Transcript Slide 1
Food Bites Prepared Custard Annual Market Quantification June 2011 Setting the scene • Prepared custard is a ready-made dessert product, manufactured for immediate consumption by consumers. • The category is traditionally sold in a foil lined carton and is UHT processed to guarantee longer shelf life. Some players also market a bottled variety, resembling the historical milk bottle pack format. • This market is dependent on raw material supply by the milk market, with lower potential volume growth when milk supply dwindles. Prepared custard is often regarded as lesser priority category for producers and therefore if milk stocks are in short supply, the raw material is channelled into more profitable lines. • The category volumes have seen pressure from difficult economic times, as consumers tend to exclude luxury items from their baskets and prepared custard being considered a non-essential item. Evidence of this is seen in the tapering off of annual category growth rates post-2006. • Historically, the pricing for this product as been pushed up by retailers and wholesalers, though in recent years this trend has abated. 2 2010 Category Distribution Foodservices Industrial 1.2% 0.3% Wholesale 14.9% Export 2.5% Retail 81.1% 3 Annual Growth Rates 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2001 2005 Volume Growth 2010 Annual Moving Average 4 Prepared custard growth tapers off • Historically, the prepared custard market saw good volume increases year on year, with the category growing steadily. However, in recent years the healthy growth rate has started to dwindle. While producers have attempted to prop the category volumes up through marketing drives, this has not been sufficient to bolster the category volumes to the growth levels seen previously. • It is believed that the recession seen within 2009 and spilling over into 2010 undermined prepared custard sales as consumers were forced to curtail spending on luxury goods in favour of essential items. • While there was some limited volume growth recorded for 2010 it should be borne in mind that there was a level of discounting for the period which served to reduce the average price and make category more appealing from an affordability perspective. • The majority of this product is channeled into the retail sector, which comprises over two thirds of the total market. Wholesale is the second largest channel within the prepared custard market, accounting for a 14.9% share of the overall volume. • Only conservative volume growth is anticipated for the short term. 5 Food Bites Prepared Custard For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za