Fri, 25/11/2016 - 12:30
Current Issue 77
ALG Estates has formed an unrivalled reputation in South Africa for its production and distribution of citrus fruits to high-end retailers, but attributes a much more wholesome focus of social enrichment as its core mission
From Family Farm to Market
Project Manager: Joshua Mann
Farming across eight generations in the Citrusdal Valley in South Africa, family business, ALG Estates has gone from strength to strength since its decision to build its own pack house in the early 1990s, and its subsequent move away from the traditional co-op system in the country has bred unparalleled diversification and expansion across its operations.
Currently comprising a number of citrus farms from which its different citrus fruits are cultivated and then distributed to the most renowned retailers in the business, ALG’s reputation has subsequently escalated at an equally impressive rate.
And with a flexible product range ensuring continuous production all year round, names as big as Woolworths have come to rely on the ALG portfolio, and the kind of expertise brought to the fold throughout its processes.
“When it comes to differentiation, you’ve got to look at the available business models I think,” says the Executive Director for Marketing - and a proud carrier of the name synonymous with ALG Estates over the generations - Gerrit van der Merwe. “There are two big business models in the world; one is where you’ve got to be the cheapest in the market, but we can’t do that.
“We have a very high quality of fruit, so we’ve gone for high quality rather than price in terms of how we differentiate. Our philosophy is that we are trying to differentiate in a commodity market, so it is our mission to add value to our commodity, which is citrus fruit.”
With a host of in-house cultivars on hand, as well as its own juicing facility and distribution centres close to its customers, ALG Estates can therefore leverage this business model in providing the highest quality product to a high-end retailer searching for just that: the highest quality product. And when the added bonus of family-run values, sustainability, transparency and trust are brought into the mix as well, the Company has ended up with an offering difficult to replicate by market competitors.
“The fact that we’re selling our own fruit is a big help in cutting out the middle man which completes the two strands of quality and supply, which are the main aspects we pride ourselves on,” van der Merwe continues. “Then, from a business perspective, we sell family values alongside our products. We’ve got a market-focused approach rather than a farming approach so our Marketing Manager decides what fruit we’re going to pick for that week to give us flexibility driven by close collaboration and communication with the end supermarkets.”
Top production facilities
To analyse the Company’s rise to prominence over the years, there can be two approaches. The first goes back centuries across the van der Merwes’ overseeing of every phase of the business’s evolution. In terms of the processes and facilities in place today though, it’s more a case of recent history, going back to the early 1990s.
Gerrit recalls: “The first step back then was to move into vertical integration so this begun with pack houses in 1994, as well as the opening of our marketing organisation in 1998; which brought about our first client, M&S at the time.
“From there, we continued to grow via our first juicing facility in 2000 and a series of farm acquisitions to facilitate the steep growth curve we were enjoying.”
Catering for all elements of the process from juice to export, supply chain management inevitably became a challenge and was subsequently addressed via a joint venture in the early 2000s to form its own logistics company; and the end result was a turnkey farming and exporting operation to complement a reputation and longevity already achieved in the country among industry heavyweights such as the aforementioned Woolworths.
“Even now, we’re working on a new production facility at the moment to complement large investments that have been made over the past couple of years trying to get our cultivars right,” van der Merwe adds. “Then, in regards to technology, we’re throwing out all our old lines and basically starting over with new equipment because if you want to put yourself out there as the top quality supplier in South Africa, you need top production facilities to accommodate this.”
Fair trade accreditation is another value added and desirable facet brought into ALG’s remit of late, and while this combination of factors results in the best product, its status as one of the best companies incorporates a much more all-encompassing ethos set to have ramifications long into the future.
Part of the solution
This final, and primary, philosophy revolves around its indigenous dedication and the ambition to create a sustainable legacy tailored for African trends and requirements.
Primarily this incorporates the Company’s care for its employees, appointing locally at all times and instilling a sense of internal promotion and local enrichment first and foremost. This then emigrates outside of the farms and pack houses to create a sustainable and enriched community in the surrounding region.
“One good example of this is through our packing facility,” van der Merwe explains. “We’re not a big fan of mechanisation because if you’re mechanising in South Africa, then you’re denying people jobs; and with a 30-40 percent unemployment rate in the country, it’s important to be part of the solution, not the problem.
“So our big thing is to employ people and use our human resources because it’s much better that you pay someone a wage, rather than some company in another country who could build you a very expensive mechanised product.”
Addressing this very real national need, ALG Estates puts its money where its mouth is in regards to this unwavering development of individuals, assigning an annual training budget to various programmes to bring people from the lowest ebbs up to working standard, and even into middle management levels once the Company’s loyalty is repaid by employee longevity.
Completing the cycle, van der Merwe actually attributes the most thanks to his customers at the end of this process in continuing to choose a business that runs on such an ethos; bringing the chain full circle from the sole individual that ALG Estates has taken a chance on, to the high-end supermarket that condones the Company’s operations and products.
He concludes: “From a business model side we are obviously going for high-end and we are striving to be the best, producing the best. But in Africa, you’ve got to be part of much more; to be part of the solution and not part of the problem.
“You need to be sustainable for the Company but also for the community around you because if you don’t solve the problem, then who will?”