{"id":850983,"date":"2026-02-22T11:00:00","date_gmt":"2026-02-22T09:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=850983"},"modified":"2026-03-20T12:00:59","modified_gmt":"2026-03-20T10:00:59","slug":"two-companies-taking-over-kitchens-across-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/850983\/two-companies-taking-over-kitchens-across-south-africa\/","title":{"rendered":"Two companies taking over kitchens across South Africa"},"content":{"rendered":"\n

While it might not seem obvious to many, one of the largest corporate battles in South Africa revolves around sliced bread. <\/p>\n\n\n\n

According to Sean Culverwell, Investment Analyst at Anchor Capital, South Africa’s food producers have a broadly positive outlook for 2026. <\/p>\n\n\n\n

This is due to easing input costs, cost efficiencies driven by investment-led economies of scale, and an emerging inflexion in industry volume growth.<\/p>\n\n\n\n

Culverwell said that the sector is entering into a new phase where structural efficiency, instead of pricing power, will determine long-term winners. <\/p>\n\n\n\n

The main milling and baking (Millkbake) players are Premier (Blue Ribbon), RCL Foods (Sunbake), Pioneer Foods (Sasko), and Tiger Brands (Albany). <\/p>\n\n\n\n

Tiger Brands and Premier are primarily undergoing significant structural changes in their Millbake operations, with automation and regional consolidation set to support improved volume growth and expanded operational margins. <\/p>\n\n\n\n

The industry is starting to change after a massive scandal in the mid-2000s, when the Competition Commission uncovered widespread collusion among major bread producers. <\/p>\n\n\n\n

“The investigation revealed coordinated price increases and market allocation practices, including the strategic closure of bakeries to limit competition in certain regions,” said Culverwell. <\/p>\n\n\n\n

“The fallout was significant, resulting in reputational damage and financial penalties. While the industry came under heightened scrutiny, no lasting price regulation was imposed.” <\/p>\n\n\n\n

Competition was expected to reassert itself, and the bread industry is doing just that, with competition fierce and pricing remaining the main battleground. <\/p>\n\n\n\n

Break market structures vary by region, with Ni<\/em><\/span>elsen data suggesting that Tiger Brands\u2019 Albany is the leading brand at 27% market share, followed by Pioneer’s Sasko at 24%. <\/p>\n\n\n\n

Tiger Brands dominates inland markets, while Premier holds larger stakes in the coastal regions, such as the Western Cape, KwaZulu-Natal, and the Eastern Cape. <\/p>\n\n\n\n

The investment analyst noted that bread is a mature, highly competitive category, with questions arising from where sustainable value creation comes from.<\/p>\n\n\n\n

“In our view, long-term winners will be determined by two factors: scale-driven cost leadership and superior asset utilisation. These characteristics increasingly favour Tiger Brands and Premier,” said Culverwell. <\/p>\n\n\n\n

“Food manufacturing is inherently high in terms of operating leverage. Production is concentrated in capital-intensive facilities with high fixed costs, meaning profitability improves as volumes rise.” <\/p>\n\n\n\n

In commoditised categories like bread, competition is primarily focused on price, with scale the most effective defence against margin erosion.<\/p>\n\n\n\n

While Tiger Brands and Premier are reshaping their cost curves via regional consolidation, automation, and logistics optimisation, Culverwell said that smaller players lack the resources to replicate these investments. <\/p>\n\n\n\n

Tiger Brands <\/h2>\n\n\n
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The analyst noted that Tiger Brand’s Millbake division is undergoing a multi-year structural reset following a prolonged period of operational underperformance. <\/p>\n\n\n\n

The main part of this is the commissioning of its Super Bakery, expected by the end of CY26, which will replace six sub-scale inland bakeries. <\/p>\n\n\n\n

This facility will replace six sub-scale inland bakeries without increasing overall capacity, lowering conversion costs through automation, reducing labour intensity, and improving yields.<\/p>\n\n\n\n

Management has guided to a roughly 50% reduction in regional conversion costs, which should lead to a step-change in margins into FY27. <\/p>\n\n\n\n

Tiger Brands has also launched a logistics network optimisation programme targeting more than R200 million in cost savings.<\/p>\n\n\n\n

This initiative focuses on fleet utilisation, route optimisation, back-haul efficiency, and warehouse rationalisation.<\/p>\n\n\n\n

The company is also focusing on the informal trade channel, targeting 130,000 general trade outlets by FY29 (up from 91,000 in FY24). <\/p>\n\n\n\n

“A higher informal trade sales mix is margin accretive and should support volume recovery following years of market share loss,” said Culverwell. <\/p>\n\n\n\n

“With improved product consistency and better on-shelf availability, we expect Tiger Brands to return to modest but sustainable volume growth over the medium term, alongside meaningful margin expansion.” <\/p>\n\n\n\n

Premier<\/strong><\/h2>\n\n\n
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A huge advantage for Premier is its vertical integration, with around 60% of its wheat flour supplied internally from co-located mills. <\/p>\n\n\n\n

This makes Premier the lowest-cost producer in the market and provides a natural hedge against the volatility in wheat pricing and supply. <\/p>\n\n\n\n

The group owns 13 bakeries and has invested heavily in large-format, highly automated \u201cmega-bakeries\u201d over the last few years. <\/p>\n\n\n\n

This includes the Pretoria facility, commissioned in 2023, and the Aeroton bakery, commissioned in 2025, which can produce 8,000 loaves per hour compared to the traditional 5,000-6,000. <\/p>\n\n\n\n

“Historically, Premier\u2019s inland bakeries generated materially lower margins than coastal operations due to outdated technology,” said Culverwell<\/p>\n\n\n\n

“The commissioning of Pretoria and Aeroton marks a structural shift. Management expects several older inland bakeries to be mothballed, resulting in a sustained uplift in operating margins.”<\/p>\n\n\n\n

Geographically, Premier’s inland expansion is attractive, with Gauteng accounting for one-third of all bread consumption, and Premier becoming the number two player in the province.<\/p>\n\n\n\n

If Premier were able to lift Gauteng market share to the national average, Anchor Capital believes inland volumes could increase 20% over the medium term.<\/p>\n\n\n\n

“Premier\u2019s exposure to the informal channel is another advantage, with roughly 75% of its bread volumes sold through this channel, supporting both mix and operating margins,” said the expert. <\/p>\n\n\n\n

“While the bread industry remains highly competitive, we believe scale and efficiency – not price – will determine long-term winners.” <\/p>\n\n\n

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Premier and Tiger Brands return on invested capital (Source: Anchor Capital)<\/figcaption><\/figure><\/div>\n\n
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Premier and Tiger Brands return on invested capital (Source: Anchor Capital)<\/figcaption><\/figure><\/div>\n\n\n

This article has been updated<\/em><\/p>\n\n\n\n

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Sliced bread is an incredibly competitive market in South Africa, with Tiger Brands and Premier set to benefit from their larger scale. <\/p>\n","protected":false},"author":95,"featured_media":850999,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[23825,11629],"class_list":["post-850983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-premier","tag-tiger-brands"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/850983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=850983"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/850983\/revisions"}],"predecessor-version":[{"id":854519,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/850983\/revisions\/854519"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/850999"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=850983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=850983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=850983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}