Thirsty Thoughts White Milk Annual Market Quantification September 2011

Setting the scene 2 The white milk industry in South Africa is one of the largest in Africa. In recent years, the number of milk producers has declined as the cost of producing milk are not covered by the profits generated through sales. The input costs of dairy farming are substantial and carried by the farmer. Some provinces have noted considerable declines in dairy farming since 1997 as this occupation is very sensitive to influencing factors such as drought, weather, economic issues, disease and grazing land, to name a few. Unprocessed milk is also sold within the milk market however this only accounts for roughly 3% that is sold for profit and a larger portion is retained by the farmer for feeding other animals on the farm and for own consumption. Dominant packaging types and sizes for white milk include the PET 2L, UHT 1L and sachets. Major players within this industry include, Clover, Parmalat, DairyBelle, Montic and Woodlands Dairy.

2010 Category Breakdown 3 *Extended Shelf Life

2010 Category Distribution 4

Annual Growth Rates 5

White milk recovers lost volumes 6 White milk in South Africa saw some growth during 2010, gaining back 2.9% of the volumes lost during the recession of 2009, which saw a decline of 2.4%. During the past five years, there has been clear cyclical trends in volume growth in one year matched by a decline in the next. Growth was seen in all channels, with on-consumption at 1.9% increase during 2010, followed by wholesale at 1.7%. Although the growth margins are low compared with the overall milk category growth, white milk remains a stable market. Eastern Cape and Mpumalanga saw decline, the only two regions to do so during the base year. The volume erosion in these two regions was made up by other provinces, such as KwaZulu-Natal and Free State, where these saw growth rates in the double digits. Rigid plastic and long life cartons are the two most widely used packaging types for milk in South Africa, holding quantities into the hundreds of million litres. Short life cartons are disappearing from the market, although they are estimated to show limited growth in 2011 through to Tetrapak cartons maintain popularity within some demographics who consume short life milk, and this helps maintain the pack format share.

Thirsty Thoughts White Milk For more information, contact: Jan Wegelin Research Manager Tel: (011) Mobile: