The Manufacture of Dairy Products in South Africa 2025

This report on the manufacture of dairy products in South Africa includes information on the size of the industry, including raw milk production, processors and distributors. There is information on major brands, suppliers, dairy sales revenues, retail prices, notable players and corporate actions. The report also examines influencing factors such as the economy, environmental factors and issues, and technology and innovation. There are profiles of 30 companies including multinationals such as Unilever, Danone, Nestlé and Lactalis, major local companies such as RFG Foods and Libstar, and other players such as Ladismith Cheese, Fair Cape, Woodlands, Douglasdale and Dewfresh.

Introduction

• The dairy industry is an important contributor to the economy, employment and food security.
• Significant consolidation in recent years has made it increasingly difficult for smaller players to compete.
• The number of producers halved since 2014, but milk production has risen significantly.
• Raw milk sales in 2024 surpassed 2019 volumes, and dairy manufacturing revenue increased marginally.
• The industry has been relatively resilient, but challenges include global policy shifts and the disruption of trade, which will affect imported inputs.
• Demand for traditional dairy products is gradually being eroded by the shift to non-dairy alternatives.

Trends

• Advances in dairy farming technologies continue to improve milk yield and quality.
• Consolidation at production and processing levels has been a notable trend over the past two decades and appears set to continue.
• Demand for products with an extended shelf-life remains strong.
• Growing demand for healthy products that are ethically and sustainably produced. Plant-based products continue to make inroads, driven by growing demand for vegan and lactose-free products.
• Lower-priced retail house brands are becoming increasingly competitive.
• Strong focus on sustainability and ecofriendly production and packaging.
• There is a growing demand for healthier dairy products with reduced fat, sugar and additives.

Opportunities

• Artisanal cheesemaking, including cream cheese and cottage cheese.
• Artisanal ice cream.
• Dairy beverages containing probiotics, such as smoothies.
• Production and supply of vegan-friendly and lactose-free dairy substitutes.
• Products made from milk from goats, sheep and water buffalo.
• Protein drinks and fermented milk products such as kefir and maas.

Challenges

•  Disease outbreaks.
• Animal welfare concerns.
• Climate-related challenges.
• Milk prices are volatile and fluctuate based on demand.
• Shrinking margins due to price competition from private labels and imports.
• The industry’s impact on the environment.
• Water supply shortages and power outages continue to disrupt operations.

Outlook

• Milk production profitability is expected to stabilise in the medium term.
• Higher domestic consumption is likely to be driven by population growth and an increase in consumer spending power.
• Plant-based dairy alternatives continue to make inroads.
• Despite the industry’s positive growth outlook, the operating environment remains extremely challenging.
• Downside risks include adverse weather conditions, disease outbreaks, economic instability, concerns relating to land reform, the volatile geopolitical environment, global trade wars, fluctuations in global commodity prices and exchange rate volatility.