Leading South African canned food manufacturer, Darsot Food is set to continue doubling its year-on-year turnover thanks to a competitive expansion and backward integration strategy designed to improve the quality of its products.
CLASS IN A CAN
Aligning its business model and marketing strategy with the competitive traits of international brand leaders, South African canned food manufacturer, Darsot Food continues to upscale its FMCG trade capabilities through the backward integration of its supply chain. Paired with a diversification strategy that has seen the Company expand to 11 production facilities across the country today, the Company has doubled its turnover year-on-year for the past six years, reflecting strong consumer demand for its Dursots, All Joy and Veri Peri branded products across sub-Saharan Africa.
“Starting as a family-run business 23 years ago – when my father returned to South Africa towards the end of the apartheid era – with one 1,200 square metre cannery, we have shaped our investments around consumer demand and emerging industry trends; adding a number of different production facilities and subsequent products to our portfolio over the years, such as other vegetables, edible oils, condiments and detergents,” recalls Muhammed Naasif Darsot, Marketing Director. “At the time, it became quickly apparent that backward integration was a necessity to guarantee the quality of our products. This resulted in the decision to produce our own edible oil, as well as the establishment of a larger can manufacturing facility by 2006, which represents a major milestone in the Company’s history.”
Once again instigating change in line with the growing local market for canned goods, Darsot made the transition from a mainly private label manufacturer to focusing on its own brand, Dursots. A play on the founding family’s surname as well as the increase in imported foods from Europe – particularly Germany at the time – the initial iteration of the name had an accent on the ‘ü’ which has since been altered as local manufacturing has increased. “This was our way of following in the footsteps of international brand strategies to develop our offering in South Africa, but to also position the Company as an exporter,” he adds.
Having been in the South African FMCG market since the end of the apartheid era, Darsot Food has seen firsthand just how quickly food manufacturing trends can shift. Muhammed offers: “For example, in 2010, the edible oil market really started to take-off and become more saturated. In order to distinguish ourselves, we had to look at ways to add value to this portion of the business and consequently, we decided to diversify into the manufacture of mayonnaise. Not only did we diversify, but the facility we put up was state-of-the-art, making us the most advanced mayonnaise manufacturer in South Africa and thus, an attractive supplier of this product.”
This same philosophy to differentiate itself from the competition through quality and value-add saw Darsot acquire not only the All Joy tomato sauce and Veri Peri product ranges in 2012, but also its main tomato-processing factory from Tiger Brands in Tzaneen, Limpopo in 2015.
“More than 60 percent of South Africa’s tomatoes are currently produced in the Limpopo region, and a key objective for Darsot is to increase the local supply of raw materials to 95 percent to reduce pressure on imports to meet demand. After the acquisition of the Tzaneen factory, we invested R100 million in a brand new plant, with Rossi Catelli equipment imported from Italy. The plant is capable of producing 300 tonnes of tomatoes a day and we remain actively engaged with local growers to maintain a steady output.”
Running its first trials in September, 2015 to great success, the factory gained the attention of local media in the first half of 2016 which increased exposure for the Dursots and All Joy house names. “This has opened potential opportunities from a geographical perspective as our tomato production currently only services the South African market. Further, agro-processing has high job creation potential, so as our new facility grows over the next 12 months, we hope to increase the number of permanent and seasonal employees,” says Muhammed.
The factory has provided an accessible outlet for local growers to sell their tomatoes while leveraging industry knowledge – including the supply and learning to use fertilisers – to create a final product that meets the required standards set out by Darsot. “Based on the rate things are progressing, we should reach capacity in year two ; ahead of our earlier 2018 forecasts. In turn, this has brought forward our decision to build another much bigger facility capable of processing 500 tonnes a day; driving us towards our goal to supply 30-35 percent of the total tomato paste demand in South Africa,” he further details.
Despite being delayed due to the All Joy acquisition, Darsot meanwhile also made a ripple in the local peanut butter manufacturing subsector in 2013; with its version of the product subsequently voted South African Product of the Year in 2015 in the peanut butter category.
Bolstered by the strength of double-digit growth year-on-year and its backward integration strategy, Darsot Food decided to go global with its products two years ago and is carefully surveying the marketplace to identify the right opportunities as it looks to scale the business further.
“Equipped with our own in-house logistics including a fleet of around 80 vehicles, we decided we had grown to the state of self-sufficiency required to take our products to the world stage,” says Muhammed. “Part of this process involved acquiring the business of our existing packaging supplier in 2015, resulting in a dedicated packaging division for all our requirements in this area. After updating and acquiring new machinery – with further equipment due to be commissioned in the latter part of this year – this investment is already delivering positive productivity results.”
With all of its existing and upcoming expansion plans in place, Darsot Food is keen to take its business to the next level. Muhammed concludes: “Right now, we are investing considerable capex in implementing international levels of food safety across all our facilities which will be a crucial enabler in ‘going global’. Opportunities are being presented to us daily, and it is important that we select the best course of action to continue to explore and develop new business ventures.”