UHT Milk Market in South Africa to Rise at a CAGR of 11.2% by 2019

Urbanization in South Africa has been on the rise. It has been indirectly driving the growth of the UHT milk market by pushing the bulk purchase of groceries, including UHT milk. According to the South African Institute of Race Relations (SAIRR), two-third of the South African population lived in urban areas in 2011, up from 52% in 1990. Polokwane, Rustenburg, Vanderbijlpark, Nelspruit, and Ekurhuleni are the fastest growing cities in the country. The long-life benefit of UHT milk has helped it to become a part of other non-perishable groceries. UHT milk is also becoming popular among the low-income population as it is not very expensive and does not get spoiled in case of major power failures.

According to a new market report published by Persistence Market Research “South Africa Market Study on UHT Milk: Market Share of Semi Skimmed UHT Milk to Increase by 2019”, the South African UHT milk market is expected to grow at a CAGR of 11.2% during 2014 to 2019, to reach an estimated value of USD 1185.3 million in 2019.

South Africa is a major dairy-consuming country in the African region where liquid milk accounts for approximately 60% of the total dairy product consumption. The pasteurized milk market in the country has been declining, whereas the UHT milk market is growing at a rapid pace. The UHT milk market in the country is expected to exhibit a double digit CAGR during 2013 - 2019. The increasing acceptability of UHT milk among all economic classes of the country has been a major driver for the growth of this market.

Whole UHT milk dominates the product segments due to the inclination of South Africans towards fat-rich products; however, its share is expected to decline during the forecast period due to rising health concerns of the population. Among provinces, Gauteng dominated UHT milk sales in South Africa; however, with rising urbanization in other provinces, its share is expected to decrease during the forecast period.

The abundance of animal feed and fodder in South Africa helps the dairy companies in the country to maintain stability in production cost of dairy products including UHT milk. This in turn helps the company in maintaining an effective dairy chain and stable retail prices of these products. . The presence of a large number of animal feed companies promotes the smooth supply of feed to the animal farms. The South African government has announced the start of ethanol production in the country from feedstuff; however, this is not expected to hamper the feedstock supply to animal farms as the country’s surplus sugarcane production can be used for ethanol production.

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The pasteurized milk market in South Africa has been declining over the past few years and is expected to follow this trend in the future. Rapid urbanization has been observed to be a key reason for this decline. However, this is favorable for the UHT milk market in the country. Dairy companies are increasing their UHT milk production capacities to cash in on the opportunity. Several other dairy processors plan to enter this market as well. For instance, Clover Industries acquired the UHT milk business of DairyBelle in 2014. Woodlands Dairy, on the other hand, increased its UHT milk packing capacity from 6,000 liters per hour to 15,000 liters per hour in 2014.

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The key UHT milk companies in South Africa include Parmalat SA (Pty) Ltd., Coega Dairy, Clover Industries Ltd., Woodlands Dairy, and Dewfresh Products (Pty) Ltd.

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