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DAMAGES of about N$250 million in South Africa's sugar sector resulting from the devastating KwaZulu-Natal floods have had a ripple effect on the snacks and treats industry, a new report says.
The sugar confectionery industry in the country has already seen a 2% decline in sales volumes following sugar shortages, Anje du Plessis, senior research analyst for market research firm Euromonitor International, says.
South Africa's sugar growers are still recovering from N$223 million's worth of losses resulting from 2 516 hectares of cane field damaged when flooding wreaked havoc in KwaZulu-Natal.
The sugarcane crops on these fields, which required replanting, have suffered severe crop and root damage.
The damage caused to the sugar plantations means less sugar is produced locally, and it may push snack makers to import sugar for production, Du Plessis says.
“It is going to take time to replant the plantation and more time before the plantation becomes productive. This will increase the price consumers pay at the end of the day, because imports are more expensive,” she says.
The sugar confectionery segment was not the only sector affected by the floods, the report says.
Locally and globally, floods have also impacted potato chips, and manufacturers have warned of shortages in 2022, Euromonitor says.
Asked whether it expects to report any shortages this year, leading food and beverages company PepsiCo, which also makes Lays and Simba chips, declined to comment.
Du Plessis says potato chips sales volumes had dropped 7% in 2022.
As in many parts of the world, South African consumers, contending with high fuel and food costs, are buckling under financial pressure.
With consumer spending power waning, the snacks industry is negatively affected by increased rational spending, and shoppers sticking to tight budgets.
“Impulse purchases suffer because consumers are making fewer trips to the store. This means their purchases are more pre-planned,” Du Plessis says.
She says middle to high-income-earning consumers will look to buy bulk packages to share, while lower-income earners “will stick to smaller pack sizes because it is less money out of the pocket”.
The report also says consumers were making fewer trips to the shops, opting for monthly over weekly visits, leaving fewer opportunities for impulse snack purchases.
– Business Insider SA