SOUTH AFRICAN RTD/ICED TEA

INDUSTRY LANDSCAPE REPORT

COMPILED: JULY 2018

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REPORT OVERVIEW

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The South African Tea Industry Landscape Report (69 pages) provides a dynamic synthesis of industry research, examining the local

and global RTD/Iced Tea Industry from a uniquely holistic perspective, with detailed insights into the entire value chain – from

manufacturing to retailing, market size trends, industry trends, industry drivers & challenges, competitor and pricing analysis.

For the Global RTD/Iced Tea Industry Section:

What are the current market dynamics (market environment, key markets) of the Global RTD/Iced Tea Industry?

What are the RTD/Iced Tea Industry trends, drivers, and challenges?

For the South African RTD/Iced Tea Industry Section:

What are the current market dynamics (consumption, market size, environment, volume, sustainability) of the SA RTD/Iced Tea

Industry?

Who are the key manufacturing players in the SA RTD/Iced Tea Industry?

What are the South African Industry trends, drivers, and challenges?

For the South African RTD/Iced Tea Retail and Pricing Analysis Section:

Who are the key retail players (retail outlets, convenience stores and supermarkets) in the SA RTD/Iced Tea Industries?

What are the prices of the most frequently purchased RTD/Iced Tea products across SA retail outlets?

SOME KEY QUESTIONS THE REPORT WILL HELP YOU TO ANSWER:

SCREENSHOTS FROM REPORT

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69 page report filled with detailed charts, graphs, tables and insights

❑ Lemon and peach are currently still the most popular flavours of RTD

Teas, but manufacturers are becoming more creative with their flavour

combinations. STeaz, for example, introduced passion fruit and dragon

fruit flavoured RTD Teas.

❑ As shown in the graph below, China was the largest RTD Tea market in

2017 with a retail value of US$ 14.4 billion, followed by Japan with a

retail value of US$ 13.4 billion.

14.4

13.4

6.8

1.4 1.3

0

2

4

6

8

10

12

14

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China Japan USA Indonesia Taiwan

TOP 5 RTD TEA MARKETS:2017 (IN US$ BILLION)

7Source: Beverage; BWire; WTNews; TechNavio; Nutra; Euromonitor: Euromonitor2; Grandview Image Source: Pixabay 1; Pixabay 2;

Between 2011 and 2016 the global Ready-To-Drink (RTD)

Tea market has increased by 40% to reach 37 billion litres

in 2016. According to Zenith Global, this growth is

expected to continue and the market will reach 45 billion

litres by 2021.

❑ The Ready-To-Drink market is segmented by product type into

Ready-to-Drink Bottled or Canned Tea, Coffee, Flavoured Milk,

and Packaged Fruit Juices. The global Ready-To-Drink market is

expected to grow at a CAGR of 6.1% during the period 2018 to

2023.

❑ Globally, the growth of RTD Tea has far exceeded that of soda

over the last five years. Consumers consider RTD Tea to be a

good alternative to carbonated drinks and these products are

gaining popularity due to busier lifestyles and rising preferences

for convenience orientated beverages.

❑ Although RTD Tea is one of the fastest growing beverage

categories globally, it is still lagging behind bottled water,

carbonated drinks and juice in terms of total volume and value.

❑ However, as consumers continue to move away from carbonated

drinks and juices, the growth potential for the product in both

established and new markets is increasing. The rising preference

for carbonated RTD Tea among consumers is also supporting the

growth of the segment.

SAMPLE FROM REPORT:GLOBAL INDUSTRY MARKET ENVIRONMENT

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RTD Tea Innovation

❑ Traditionally containing large amounts of sugar, manufacturers of

RTD Tea have been forced to alter the contents of their products

due to the South African sugar tax introduced in 2018.

❑ Therefore, manufacturers of RTD Tea have begun introducing

decreased sugar versions of popular RTD Tea beverages in order

to mitigate the rising costs associated with the Sugar tax.

❑ An example of this is the introduction of a version of Lipton RTD

Teas with 30% less sugar

❑ In addition to reducing sugar content, RTD Tea manufacturers are

also diversifying their products in terms of flavouring, packaging,

and marketing.

❑ This innovation is serving to drive RTD sales by enticing

consumers to continue purchasing these products.

Source: Euromonitor; Bos Brands; Lipton Ice Tea; Toni Glass Image Source: Leelalicious; ToniGlass; Lipton

RTD Tea Cocktails

❑ RTD Tea products have become the guinea pigs for experimenting

with a variety of flavours, not only as normal RTD Tea, but also as

basis for cocktails.

❑ Adding a twist to regular RTD Tea products has been capitalised

on by RTD Tea brands who are now providing recipes on their

websites with details on how to use RTD Tea in cocktails which

can be made at home.

❑ An example of this is BOS RTD Tea providing cocktail recipes for

all their available RTD Tea products. Lipton Ice Tea has also

joined this trend, as they also now provide recipes allowing

consumers to add a twist to their RTD Teas.

❑ This growing trend is likely to drive the RTD Tea market through

increased RTD Tea usage in different beverage forms.

SAMPLE FROM REPORT:SA INDUSTRY DRIVERS

CHANNEL DISTRIBUTION

(2012 AND 2017)

BY OUTLET TYPE

Revenue Share (%)

(2012 and 2017)

Revenue Share

(in ZAR million)

(2012 and 2017)

Store-Based Retailing 89.3% 89.5% 42.3 59.4

Grocery Retailers 85.6% 85.6% 40.5 56.8

Modern Grocery Retailers 81.7% 82.4% 38.7 54.7

Convenience Stores 15.3% 16.5% 7.2 11.0

Discounters 1.4% 1.2% 0.6 0.8

Forecourt Retailers 7.8% 8.0% 3.7 5.3

Hypermarkets 8.9% 6.6% 4.2 4.4

Supermarkets 48.4% 50.1% 22.9 33.3

Traditional Grocery Retailers 3.9% 3.2% 1.8 2.1

Food/drink/tobacco specialists 1.8% 1.0% 0.8 0.7

Independent Small Grocers 0.8% 0.7% 0.4 0.5

Other Grocery Retailers 1.3% 1.5% 0.6 1.0

Non-Grocery Specialists 3.8% 3.9% 1.8 2.6

Non-Store Retailing 0.2% 0.1% 0.1 0.1

Vending 0.2% 0.1% 0.1 0.1

On-trade 10.5% 10.4% 5.0 6.9

82.4%

10.4%

3.9%3.2% 0.1%

CHANNEL DISTRIBUTION FOR RTD TEA PRODUCTS: 2017

Modern Grocery Retailers

On-trade

Non-Grocery Specialists

Traditional Grocery Retailers

Vending

SAMPLE FROM REPORT:SA MARKET ENVIRONMENT: RTD TEA DISTRIBUTION CHANNELS

In 2017, 82.4% of all RTD Tea was distributed through

Modern Grocery Retailers, while 10.4% was distributed

through On-Trade, as illustrated in the graph below.

Furthermore, 3.9% of RTD Tea was distributed through

Non-Grocery Specialists, 3.2% through Traditional

Grocery Retailers and 0.1% through Vending.

❑ The table below illustrates the distribution of RTD Tea according to

outlet types for 2012 and 2017.

❑ In 2017, 50.1% of RTD Tea was distributed via Supermarkets (an

increase from 48.4% in 2012), while 16.5% was distributed via

Convenience Stores (an increase from 15.3% in 2012).

Source: Euromonitor Image Source: Onlinewebfonts; Icons8; Simple Icon; The NP; iStock Photo

77

114

482

644

762

1,205

0 200 400 600 800 1000 1200 1400

Olive Oil and Soya

Ingredients

Fermented Products and Desserts

Value-Added Dairy Fluids

Concentrated Products

Non-Alcoholic Beverages

CLOVER REVENUE FROM PRODUCT SALES BY SEGMENT FOR THE SIX MONTHS ENDED 31 DECEMBER

2017 (IN ZAR MILLION)

❑ In addition, the product Group sales for Non-Alcoholic Beverages

decreased by 2.5%, despite the overall volume and market growth

increase of 8% during the same period.

❑ Furthermore, market share for Clover’s RTD Tea decreased from

17.5% in the 12 months ending December 2016 to 13.2% in the 12

month ending December 2017.

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Source: Clover Unaudited Interim Results for the six months ended 31 December 2017 Image Source: Icon Archive1; Icon Archive2; Icon Finder; Flat Icon; Parker’s; Olive; Sharebox

According to Clover’s Unaudited Interim Results for the

six months ending 31 December 2017, Clover reported a

decrease in revenue of 17.8% to R4.2 billion, compared to

the same period in 2016 (R5.1 billion).

❑ The Group’s gross profit margin increased by 14.8% during the

same period to reach R370.4 million, while the group’s operating

margin increased from 6.3% to 8.8% due to volume growth and

the implementation of efficiency improvement initiatives.

❑ Revenue from the sale of products decreased by 31.5% from R4.8

billion for the six months ended 31 December 2016 to R3.3 billion

for the six months ended 31 December 2017 as a result of the

formation of Dairy Farmers South Africa (DFSA).

❑ Clover is segmented by Non-alcoholic Beverages, Concentrated

Products, Value-Added Dairy Fluids, Fermented Products and

Desserts, Ingredients, and Olive Oil and Soya. The combined

revenue for these segments increased by 9.2%.The adjacent

graph illustrates the revenue from product sales for each segment.

❑ The Non-Alcoholic Beverages segment includes the Manhattan

Ice Tea brand. This particular segment experienced a decrease in

revenue of 1.1%. The revenue for the segment amounted to R1.2

billion for the six months ended 31 December 2017. The decrease

in revenue was due to a decline of water and RTD Tea product

volumes.

SAMPLE FROM REPORT:SA RTD TEA MANUFACTURING OVERVIEW: CLOVER

SAMPLE FROM REPORT:RTD TEA PRICING ANALYSIS

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BRAND AND SIZE

BOS Ice Tea Peach

200ml R8.49 R8.56 N/A N/A N/A N/A N/A N/A

330ml R12.49 R13.10 N/A R13.55 N/A N/A R11.31 R14.99

1L R23.49 R23.99 N/A R24.06 R24.99 N/A R22.25 N/A

3L R52.99 R54.99 N/A R56.78 N/A N/AR51.45

(Special)R62.99

Fuze Tea Peach

330ml R10.99 R10.99 N/A N/A N/A N/A N/A R10.00

500ml R11.99 R12.99 R11.99 N/A R11.99 R13.49 R8.83 R11.50

1.5L R22.99 R23.99 R22.99 N/A R25.99 R24.99 N/A R22.19

House Brand

(Black Ice Tea)

200ml N/A N/A N/A R9.99 N/A N/A N/A N/A

500ml N/A N/A N/A R15.13 N/A N/A N/A N/A

1L N/A N/A N/A R21.99 N/A N/A N/A N/A

1.5L N/A N/A N/A R34.99 N/A N/A N/A N/A

House Brand

(Rooibos Ice Tea)

200ml N/A N/A N/A R9.99 N/A N/A N/A N/A

330ml N/A N/A N/A N/A N/A N/A N/A N/A

500ml N/A N/A N/A R15.13 N/A N/A N/A N/A

1.5L N/A N/A N/A R34.99 N/A N/A N/A N/A

This pricing analysis was conducted at retail stores and supermarkets during w/c 18 June 2018

1. Executive Summary (3 pages):

1.1 Global Industry Snapshot

1.2 South African Industry Snapshot

1.3 Industry Drivers and Restraints

TABLE OF CONTENTS

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2. Global RTD Tea Industry (7 pages):

2.1.1 Global Industry Overview: TOP 5 RTD TEA MARKETS: 2017 (IN US$ BILLION) (Graph)

2.1.2 Global Industry Market Environment

2.1.3 Global Key Markets: Asia Pacific

2.1.4 Global Key Markets: North America and Western Europe

2.1.5 Global Industry Trends and Drivers

2.1.6 Global Industry Challenges

TABLE OF CONTENTS

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3. South African RTD Tea Industry (27 pages)

3.1 South African RTD Tea Industry Overview (15 pages)

3.1.1 South African Industry Market: SA RTD Tea Market and Distribution Definitions

3.1.2 South African Industry Overview: RTD Tea: TOTAL RTD TEA SALES IN SOUTH AFRICA: 2012-2017 (IN ZAR MILLION) (Graph)

3.1.3 South African Consumption: RTD Tea

3.1.4 South African Industry Market Size: RTD Tea Market (2012-2017): VALUE OF SA RTD TEA MARKET: 2012-2017 (IN ZAR MILLION); SA TEA MARKET CAGR AND

TOTAL GROWTH (IN PERCENTAGE) (Graph and Table)

3.1.5 South African Industry Market Size: RTD Tea Market (2012-2017: By Category): VALUE OF SA RTD TEA MARKET BY CATEGORY: 2012-2017 (IN ZAR MILLION)

(Graph)

3.1.6 South African Industry Market Size: RTD Tea Market (Forecast: 2018-2022*): VALUE OF SA RTD TEA MARKET: 2017 & 2022* (IN ZAR MILLION); SA RTD TEA

MARKET VALUE FORECAST BY CATEGORY (IN ZAR MILLION) (Graph and Table)

3.1.7 South African Industry Market Size: RTD Tea Market Volumes (2012-2022*): VOLUME OF SA RTD TEA MARKET: 2012-2022* (IN MILLION LITRES) (Table)

3.1.8 South African Market Environment: Top RTD Tea Companies: TOP RTD TEA COMPANIES IN SOUTH AFRICA: 2017 (REVENUE SHARE IN ZAR MILLION); TOP RTD TEA

COMPANIES: 2012 VS 2017 (IN REVENUE SHARE PERCENTAGE AND REVENUE SHARE IN ZAR MILLION) (Graph and Table)

3.1.9 South African Market Environment: Top RTD Tea Companies (Per Category): TOP RTD TEA COMPANIES (PER CATEGORY) IN 2017 (IN MARKET SHARE

PERCENTAGE AND MARKET SHARE IN ZAR MILLION) (Table)

3.1.10 South African Market Environment: Top RTD Tea Brands: TOP RTD TEA BRANDS IN SOUTH AFRICA: 2017 (REVENUE SHARE IN ZAR MILLION); TOP RTD TEA

BRANDS: 2012 VS 2017 (IN REVENUE SHARE PERCENTAGE AND REVENUE SHARE IN ZAR MILLION) (Graph and Table)

3.1.11 South African Market Environment: Top RTD Tea Brands (Per Category): TOP 3 RTD TEA BRANDS (PER CATEGORY): 2017 (IN REVENUE SHARE PERCENTAGE AND

REVENUE SHARE IN ZAR MILLION) (Table)

3.1.12 South African Market Environment: RTD Tea Distribution Channels: CHANNEL DISTRIBUTION FOR RTD TEA PRODUCTS: 2017 (IN PERCENTAGE); CHANNEL

DISTRIBUTION (2012 AND 2017) BY OUTLET TYPE (Graph and Table)

TABLE OF CONTENTS

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3. South African Tea and RTD Tea Industry Continued (27 pages):

3.1 South African Tea Industry Overview Continued (15 pages)

3.1.13 South African Industry Trends

3.1.14 South African Industry Drivers

3.1.15 South African Industry Challenges

3.2 South African Tea Industry Sustainability (2 pages)

3.2.1 South African Industry Sustainability: Ethical Tea Partnership, Fairtrade International

3.2.2 South African Industry Sustainability: The Rainforest Alliance, UTZ

3.3 South African RTD Tea Manufacturing Overview (10 pages)

3.3.1 BOS Brands: Overview & RTD Tea Brands/Products

3.3.2 Clover: Overview: CLOVER REVENUE FROM PRODUCT SALES BY SEGMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 (IN ZAR MILLION) (Graph)

3.3.3 Clover: RTD Tea Brands/Products

3.3.4 Coca-Cola: Overview & RTD Tea Brands/Products

3.3.5 Pioneer Foods: Overview: PIONEER FOODS REVENUE BY SEGMENT FOR THE SIX MONTHS ENDED 31 MARCH 2018 (IN ZAR BILLION) (Graph)

3.3.6 Pioneer Foods: RTD Tea Brands/Products

3.3.7 South African Speciality Retailers

TABLE OF CONTENTS

4. South African RTD Tea Industry Retail Analysis (15 pages):

4.1 South African RTD Tea Retail Overview (8 pages)

4.1.1 SA Retail Overview

4.1.2 Checkers: Overview

4.1.3 Food Lover’s Market: Overview

4.1.4 Massmart: Overview: MASSMART DIVISIONAL SALES OPERATIONAL REVIEW FOR 53 WEEKS ENDED 31 DECEMBER 2017 (IN ZAR BILLION)

(Graph)

4.1.5 Pick n Pay: Overview: PICK N PAY GROSS PROFIT FOR 26 WEEKS ENDED 27 AUGUST 2017: 2016 VS 2017 (IN ZAR BILLION) (Graph)

4.1.6 Shoprite: Overview: TOTAL TURNOVER FOR 26 WEEKS ENDED 31 DECEMBER 2017 (IN ZAR BILLION) (2016 VS 2017) (Graph)

4.1.7 Spar: Overview: SPAR CAPITAL EXPENDITURE PER GEOGRAPHICAL SEGMENT: 2017 (IN ZAR MILLION) (Graph)

4.1.8 Woolworths: Overview: WOOLWORTHS TOTAL REVENUE CONTRIBUTION BY SEGMENT: 2017 (IN ZAR BILLION) (Graph)

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4. South African Tea Industry Retail Analysis Continued (15 pages):

4.2 South African Convenience Stores (5 pages)

4.2.1 Bonjour, La Boutique & Thrupps (TOTAL): Overview

4.2.2 BP Express & Pick n Pay Express (BP): Overview

4.2.3 FreshStop (Caltex): Overview

4.2.4 QuickShop & Woolworths Food (Engen): Overview

4.2.5 Sasol Delight (Sasol): Overview

4.2.6 Shell Select & Spar Express (Shell): Overview

4.3 RTD Tea Pricing Analysis (2 pages) (w/c 18 June 2018)

4.3.1 RTD Tea Pricing Analysis: BOS Ice Tea Peach; Fuse Tea Peach; House Brand (Black Ice Tea); House Brand (Rooibos Ice Tea); Lipton Ice Tea Peach; Lipton

Green Ice Tea; Lipton Ice Tea with Rooibos; Manhattan Black Ice Tea Peach; Manhattan Green Ice Tea Ruby Grapefruit and Strawberry; Oros Ice Tea Peach

Ready To Drink; Sir Fruit Brewed Ice Tea Peach – Comparative pricing at Checkers, Pick n Pay, Shoprite, Woolworths, Food Lover’s Market. Game, Makro, Spar

TABLE OF CONTENTS

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