Producers will need to diversify their product offering to cater for the higher-end consumer to protect earnings. Moneyweb inflation foodproducers
Cash-strapped consumers having to tighten their belts, especially in the lower and middle-income markets, is putting South Africa’s major food producers under pressure and they will have to diversify upwards of the income scale to boost their bottom lines. This is the view of Sasfin senior equity analyst Alec Abraham, who spoke to Moneyweb on the lacklustre stock price performance of JSE-listed food producers.
Although the market has begun registering a softening in key soft commodity prices like white maize, yellow maize, soya, sunflower and wheat, he says food producers are still spending a lot more on fuel and distribution. “These aspects ultimately keep operating costs high and necessary to share with the consumer.” “I would not start nibbling at the food producers quite yet.
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