South African Food and Drink Producers Incurring Huge Losses Due to Power Crisis

DUBLIN, Ireland--(Business Wire)--
Research and Markets
(http://www.researchandmarkets.com/reports/c88928) has announced the
addition of South Africa Food and Drink Report Q2 2008 to their
offering.

The South Africa Food Drink Report provides independent forecasts
and competitive intelligence on South Africas food and drink industry.

Ongoing power cuts are continuing to plague South Africa, and are
having a major negative impact on the country's food and drink
producers. This current power crisis is due to underinvestment in the
country's power infrastructure at a time when economic growth has
accelerated. One of the nations leading brewers, Anglo-South African
SABMiller, has recently said that despite the inevitable negative
effect on sales, business in the country will continue as usual.
Although the company admitted that the ongoing power shortages are a
major problem, it was quick to point out that this is something it has
been dealing with for a year and a half already and that despite this,
its business in the country has continued.

Meanwhile, the country's dairy producers are threatening to sue
the state-run power company for damages of ZAR100mn (US$14mn) a month,
saying that the energy cuts are costing them as much as ZAR40mn a
month in direct costs, with the losses rising by as much as 250% when
indirect costs such as generators and falling milk yields are taken
into account. Dairy farmers say that since the start of this crisis,
milk production has dropped by 10% and they have been forced to spend
ZAR240mn (US$30.8mn) on back-up power generators.

Of even greater concern is the long-term impact these cuts will
have on growth and how this will damage the countrys current positive
image as a top investment destination, potentially limiting further
foreign direct investment inflows. As this crisis threatens to stretch
into the long term, seriously damaging South Africas economy and
lowering the countrys appeal to foreign investors, BMI may have to
revise its real GDP growth forecast of 4.18% per annum between 2008
and 2011.

Food consumption in South Africa, in both overall dollar terms and
in per capita terms, is set to increase considerably over the next
five years, with growth of 36.4% and 35.9 % forecast respectively to
2012. Mass grocery retail operators will play their part in fuelling
this growth by bringing a wider range of higher-value produce to a
wider consumer base, 24 hours a day, to cater to the needs of
increasingly demanding consumers. Yet the real driver behind this
growth will be the country's economic strength. Consumers are finding
themselves better off, thanks to a rise in employment opportunities,
higher wages and lower inflation. All of this has boosted consumer
confidence and encouraged spending on non essential items. However, in
order for the country to make the most of its long-term growth
potential, the current infrastructure crisis must be adequately
addressed.

Companies Mentioned:

-- Illovo Sugar

-- Tiger Brands

-- Distell

-- SABMiller

-- Mass Grocery Retail

-- Woolworths

-- Pick n Pay

For more information visit
http://www.researchandmarkets.com/reports/c88928

Source: Business Monitor International

Research and Markets
Laura Wood
Senior Manager
Fax: +353 1 4100 980
press@researchandmarkets.com

Copyright Business Wire 2008