’s largest imported beverage with a value of ZAR2.8bn. Beverage waters, sweetened
or flavoured (ZAR524.2m) were the second largest imported beverage followed by alcoholic liquors (ZAR422.7m).

SOUTH AFRICA’S EXPORTS OF BEVERAGES, 2013 SOUTH AFRICA’S IMPORTS OF BEVERAGES, 2013

VALUE % VALUE %
RANK PRODUCT 2013 GROWTH RANK PRODUCT 2013 GROWTH
(ZARm) 2012-2013 (ZARm) 2012-2013
Grape wines nes, fortified wine or
1 4 628.9 27.50% 1 Whiskies 2752.4 20%
must, pack < 2l
Grape wines, alcoholic grape Beverage waters, sweetened or
2 3 006.2 45.16% 2 524.2 4%
must nes flavoured
Undenatured ethyl alcohol > 80%
3 -0.25% 3 Alcoholic liqueurs nes 422.7 396%
by volume 927.9
Spirits obtained by distilling grape wine,
4 Liqueurs and cordials 32.38% 4 222.8 37%
813.4 grape marc
Spirits obtained by distilling grape
5 249.99% 5 Beer made from malt 221.1 -12%
wine, grape marc 487.0
Fermented beverages nes (eg
6 9.32% 6 Grape wines, sparkling 164.6 29%
cider, perry, mead, etc) 404.5
Beverage waters, sweetened or Non-alcoholic beverages nes, except
7 32.62% 7 159.0 49%
flavoured 368.8 fruit, veg juices
Ethyl alcohol and other spirits,
8 32.69% 8 Liqueurs and cordials 156.2 13%
denatured 325.5 8
Undenatured ethyl alcohol > 80% by
9 Beer made from malt 300.6 33.73% 9 112.1 -34%
volume
10 Grape wines, sparkling 296.6 6.58% 10 Rum and tafia 95.6 -7%
TOTAL EXPORTS 11 815.8 31.45% TOTAL IMPORTS 5075.1 23%
Source: Quantec, 2014

The figures below show the growth performance of the top beverage products traded by South Africa

The fastest growing exports in the period 2009-2013 were:


 Spirits obtained by distilling grape wine, grape marc (e.g. Brandy), 83.26% growth
 Ethyl alcohol,41.16%
 Rum and tafia, 35.88%
 Liqueurs and cordials, 20.78%
 Alcoholic grape wines, 19.53%
 Beer made from malt, 13.33%

The fastest growing imports in the period 2009-2013 were:


 Fermented beverages (eg cider, perry, mead, etc), 79.2% growth
 Alcoholic liqueurs nes, 59.9%
 Vodka, 47.4%
 Spirits obtained by distilling grape wine, grape marc (e.g. Brandy), 45.2%
 Gin and Geneva, 35.0%
GROWTH OF SOUTH AFRICA'S EXPORT OF GROWTH OF SOUTH AFRICA'S IMPORT OF
BEVERAGES, 2009-2013 BEVERAGES, 2009-2013

Gin and Geneva -18% H220300: Beer made from malt -34%

Mineral and aerated waters not H220840: Rum and tafia -12%
sweetened or flavoured -13%

H220429: Grape wines,


Beverage waters, sweetened or -6%
-8% alcoholic grape must nes
flavoured
H220510: Vermouth and other
Ice, snow and potable water not flavoured grape wines - pack < -2%
-4%
sweetened or flavoured 2l
H220590: Vermouth and other
flavoured grape wines - pack > -2%
Vodka -4% 2l

H220830: Whiskies 3%
Grape wines nes, fortified wine
2%
or must, pack < 2l
H220720: Ethyl alcohol and
7%
Grape must, unfermented, other spirits, denatured
2%
except as fruit juice
H220110: Mineral and aerated
waters not sweetened or 11%
Undenatured ethyl alcohol > flavoured
3%
80% by volume
H220210: Beverage waters,
14%
sweetened or flavoured
Vermouth and other flavoured
8%
grape wines - pack > 2l
H220410: Grape wines,
15%
sparkling
Grape wines, sparkling 10% 9
H220870: Liqueurs and cordials 16%

Alcoholic liqueurs nes 11%


H220710: Undenatured ethyl
17%
alcohol > 80% by volume
Fermented beverages nes (eg 11%
cider, perry, mead, etc) H220421: Grape wines nes,
18%
fortified wine or must, pack < 2l
Non-alcoholic beverages nes,
13% H220190: Ice, snow and
except fruit, veg juices
potable water not sweetened or 33%
flavoured
Beer made from malt 13% H220290: Non-alcoholic
beverages nes, except fruit, veg 34%
juices
Grape wines, alcoholic grape
20%
must nes H220850: Gin and Geneva 35%

Liqueurs and cordials 21% H220820: Spirits obtained by


distilling grape wine, grape 45%
marc

Rum and tafia 36% 47%


H220860: Vodka

Ethyl alcohol and other spirits, H220890: Alcoholic liqueurs


denatured 41% 60%
nes

Spirits obtained by distilling H220600: Fermented


83% beverages nes (eg cider, perry, 79%
grape wine, grape marc
mead, etc)
-30% 0% 30% 60% 90% -40% -20% 0% 20% 40% 60% 80%

Source: Quantec, 2014


2.3 Western Cape Trade of Beverages

The Western Cape has been a strong exporter of beverages for the past ten years and has continually maintained
a trade surplus. Demand for foreign beverages has been increasing since 2003 reaching its peak in 2009, this
import growth was not sustained into 2010 with imports deceasing considerably but recovering in 2011 and 2012.

In 2012, exports (ZAR7bn) reached their highest level increasing by 9% from 2011 while imports grew to ZAR2.7bn
equating to a 16% increase. Although imports grew at a faster rate in 2011, the province was still able to register
its 10th successive and highest trade surplus. The Western Cape’s beverage exports accounted for 10.19% of all
exports from the Western Cape in 2012, this was a slight decline from 11.68% in 2011.

WESTERN CAPE TRADE IN BEVERAGES, 2003-2012

8 000

7 000

6 000
Value(ZARm)

5 000

4 000

3 000

2 000

1 000

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Exports (ZARm) 3345,5 3552,5 3936,0 3819,4 5014,0 6742,0 6666,4 6400,6 6372,7 6973,5
10
Imports (ZARm) 858,2 986,3 1287,8 1620,3 2509,2 2914,6 3216,7 2046,4 2331,4 2711,0
Trade Balance (ZARm) 2487,3 2566,1 2648,2 2199,0 2504,8 3827,4 3449,8 4354,1 4041,3 4262,4

Source: Quantec, 2014

As with national beverage exports, the United Kingdom was also the province’s largest beverage export market
commanding 16.39% of all exports. Germany (ZAR832.1m) was the provinces second largest market followed by
Sweden (ZAR564.0). Angola was the Western Cape’s largest African export destination with ZAR531.5m and
imported 7.62% of the provinces beverages. The United Kingdom, United States, China and Belgium were the only
top export markets to experience positive growth in 2012.

WESTERN CAPE’S EXPORT MARKETS FOR BEVERAGES, 2013


VALUE % %
DESTINATION
RANK 2012 GROWTH SHARE
MARKETS
(ZARm) 2011-2012 2012
1 United Kingdom 1 143.2 10.83% 16.39%
2 Germany 832.1 -0.71% 11.93%
3 Sweden 564.0 -9.29% 8.09%
4 Angola 531.5 -2.17% 7.62%
5 Netherlands 446.2 -14.24% 6.40%
6 Canada 416.8 19.03% 5.98%
7 United States 407.3 36.42% 5.84%
8 Denmark 260.0 -13.34% 3.73%
9 China 233.2 61.08% 3.34%
10 Belgium 188.2 4.68% 2.70%
TOTAL EXPORTS 6 973.5 9.43% 100.00%
Source: Quantec, 2014
The Western Cape sourced most of its beverages from European markets with Mexico, Australia and Brazil
completing the top import markets. The United Kingdom (ZAR1.7bn) was the province’s largest import market
mainly due to the demand for whiskey. Switzerland and Italy were the Western Cape’s fastest growing import
markets in 2012.

WESTERN CAPE’S IMPORT MARKETS FOR BEVERAGES, 2012


VALUE % %
RANK SOURCE MARKETS 2012 GROWTH SHARE
(ZARm) 2011-2012 2012
1 United Kingdom 1 674.9 9.62% 61.78%
2 Austria 256.5 78.24% 9.46%
3 Ireland 210.1 -9.80% 7.75%
4 Italy 176.5 103.69% 6.51%
5 France 59.6 -1.69% 2.20%
6 Netherlands 54.9 -35.08% 2.03%
7 Mexico 47.2 -6.40% 1.74%
8 Australia 40.2 2.70% 1.48%
9 Switzerland 38.6 933.47% 1.42%
10 Brazil 31.8 59.89% 1.17%
TOTAL EXPORTS 2 711.0 16.29% 100.00%
Source: Quantec, 2014

The Western Cape is South Africa’s largest grape producing region, it is thus unsurprising that 3 grape derived
products are amongst the top exports. Fortified wine (ZAR3.6bn) was the province’s largest export in 2012, this
was followed by alcoholic grape wines (ZAR2bn) and liquors and cordials (ZAR591.2m).

Below are the Western Cape’s main exported beverages and their export shares: 11
 Fortified wine, (ZAR3.6bn) accounted for 51% of Western Cape beverage exports and 77% of national
exports was produced in the Western Cape.
 Alcoholic grape wines, (ZAR2.0bn) accounted for 29% of Western Cape beverages exports and 68% of
national product exports was produced in the Western Cape.
 Liqueurs and cordials, (ZAR591.2m) accounted for 8% of Western Cape beverage exports and 73% of
national exports were produced in the Western Cape.
 Fermented beverages (e.g. cider, perry, mead; ZAR300.6m) accounted for 4% of Western Cape beverage
exports and 74% of national exports were produced in the Western Cape.
 Sparkling grape wines, (ZAR255.8m) accounted for 4% of Western Cape beverage exports and 86% of
national exports were produced in the Western Cape.

Whiskies were the provinces largest imported beverage good to the value of ZAR1.8bn. Whiskeys also accounted
for 66% of provincial beverage imports and 65% of national beverage imports.
WESTERN CAPE’S EXPORTS OF BEVERAGES, 2012 WESTERN CAPE’S IMPORTS OF BEVERAGES FROM, 2012

VALUE % VALUE %
RANK PRODUCT 2012 GROWTH RANK PRODUCT 2012 GROWTH
(ZARm) 2011-2012 (ZARm) 2011-2012
Grape wines nes, fortified wine or
1 3 560.8 -0.01% 1 Whiskies 1794.2 8%
must, pack < 2l
Grape wines, alcoholic grape must Beverage waters, sweetened or
2 2 032.9 29.82% 2 330.1 101%
nes flavoured
3 Liqueurs and cordials 591.2 19.81% 3 Beer made from malt 211.6 30%
Fermented beverages nes (eg cider,
4 300.6 9.91% 4 Rum and tafia 82.6 19%
perry, mead, etc)
Spirits obtained by distilling grape
5 Grape wines, sparkling 255.8 22.49% 5 59.0 -10%
wine, grape marc
Spirits obtained by distilling grape
6 121.3 153.27% 6 Alcoholic liqueurs 48.8 5%
wine, grape marc
Beverage waters, sweetened or Non-alcoholic beverages except
7 19.9 24.73% 7 36.0 68%
flavoured fruit, veg juices
Grape wines , fortified wine or
8 Whiskies 19.6 -25.36% 8 33.4 38%
must, pack < 2l
Non-alcoholic beverages , except fruit,
9 18.2 34.31% 9 Liqueurs and cordials 30.3 -24%
veg juices
10 Alcoholic liqueurs 17.7 77.75% 10 Grape wines, sparkling 26.6 15%
TOTAL EXPORTS 6 973.5 9.43% TOTAL IMPORTS 2711.0 16%
Source: Quantec, 2014

The graph below shows the Western Cape’s export destinations by continent. In 2012, Europe was the Western
Cape’s largest export destination commanding 60% of provincial beverage exports. Asia and Oceania were the
province’s fourth and fifth placed export destination, but exports to these two continents showed the strongest
increase in demand with Western Cape beverage imports growing in excess of 40% in 2013

WESTERN CAPE CONTINENTAL EXPORTS, 2013


12
4500 70%

4000
60%
3500
50%
3000
Value(ZARm)

2500 40% %

2000 30%

1500
20%
1000
10%
500

0 0%
Europe Africa Americas Asia Oceania
% Growth 2012-2013 4,21% 5,09% 19,85% 46,96% 47,18%
Value (ZARm) 4166,0 1163,8 972,4 597,8 100,9
% Share 59,51% 16,62% 13,89% 8,54% 1,44%

Source: Quantec, 2014


3. Foreign Direct Investment (FDI)

3.1 Global FDI

Between January 2003 and January 2014, a total of 1,232 FDI projects were recorded into the beverages sector,
equating to a 0.7% share of global FDI. These projects represent a total capital investment of ZAR447.19bn. During
the period, a total of 180 057 jobs were created.

GLOBAL FDI OF THE BEVERAGES SECTOR, 2003-JANUARY 2014

120 000 160

140
100 000
120
80 000
100
Value (ZARm)

Projects
60 000 80

60
40 000
40
20 000
20

0 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Capex (ZARm) 35 501 28 311 22 135 29 009 34 885 59 326 95 544 36 285 36 368 34 261 31 976 3 592
Projects 113 112 69 98 109 148 142 102 115 120 94 10
13
Source: FDI Intelligence, 2014

The United States was the largest investor into the beverages sector, the world largest economy invested into 361
projects, this equated to ZAR179.2bn in capital expenditure. The United Kingdom (166 projects and ZAR64.5bn
capex) and the Netherlands (83 projects and ZAR36bn capex) were the second and third largest global investors
respectively. The beverages sector received most of its investment from European nations.

SOURCE MARKETS FOR GLOBA FDI INTO BEVERAGES JAN 2003-JANUARY 2014
DESTINATION % CAPEX % %
RANK PROJECTS COMPANIES
COUNTRY PROJECTS (ZARm) CAPEX COMPANIES
1 United States 361 29.30% 179 231.9 40.08% 91 17.57%
2 United Kingdom 166 13.47% 64 835.9 14.50% 61 11.78%
3 Netherlands 83 6.74% 35 511.9 7.94% 26 5.02%
4 Denmark 68 5.52% 20 207.3 4.52% 19 3.67%
5 France 63 5.11% 13 527.4 3.02% 32 6.18%
6 Japan 45 3.65% 9 734.1 2.18% 27 5.21%
7 Belgium 39 3.17% 11 308.8 2.53% 12 2.32%
8 Switzerland 28 2.27% 8 611.6 1.93% 12 2.32%
9 Germany 26 2.11% 5 001.0 1.12% 18 3.47%
10 Spain 26 2.11% 6 422.7 1.44% 15 2.90%
Other Countries 327 26.54% 92 800.8 20.75% 205 39.58%
TOTAL 1232 100.00% 447 193.4 100.00% 518 100.00%
Source: FDI Intelligence, 2014
Germany was the largest recipient for investment into the beverages sector receiving 82 projects from 78
companies. Although the United States was the second largest destination for beverage investment projects it
received the most capital expenditure (ZAR11.2bn). BRICS countries, Russia, India and Brazil were amongst the
top investment destinations for beverages.

DESTINATION MARKETS FOR FDI INTO THE BEVERAGES SECTOR, JANUARY 2004 - JANUARY 2014
% CAPEX %
RANK DESTINATION COUNTRY PROJECTS % CAPEX COMPANIES
PROJECTS (ZARm) COMPANIES
1 Germany 82 32.41% 2811.3 6.66% 78 33.77%
2 United States 26 10.28% 11219.6 26.56% 24 10.39%
3 India 17 6.72% 4486 10.62% 15 6.49%
4 Brazil 14 5.53% 2 817 6.67% 14 6.06%
5 Poland 12 4.74% 3152.7 7.46% 6 2.60%
6 Taiwan 9 3.56% 491.8 1.16% 7 3.03%
7 UAE 9 3.56% 659.6 1.56% 9 3.90%
8 Russia 8 3.16% 4034.7 9.55% 7 3.03%
9 United Kingdom 8 3.16% 519.1 1.23% 8 3.46%
10 Indonesia 5 1.98% 2546.8 6.03% 5 2.16%
Other Countries 63 24.90% 9500.3 22.49% 58 25.11%
TOTAL 253 100.00% 42 239 100.00% 231 100.00%
Source: FDI Intelligence, 2014

The figure below shows investment into the beverage sector broken down into subsectors, from January 2003 to
January 2014. Soft drinks & ice as well as breweries & distilleries received the lion’s share of investment. This
investment trend is in line with the global sales figures as the beverage that received the most sales are the ones
receiving the most investment.
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INWARD FDI INTO BEVERAGES SUBSECTOR, 2003-JANUARY 2014

60%

50%

40%
Percentage

30%

20%

10%

0%
%Projects Capex
Soft drinks & ice 46,27% 53,35%
Breweries & distilleries 42,05% 40,55%
Wineries 9,33% 4,39%
Food & Beverage Stores (Beverages) 1,87% 1,33%
Other Beverages 0,49% 0,39%

Source: FDI Intelligence, 2014


The table below lists the companies making the most investments within the beverages sector by number of
projects. Soft drink giant Coca-Cola was the largest investor within the sector with alcohol companies also featuring
as prominent investors.

COMPANIES INVESTING INTO THE BEVERAGES SECTOR , JAN 2003- JANUARY 2014

RANK INVESTING COMPANY PROJECTS CAPEX (ZARm)

1 Coca-Cola 100 86 707.9

2 PepsiCo 47 21 401.7

3 Heineken 36 22 637.5

4 Carlsberg 25 10 565.7

5 SABMiller 23 11 442.7

6 Coca-Cola Amatil (CCA) 20 9 834.2

7 Diageo 19 15 656.0

8 Asia Pacific Breweries 15 4 033.0

9 Baltika Brewery 15 2 295.5

10 Anheuser-Busch InBev (ABInBev) 13 3 876.0

TOTAL 253 42 238.0


Source: FDI Intelligence, 2014

3.2 South African investment

3.2.1 Inward investment

Between January 2003 and January 2014, a total of 8 FDI projects were recorded into South Africa’s beverage
industry. These projects represent a total capital investment of ZAR4.37bn. During the period, a total of 843 jobs
15
were created. The largest investment into the South African beverages sector was by beer giant Heineken worth
ZAR3.2bn in 2008, this was the largest of the two investments from the Netherlands. The United States was the
largest project investor with Gauteng receiving the most beverage projects.

The Western Cape received one beverage investment into the winery subsector worth ZAR157.1m in 2012, this
investment created 23 jobs.

FDI INTO SOUTH AFRICA'S BEVERAGE SECTOR, JANUARY 2003- JANUARY 2014
INVESTING SOURCE DESTINATION DESTINATION CAPEX
DATE SUB-SECTOR INDUSTRY ACTIVITY JOBS
COMPANY COUNTRY STATE CITY (ZARm)
Feb Vina Concha y
Chile Western Cape Cape Town Wineries Sales, Marketing & Support 157.1 23
2012 Toro
July Coca-Cola
United States Gauteng Heidelberg Soft drinks & ice Manufacturing 281.9 214
2011 South Africa
Mar Breweries &
Heineken Netherlands Gauteng Not Specified Manufacturing 3 265.1 225
2008 distilleries
Mar Design, Development &
Coca-Cola United States Gauteng Midrand Soft drinks & ice 49.6 18
2008 Testing
Mar Breweries &
Heineken Netherlands Not Specified Not Specified Manufacturing 281.9 214
2008 distilleries
Feb
Lonrho Springs UK Gauteng Johannesburg Soft drinks & ice Manufacturing 43.8 22
2008
Sep
Coca-Cola United States Gauteng Johannesburg Soft drinks & ice Headquarters 162.8 65
2006
Feb
Bromor Foods UK Free State Roodekop Soft drinks & ice Manufacturing 124.0 62
2003
Source: FDI Intelligence, 2014
3.2.2 Outward investment

Between January 2003 and January 2014, a total of 6 FDI projects were from South Africa into the beverages
sector. These projects represent a total capital investment of ZAR705.9m. During the period, a total of 383 jobs
were created.

Three of the projects were from the Western Cape. The Lourennsford Wines investment (ZAR329m) into India was
the largest outward beverage investment to date.

OUTWARD FDI FROM SOUTH AFRICA INTO THE BEVERAGES SECTOR, JANUARY 2003- JANUARY 2014
DESTINATION
DATE INVESTING COMPANY SOURCE STATE SUB-SECTOR INDUSTRY ACTIVITY CAPEX JOBS
COUNTRY
Feb 2011 First National Choice Not Specified Mozambique Soft drinks & ice Manufacturing 49.6 25
Logistics, Distribution &
Jul 2008 Bright World Western Cape Hong Kong Wineries 290.1 124
Transportation
Logistics, Distribution &
Mar 2006 Distell Group Western Cape Namibia Wineries 12.4 6
Transportation
Feb 2005 Lourensford Wines Western Cape India Wineries Manufacturing 329.0 221
Specialist Mechanical
Jun 2003 Not Specified UAE Soft drinks & ice Manufacturing 24.8 7
Engineers (SME)
Source: FDI Intelligence, 2014

For more information on this publication and other Wesgro publications please contact research@wesgro.co.za. For more
publications like this visit the Wesgro publications portal on our website at http://wesgro.co.za/publications

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