A South African consumer goods and milling company, RCL Foods, completed the expansion of their pet food plant, reported MoneyWeb. RCL’s pet food plant expansion cost ZAR123 million (US$10.3 million).
RCL’s pet food plant is located in Randfontein, west of Johannesburg. The expansion will boost its pet food production to 12,000 metric tons (13,227 US tons) per month from 7,000 metric tons (7,716 US tons).
The company hopes that increasing their South African pet food production will counter risks to their poultry business from inexpensive imports and drought. South African government officials declared the nation’s drought a national disaster on March 13, as Cape Town prepares for the day when citizens’ taps may run dry in late August. The drought has raised the price of inputs to poultry sector, such as corn.
South African pet food market overview
South Africa’s economic climate has certainly presented struggles for the pet industry, reported Petfood Industry. The highest unemployment levels since the 2008–09 recession (26.7 percent in the first quarter of 2016), high inflation (nearly 7 percent) due to a weak rand and the worst drought in 23 years, and weaker commodity prices have converged to decrease overall consumer spending, including in the African pet food market. The impact has been felt significantly in the premium segment, where higher-end brands such as Hill’s, Eukanuba, Iams and Royal Canin have felt the effects of the weakening exchange rate, according to Euromonitor International. Even mid-priced brands, such as Whiskas and Friskies, have felt the crunch.
But there are opportunities in the market, as well. According to Euromonitor, due to consumer demand for products in a variety of price points as well as product offerings, there is room for both international and local companies to compete. Global player Nestlé sold the South African branch of its pet food business to local manufacturer Martin & Martin in 2016, including its Purina brands and a manufacturing facility in N’dabeni. Mars continues to be a strong market presence with its mid-priced dog and cat food brands in spite of the challenges, and the local Foodcorp brands offer quality as well as affordability.
