South Africa’s food manufacturing sector is on the brink of a major transformation as Premier Group moves to acquire RFG, a deal set to create a combined food powerhouse with annual revenues of approximately R28 billion and profit after tax of about R1.8 billion.
Premier Group, one of the country’s leading food producers, is widely recognised for its flagship Blue Ribbon brand, a staple in South African households. According to Sean Culverwell, Investment Analyst at Anchor Capital, Premier’s dominance in milling and baking makes it comparable to the “Shoprite of baking and milling,” underscoring its scale, reach, and operational strength.
Culverwell explained that Premier’s growth story has been anchored on three key pillars: steady single-digit revenue growth, expansion of operating margins, and declining finance costs. He noted that the company’s disciplined execution across these drivers has resulted in industry-leading growth since its stock market listing, a momentum expected to continue into the coming year.
The proposed acquisition of RFG is expected to further strengthen Premier’s position. RFG is a well-established food producer with a diversified portfolio spanning foods, dairy, juices, and canned goods, and is home to iconic brands such as Rhodes, Bull Brand, and Pakco. Premier has offered to acquire all RFG ordinary shares, excluding treasury shares, through a share-swap transaction, allowing shareholders of both companies to participate in the long-term growth of the enlarged group.
Management is reportedly confident that the transaction will be finalised by March 2026, paving the way for the creation of a formidable player in South Africa’s food value chain.
Anchor Capital believes the deal makes both strategic and financial sense, particularly given the limited liquidity in Premier shares and the concentration risk within its Millbake division. Consolidating RFG into the group is expected to address these challenges while also delivering immediate earnings accretion.
While industrial and route-to-market synergies between the two companies appear compelling on paper, Culverwell acknowledged that such efficiencies can be difficult to realise in practice. However, he expressed confidence in Premier’s leadership, noting that CEO Kobus Gertenbach and his team have consistently demonstrated strong execution capabilities.
Beyond the RFG acquisition, Premier’s growth outlook is also being boosted by the opening of the long-delayed Aeroton mega-bakery, which began operations in November. The new facility is expected to be a significant margin driver, enabling the group to consolidate its regional manufacturing footprint by phasing out three older bakeries across Gauteng and the North West.
Reducing the need to transport bread from distant facilities is expected to unlock meaningful cost savings, while the modernised site is also set to enhance product quality and service levels. Premier has already seen similar benefits from its Pretoria mega-bakery, commissioned in 2023.
With the completion of the Aeroton facility, Premier has now wrapped up its Millbake capital expenditure cycle. Coupled with the RFG share-swap deal, the group is expected to see rising cash levels on its balance sheet, opening up opportunities for higher dividend payouts or potential share buybacks.
According to Anchor Capital, these possibilities could be “the cherry on top” of what is already shaping up to be a compelling investment case, as Premier positions itself at the centre of South Africa’s evolving food manufacturing landscape.
