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meat
White meat consumption has grown with increases in per capita income and growth of the middle class

White meat consumption has grown with increases in per capita income and growth of the middle class

White meat consumption has grown with increases in per capita income and growth of the middle class

  • South Africa has experienced rapid growth of middle-to-upper-class citizens fuelled by the parallel increase in disposable income of this socio-economic group
  • The GDP per capita of South Africa has grown by 54% in real terms from R45 580 in 1981 to R70 184 in 2013
  • As the poor emerge from poverty and the emerging middle class consumers are able to afford more protein in their diets, chicken, being the most affordable and versatile, has emerged as the meat of choice for this burgeoning population group
  • The result has been growth in white meat per capita consumption ahead of red meat coupled with added benefits of being easy to produce and with less cultural constraints than pork
  • White meat consumption per capita has grown by 223% from 11,93 kg/capita in 1981 to 38,5 kg/capita in 2014
  • Consumption of white meat has also been fuelled by the growth of QSRs like KFC and to an extent, people trading down for a cheaper source of protein
  • Red meat, being more expensive, is growing at a slower pace
  • Pork and sheep meat i.e. Lamb (the most expensive of all red meat) and mutton consumption have remained fairly flat while beef consumption has grown since 2001
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South African retailers have maintained flat margins on lamb and seen declining margins on beef

South African retailers have maintained flat margins on lamb and seen declining margins on beef

  • Beef producers’ share of retail prices has increased from 43% to 45% from 2000 to 2013 while lamb producers’ share has decreased from 55% to 53%
  • Lamb prices have escalated above other meat prices as producers have passed on supplier increases
    • Retailers have been unwilling to cushion these increases
  • Retailers have cushioned an increase in beef producer prices and taken smaller margins
    • Retail prices of beef have risen at a slower rate than producer prices
  • Beef consumption is growing with the rise of the middle class while lamb consumption is declining
  • Demand for beef is higher than lamb due to affordability
    • Retailers are willing to take less margin on beef in order to maintain foot traffic through their stores
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Global Advisors | Quantified Strategy Consulting