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Africa Outlook

Brands
Lodestone

LODESTONE BRANDS

Taking Businesses to the Next Level

 

Lodestone Brands is looking to expand its acquisition portfolio across Africa, building on an initial six years of success in the FMCG market

 

Writer: Matthew Staff

Project Manager: Callum Philp

 

Lodestone Brands is aiming to apply the same, vast amounts of experience and expertise that helped initiate the company, to produce the next generation of fast moving consumer goods (FMCG) entrepreneurs.

Incepted in 2009, with the initial investment from Standard Chartered Bank of $170 million, the company is a brainchild of former Tiger Brands CEO, Nick Dennis alongside partners John Seymour and Shaun Bruyns.

The idea was to achieve sustainability and longevity through the acquisition of a series of market-leading FMCG brands, to take them to new levels of success, and to establish Lodestone Brands as a top-two player in each of its core operating sectors; being sugar confectionery, beverages, and baby care.

“When meeting with Shaun initially, I said I wanted to continue to work on something that had longevity,” CEO, Dennis recalls. “Shaun then spoke to John Seymour, and we decided to see if we could replicate, in a much smaller way, what had been achieved at Tiger.

“It was about building a branded FMCG business and using our experience, including learning from previous mistakes, to try and get things done in a far shorter time frame.”

Seymour adds: “The brief was essentially to combine Nick’s unparalleled strategic and operational expertise in fast moving consumer goods, with Shaun’s and my financial and investment skills, and to build a business by way of acquisition.

The next level

The subsequent six years of development has comprised this philosophy to the tune of a three legged Lodestone Brand portfolio consisting of four acquisitions under the industry category banners of confectionery, beverages and baby care.

The acquisitions, being Mister Sweet and Candy Tops; Dynamic Brands; and National Pride, respectively, are all pre-existing market players in their various fields of FMCG and, after being acquired by Lodestone over the past half-decade, are now undergoing the necessary expansion strategies to take them to new market levels.

Seymour explains: “When we acquired them, most of the businesses were mid-sized within their target markets and we identified that they needed a strategic partner to take them to the next level.

“What we have endeavoured to do is add a level of professionalism and invest in requisite professional skills.”

This business model is applied in keeping with the existing entrepreneurial spirit present in the acquired business. A balance is found between maintaining the facets that made the company successful to begin with, while facilitating future growth.

“The founding partners developed a statement of purpose to ‘take entrepreneurs to the next level’,” Dennis continues. “All our businesses were highly entrepreneurial but, as is often the case, the entrepreneurs haven’t had the advantage of working in big professional organisations which is what we brought to the table.

“What we are trying to do is professionalise these businesses without corporatising them, retaining a significant degree of entrepreneurship within the business. This enables us to act with speed; an essential component in building our group”

Smart marketing

After only six years of operating, the success of this model is already evident across Africa with its sugar confectionery category currently the third largest player on the continent.

In the category of disposable diapers, Lodestone is also market leader in Zimbabwe, Zambia and the DRC as well as number two in Angola, Malawi and Mozambique.

In the category of beverage concentrates, Lodestone’s portfolio boasts the largest brand in Southern Africa by both value and volume.

Being produced within South Africa and subsequently exported across these markets, this early success is a sign of things to come for Lodestone Brands, but Dennis is adamant that this is just the beginning.

“Where we are in terms of our performance as an organisation at the moment, we’re a two out of 10,” he states. “There is so much to do and this includes actively marketing our brands.

“Prior to the acquisitions, none of these companies had ever had a conversation with a consumer which is fundamental in building a branded FMCG business.”

To counter this challenge, Lodestone has worked tirelessly in conducting qualitative market research in the relevant market categories. Areas where brands need support have been identified and this knowledge has been invaluable in brand building.

The CEO continues: “We’re still a relatively small player so have to work smartly in terms of where we put our money behind these brands.

“Because we have identified the brand positioning with the consumer we have been able to use these learnings in our strategic re-launches.”

World-class talent

Key to ensuring the growth and ongoing entrepreneurial flair of each acquisition is the flexible ethos of Lodestone Brands itself, working on a decentralised basis and incorporating an owner-manager culture with no bureaucracy.

“This structure ensures the essence of speed, whether it is speed to market for new product launches or the speed to make decisions,” Seymour emphasises.

Veering away from traditional mid-sized enterprise challenges, Lodestone has also encouraged an increase in the amount of exposure that people get across the wider group to further develop their own understanding and skills set within the FMCG sector; a general enhancement of industry knowledge that is also epitomised by the company’s supply chain management strategy.

Dennis explains: “We have moved significantly, especially in our biggest division – confectionery – towards the injection of world-class people who have also worked for the large multinational and local market participants.

“These people have fantastic experience and while it does take a while to adapt to mid-sized organisations, they have been attracted to working in the environment and especially the entrepreneurial culture that comes with it. We have been able to attract great, world-class talent.”

Unique culture

Engraining world-class partnerships and structures into the pre-existing entrepreneurial ideology promises to be a combination that ensures Lodestone achieves its goal of being the number one or two branded organisation in each niche category.

Seymour notes: “2015 will be a year of continuing to build on the success we’ve had in prior years and I expect to see more leverage of our brands across the categories as a key focus.

“We’ve made significant investments over the past three years in both people and capital and we need to make sure we are getting returns on these.”

In a market that holds potential for companies outside of multinational status, there are significant opportunities for Lodestone Brands.

Marketing itself as a flexible, entrepreneurial owner-managed business, the scope to partner with likeminded organisations across East, West and Central Africa – and beyond – is unlimited and Dennis is excited about the opportunities that these attributes will unearth over the coming years.

“We’re passionate about, and absolutely love our business,” he concludes. “If you cut into our veins, you don’t see blood, you see brands!

“What makes us unique? Our innovative capabilities, our unique culture and our speed; unfettered by bureaucracy.

“We are now keen to build our business in Southern Africa, and then selectively across the continent, where we expect our next meaningful port of call to be in 

East Africa.”

To find out more and to contact us visit the webpage: www.lodestonebrands.com