South African society continues to exist as a dichotomy. Palatial houses in acres of manicured gardens rub shoulders with shanty towns. BMWs and Land Rovers share the roads (potholed or well-maintained) with clapped-out minibuses ferrying dozens of passengers to work. Legislation, considered to be of the best calibre in the world, is powerless without the resources to enforce the laws.
The food industry is no different. On one hand, many technical skills and industrial manufacturing facilities are world-class: European and American trends predominate in terms of new product development (NPD) and food safety is non-negotiable. ‘First world’ consumers are becoming more demanding and retailers wield a boisterous, sometimes ruthless, power to determine what goes on the shelf.
However, at the other end of the spectrum, more than 75% of South Africans live in poverty, making less than US$5,000 a year to support their families. Close to 50% of families survive on less than $2 a day. As such, the informal sector thrives in South Africa. With a significant percentage of the urban population living in shanty towns, one hot meal a day (often a cooked maize meal) is often considered sufficient.
South African food manufacturers supplying the five main retailers in South Africa are forced to maintain high-quality standards. While HACCP isn’t compulsory (except in ground nut production due to the threat of mycotoxins), it has become a given.
Currently, each retailer conducts its own audits according to its own specified systems – creating significant pressure on production staff and management, as every couple of weeks another auditing team arrives. To improve matters, the Food Safety Initiative (FSI), part of the Consumer Goods Council of South Africa, is in the process of developing a single food safety audit for South Africa. It has the buy-in of all the major retailers.
With such a small formal market, the primary goal of many local manufacturers is to export. As such, the British Retail Consortium (BRC) standard (and ISO 22 000) are becoming firm favourites to enable these companies to operate in the global arena.
Adherence to a reputable food safety system with adequate traceability takes on even greater importance when considering the Consumer Protection Act (CPA), which was signed into law in April 2009. The CPA allows for a consumer harmed by unsafe goods (or even faulty labelling) to sue almost any person involved in getting that product to market, irrespective of whether that person was negligent. No one yet knows how litigious the South African consumer may yet become. (The Act will come into effect in October 2010.)
New labelling and advertising foodstuff regulations were published in South Africa on 1 March 2010, setting the tone for health claims and on-pack nutritional content. While there had been much debate on this topic over many years, nearly all labels in SA will now have to change over the next year. The label laws have been divided into two phases, with the second phase focusing on more contentious issues such as nutrient profiling and health claims.
Phase one sets out guidelines for things such as comparative claims, quantitative ingredients declaration (QUID), endorsements and nutritional information.
Local food industry expert and chair of the IUFoST local organising committee, Nigel Sunley, says that including all required information in a user-friendly format on-pack is going to be difficult. Some surprises in the regulations include that all food (not only chilled and frozen) will now need to carry storage instructions for before and after opening, and the new regulations only allow for the use of the word ‘flavours/ing’ or ‘flavourant’ and ‘colourant’ irrespective of the type of flavour or colourant being used. This eliminates any marketing advantage to be gained from ‘natural’ additives.
Sunley believes that enforcement will be a problem, and self-policing by the industry will be critical to ensure compliance.
The power of the retailer has also grown significantly as competition increases and private label products become more popular. Previously, no-name brands (as they were called) were seen as inferior. Now, most of the retailers have introduced high-quality private labels across many categories that can compete well with branded goods and are given shelf space.
Woolworths sells mostly own-brand goods and is renowned for maintaining exceptionally high levels of quality. To counteract the perception that it only sells upmarket food at upmarket prices, it has recently launched a lower priced house brand called Essentials.
The retailer is also extremely active in new product development and makes sure it subscribes to key trends emanating from around the world, such as removing azo dyes and aspartame from all its own-brand products, as well as reducing salt and including more natural flavours.
Woolworths also pays particular attention to its impact on the environment and is a trailblazer in terms of ‘green’ issues in the food industry. The ‘Farming for the future’ initiative, for example, introduced a model for sustainable farming, which comes between that of organic and traditional commercial farming methods and guarantees predictable yields. By 2012, all of Woolworths’ fresh produce suppliers will need to be compliant.
Interestingly, Woolworths supports the single food safety audit only for the branded goods it carries and not for its house brand.
Regulation and legislation of the industry makes no difference to those who worry about when their next meal will materialise. For this sector, fruits, vegetables and snacks are sold individually on the side of the road or in makeshift markets.
Food safety and sell-by dates are often nonexistent, and food is consumed on the day it’s bought as refrigeration isn’t available.
Ingredient suppliers supplying the informal market are doing extremely well and often make the choice to supply manufacturers (who service the informal market) based on the sheer volumes (and profit) rather than reputable food safety systems.
Street food vending (SFV) offers a source of inexpensive, convenient and nutritious food and also provides a major source of income to the informal sector. In addition, it offers a chance for self-employment and to develop business skills with low capital investment.
SFV is considered to be high risk because of the lack of basic infrastructure, services and difficulties in regulation. While there are obviously food safety fears, several studies over the years have shown relatively low microbiological counts and low incidences of pathogens (and, in the case of salmonella, a total absence).
South Africa is blessed with rich mineral and agricultural resources. The diversity of climate results in a wide variety of crops being grown, which in turn leads to a variety of secondary food processing industries, large and small.
South African wines, fruits (especially citrus, avocados and grapes), ostrich meat and sugar have unique and premium qualities that place them at the centre of global demand. Fruit processing, especially, has made a name for itself internationally. This includes canned and frozen fruits as well as aseptically packed fruit juices. Arguably, no company is better known in this space than the Ceres Beverage Company, part of Pioneer Foods. Its range of juices (incorporating Liqui-Fruit, Ceres and Fruitree brands locally) accounts for close to 50% of the total long-life juice category in South Africa. The products are also exported to more than 80 countries.
Macadamia nut growing and processing is a burgeoning industry too, and South Africa is now the world’s third largest producer. Since most of the nuts are destined for export, these farmers and their associated processing facilities adhere to Global Gap and BRC standards. Golden Macadamias in Nelspruit, Mpumalanga, boasts one of the most advanced macadamia nut processing facilities in the world.
Liberated by the advent of democracy, the South African wine industry has gone from strength to strength, with exports growing by 335% between 1995 and 2007. It’s now the 9th largest wine producer in the world. Currently, more than 3,999 farmers cultivate some 101,957 hectares of land under vines. Some 256,908 people are employed directly and indirectly in the wine industry. The estimated annual harvest in 2009 amounted to 1,330,357 tonnes (1,015,4m litres), of which 77% was used for wine. The South African wine industry is backed by a state body, the Nietvoorbij Institute for Viticulture and Oenology, a leader in research with one of the most modern experimental wineries in the world and several experimental farms. All wines for export must undergo extensive taste and chemical analysis tests before they’re granted an export licence.
Once known as the poor man’s tea, rooibos, only grown in a small part of the Western Cape, is experiencing strong local and international growth. The indigenous Rooibos plant, Aspalathus linearis, is green when harvested and turns red during the fermenting process (hence its name, ‘red bush’). The growing popularity of this herbal tea can be attributed to the absence of caffeine, its low tannin content, and its rich source of nutrients, including a powerful antioxidant SOD (super oxide dismutase).
Germany, the US and the Netherlands are the major export markets for the indigenous tea. Value-added products from rooibos are on the rise. Red Espresso, the world’s first tea espresso-based drink, has taken the local market by storm (red cappuccino being a firm favourite) and is making steady inroads overseas.
Baobab achieved Gras status last year and is starting to appear slowly on ingredient lists. One of the most exciting new products so far has been the recent launch of Pepsi Baobab in Japan.
Grant Momplé of Afriplex, one of two processors of baobab locally, believes that a lack of reference point in terms of taste may either help or hinder product uptake: “NPD specialists can introduce the ‘taste’ of baobab that will capture the hearts of consumers,” he says, “but it can’t disappoint customer expectations because there aren’t any. Consumers may, however, be reluctant to try it.”
Uptake in South Africa has also been slow, despite the incentive of the Fifa World Cup as a way to showcase uniquely South African ingredients. Beverages seem to have captured most of baobab NPD. In the middle of May, however, Woolworths launched a range of yogurts sporting a variety of indigenous ingredients, including baobab.
South Africa faces many challenges. The government’s Green Drop report admits that 55% of its wastewater plants need improvement, to the tune of R23bn. Electricity outages in 2008 due to a lack of capacity have precipitated an annual price increase of between 24.8% and 25.9% for the next three years to enable ‘part-nationalised’ Eskom to build power stations, which is likely to impact on operating costs.
Infrastructure, especially transport infrastructure, needs attention. Food security is also a contentious topic in a country where poverty is rife, especially in light of the upcoming land redistribution plan. How this is going to be tackled to transfer skills isn’t yet known.
Despite these fearsome challenges, the South African food industry remains innovative and resilient. It has some of the brightest minds and some of the best raw materials to work with.
Juliette Hillmann is editor of South African Food Review.
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