Parmalat in the world
The product portfolio of the South African SBU includes the following:
- UHT Milk. The market for UHT milk, which is still smaller than the market for pasteurized milk, is valued at about 304 million euros. The UHT milk market is growing rapidly (2002-2005 CAGR of 8%). The market is very concentrated, with the top four producers accounting for 81% of total sales.
- The growth enjoyed by the SBU was made possible by increased business done through private labels and strong demand for flavored milk.
- Pasteurized Milk. In revenue terms, the market for pasteurized milk is valued at about 403 million euros and has been growing at an average rate of 4% (2002-2005 CAGR). This rate of expansion was lower than that of the milk market as a whole (6%) due to a shift in buying habits toward UHT milk.
- Cheese. The cheese market is valued at about 390 million euros. It has become a stable market, with a 4% growth rate. Parmalat SA is especially strong in upmarket products bearing the Simonsberg and Melrose brands (hard and spreadable cheeses with high profit margins).
- Yogurt. The yogurt market is valued at about 188 million euros. It is a very dynamic market, with an average growth rate of 15%.
- Desserts. The market for desserts is valued at about 132 million euros. Its average growth rate has been around 7%. Parmalat SA’s market share is about 8%, significantly less than those of Nestlé (23%) and Clover (16%). The dessert production of Parmalat SA consists mainly of custards. These products have some the highest profit margins of all of the items manufactured by the SBU.
- Fruit Juices. With an estimated value of 442 million euros, the fruit juice market is the largest market in which the SBU operates.
The South African market is characterised by high competition in an unregulated market where no cooperatives exist at national level, but production and raw materials supply are highly fragmented; the UHT milk business is considerably more profitable than that of pasteurized milk: Parmalat’s strategy is, in fact, that of gradually reducing its fresh milk business and concentrating on UHT milk.
Parmalat South Africa operates seven production facilities.