Stronger demand for shop brands boosts food producer Libstar

Lancewood is a Libstar brand.
Lancewood is a Libstar brand.

Sales of private label food products in South Africa continues to outstrip the growth in named brands, says Libstar.

Libstar produces food under store labels for Shoprite, Woolworths, Clicks, Spar and Pick n Pay. This area of its business accounts for almost half of its revenue. The rest comes from its own brands like Denny and Lancewood cheese, as well as products it produces for Nestlé, Unilever and others.

In the past six months to end-June, its headline earnings rose  by more than 12%, while revenue increased by almost 5% to R4.6 billion.

Libstar says it is receiving the benefits from new factories for granola, health bars and sliced meats, that were completed last year. More recently it commissioned a baking plant (which will deliver partially baked bread) and a local manufacturing plant for Pringles chips. The local production of Kiri and Laughing Cow soft cheese is expected to start in coming months. 

Listar warned of aggressive competitor discounting and constrained demand in its markets, but said it looks set to grow its store brands business. It launched 350 new or renovate products during the past six months.

By Wednesday mid-morning, Libstar’s share price was half a percent higher at 717c. The company's share price has been under pressure since its listing last year. 

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