South Africa’s Clover Industries to launch low-sugar Tropika

South Africa’s largest dairy fruit juice maker, Clover Industries said on Tuesday it would soon introduce Tropika Slender, a low-sugar and low-calorie variant of its bestselling beverage, Tropika, as it seeks to protect its market against a government sponsored sugar-tax that is to come into effect in April 2017. Clover has about 80% market share of South Africa’s dairy fruit juice sector.

Speaking at the company’s financial results presentation, CEO Johann Vorster said Tropika Slender had already been launched in Botswana and had received a positive feedback.

Vorster said that he hoped South Africans would like the low-sugar alternative when it hits the shelves of major retailers around February 2017, just before the sugar-tax on sweetened beverages comes into effect on April 1, 2017.

He adds that if the tax becomes law and results in an expected price increase of about 6% on Tropika, the subsequent loss in volume would be offset by increased sales of Tropika Slender, he said.

“We want to be ahead of the [potential] attack from the tax with this sugar-free offering.

“The idea is to get consumers to switch before the tax comes into effect,” he said.

The company said it could also review a possible introduction of low-sugar alternative for its flavoured milk products, Super M.

Clover’s revenue grew 6% to R9.8bn ($683m) for the full-year ending June 30 2016, while profits rose 1.8% to R351.9m ($25m), hurt by higher costs.

The company said it grew sales and gained market share in its feta cheese, pre-packed and processed cheese, maas, yoghurt and liquid custard products.

However, traditional dairy products that include fresh milk and cream saw sales decline due to excess supply of milk in the market. It created a challenging situation for the company, as the drought had created another headwind, causing feed prices to rise.

Vorster said the outlook for the company’s milk volumes in 2017 financial year looked good, as it had clinched a deal with Pick n Pay to supply it with milk for its house brand.

Clover said it lost R253m ($17.6m) in income due to the termination of supply deals with principal agents such as French dairy maker Danone, Unilever and Nestle, the company’s Chief Financial Officer, Elton Bosch disclosed. However, their exit had opened doors for the company to enter into new product segments such as yoghurt and custards, which brought in higher margins, he said.

Clover announced in March that it was pulling out of the Nigerian market due to the financial crisis brought about by a fall in oil price. However, it had indicated it would keep the clover brand alive through its Tropika juices.

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