The Groceries division manufactures, markets and sells a range of food and beverage products, of which cereals and long-life juices are the primary categories, to both local and international markets.

Business environment

Inflationary increases in raw materials and packaging, exacerbated by reduced spending power of consumers, had an adverse effect on the local market. Rand depreciation was the major contributor to raw and packaging material inflation. Cereals, long-life juice and ice tea achieved strong volume growth in the local market while the rest of the basket remained flat.

South Africa is one of a handful of major fruit-producing regions in the world and is well positioned to market a range of fruit-based products to the international retail, industrial and catering sectors. A substantial dried fruit crop on the back of the previous season’s bumper crop, coupled with favourable pricing conditions, led to value and volume growth in international markets.

The African market was buoyant with very good volume growth, specifically in the juice category.

Performance overview

The Groceries division delivered overall revenue growth of 15% through healthy volume growth in cereals, fruit and beverage (domestic and international). The Groceries merger of Bokomo Foods and Ceres Beverages resulted in overall synergies, which together with stringent cost management and conversion efficiencies, resulted in operating profit increasing by 36% to R736 million (2013: R543 million). Operating profit margins expanded from 8.8% to 10.4%.

Financial performance
Products

PRODUCT CATEGORIES: BOKOMO FOODS

PRODUCT CATEGORIES: BOKOMO FOODS

Financial performance

PRODUCT CATEGORIES: CERES BEVERAGES

PRODUCT CATEGORIES: CERES BEVERAGES

PRODUCTION FOOTPRINT

PRODUCTION FOOTPRINT

REVENUE CONTRIBUTION

REVENUE CONTRIBUTION

Brands

SUSTAINABILITY PROGRESS

Bokomo Foods

  • Installed systems to reduce electricity consumption.
  • Reduced water consumption by installing water efficiency systems.

Ceres Beverages

  • Water recovery pasteurisation systems to reduce water consumption.
  • Upgraded effluent treatment plant.
  • Lightweighting of plastic bottles.

Warehouses

  • Installed energy-saving lights with day/night switches to reduce electricity consumption.

More information on Pioneer Foods’ sustainability approach, performance and prospects can be found in the sustainability report.

INNOVATION

  • Oat-Bix: Ready-to-eat breakfast biscuits made from oats for the discerning consumer looking for a high-protein, oats-based breakfast cereal.
  • Oat pops: A ready-to-eat oats-based chocolate cereal for children.
  • Protein Oats: South Africa’s first whole grain, high-protein oats product, responding to high-end consumer preferences for hot breakfasts and protein-rich, high-fibre food.
  • Premiumising of Ceres fruit juices with new sophisticated packaging and the inclusion of fruit cells.
  • A new chocolate flavour to expand the popular Bokomo Corn Flakes range.
  • Fruitree Squash: A new orange flavour squash product was introduced to the market.

OUTLOOK

Prospects in the local market remain subdued while export conditions into various geographies continue to offer higher growth opportunities. Domestically, growth and share gains are an imperative while relentlessly targeting cost and efficiency opportunities.

Underperforming products are being assessed with the objective of honing the overall Groceries product portfolio. The optimisation of manufacturing plants, as well as the support provided by centralised logistics services, will enable further implementation of the corporate strategy.

Products