Nazeem Sterras

ADC Africa Business Briefing Lord Charles Hotel 5th March 2013 “An Overview of the Western Cape Fine Food Initiative”

What is food? "any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans.” ….. EU Excludes:

"(a) feed; (b) live animals unless they are prepared for placing on the market for human consumption; (c) plants prior to harvesting; (d) medicinal products within the meaning of Directive 65/65 (…); (e) cosmetics (…); (f) tobacco and tobacco products (…); (g) narcotic or psychotropic substances (…); (h) residues and contaminants."

Definition of Fine Food Fine Food products shall mean: “Foods and beverages that exemplify quality, innovation and style in their category” The Fine Food specialty nature derives from some or all of the following characteristics: Their originality, authenticity, ethnic or cultural origin, specific processing, ingredients, limited supply, distinctive use, extraordinary packaging or specific channel of distribution or sale. By virtue of their differentiation in their categories, such products maintain a high perceived value and often command a premium price. Adopted from NASFT National Association for the Specialty Food Trade

Clear Vision To guide the growth of the South African Fine Food (and related Agro-Processing) Industries toward achieving worldwide recognition as a supplier of premium products and brands

History Time lines 2008

Idea of an Association conceived at meeting at Blouberg’s Blue Peter Hotel Steering Committee Elected

2009:

Strategic Planning Interim Board Elected Structure and Organisation

2010:

Implementation, Project Management Section 21 Company, Constitution, Programs & Events identified

2011:

Membership of 50 TOP FINE FOOD CO’S Sustainable, Self Funding Participate in Events (SATH, FFS) Appointment of CEO

2012:

Series of Capacity Building Workshops Towards Full Corporate Governance Compliance Improved Strategic Partnerships 3-Year Budget AGM

Partnerships & Associates Western Cape Department of Economic Development & Tourism Supporter of WCFFI from inception – ongoing commitment Provides funding, people and facilitation support Strategic Partner in the spirit of a Public Private Partnership WCFFI Project Management, Project Planning, Funding

CPUT – AFS Projects, events and progammes (Larry Dolley) South African Global Trade Hub – Funding, Export Development Government - DTI, SEDA, SETA, Agriculture, Embassies Development Agencies – USAID, NorAid, Swiss Contact, etc.

Corporate SA – as Associate Members

OPERATIONAL & OVERSIGHT STRUCTURE WCFFI Board Chief Executive Officer Admin assistant

Industry Development Officer Shreef Abass Debbie Payne Nazeem Sterras Larry Dolley

Chair Person Deputy Chair Person Acting CEO Board Member

Business Service Providers Dingaan Goodwell Earl Starr Shelldon Breda Amina Abrahams

Board Member Board member Board member Board Member

Objectives Manage, promote and protect the interests of the Fine Food Industry; Create close links between suppliers, producers and retailers; Share information on training provision to fulfill the needs of the organization; Create a conducive environment for the development of the Fine Food Industry by means of a membership-based platform.

Promotion of services, operations and functions of the Fine Food Industry including procurement, processing, marketing, sales and distribution in respect of the products of the industry; Promote the protection of consumers by adhering to international food safety standards and the Consumer Protection Act; Promotion and implementation of innovative measures in line with local and international requirements; Adhering to the transformation charter by employing an affirmative approach to the industry

PROGRAMS, SERVICES & EVENTS  Improve Competitiveness in Supply Chain  Identify Trade Opportunities, Trade shows & Trade missions  Enterprise Development & Supplier Diversity (BEE)  Market Access & Compliance  Access to Business Finance, Funding & Risk Management  Capacity Building, Mentorship & Incubator program  Market Research & Market Intelligence/Information  Workshops & Industry Applicable Events

RSA Agro-Processing Value Chain Matrix R&D

TECHNOLOGY

MARKETING

INPUT SUPPLIES

GOVERNMENT SUPPORT

MULTINATIONALS

Fresh, dried, canned & frozen fruits

Horticultural Crops

Processed, dried, frozen & canned vegetables

SLAUGHTERING

CUTTING

FERMENTING

Bakery & Confectionery Field Crops

AGRO- PROCESSING

Beverages

Live Stock

MOLDING

BLENDING MILLING

Sugar

Forestry

Processed, value added meat & meat products Inputs for Bio-Fuels Inputs for Chemical products LOGISTICS

TRAINING & SKILLS DEV.

MACHINERY

QUALITY ASSURANCE

INVESTORS

Selected Sectors/Sub-Sectors Agri Business

Fresh Produce

Fruit Flowers Eggs Vegetables

Benefication Technologies

Seed Oils Fuel Energy Waste Management

Processed Products

Milling – Grains,Oilseeds Dehydrated Products – Soups, Sauces, Spices,Dried Fruit

Non/Alcholic Beverages Wine,Tea,Juice Canning – Fruit,Vegetables Meat – Poultry,Red.Wool

Needs of target Group DEMAND SIDE

Small, Large Small, Emerging, Agribusinesses Emerging, Commercial & Commercial CommercialEnterprises Corporations Enterprises

Manufacturing, Sorting, Packing Agro-Businesses

Six pillars of support

Training & Capacity Building

Financial Assistance

SME & CORPORATE SUPPORT

Large commercial retailers, export & consumer markets

Marketing& Business Development

SUPPLY SIDE

SUPPLY Existing Supplier that is Linkage Ready

DEMAND Mobilise corporate support for SME supplier development



Potential Supplier that is Linkage Ready

Company Diagnostic SME readiness/









Analyse corporation value and supply chains

Identify and quantify linkage opportunities for SME suppliers

Strategise & plans for SME linkages & support to procurement practitioners

SMEs engaged in accordance with corporation requirements



Org & management improvements



Accounting/MIS



Quality assurance



Certification (ISO)



Product/ Production improvements



Marketing strategy



BEE certification



Mentorship, coaching

Deficiency report

Facilitate necessary support to build capacity

SME readiness/ Deficiency report

INCREASED BUSINESS LINKAGES

No progress REFER to STRATEGIC PARTNER

Business Service Providers provide support

Periodic review of progress

SMEs competent to bid and deliver on standards required by large corporations

Dilemmas Balance

Product/supplier Market/Buyer

SME

World food TRENDS Trend 1: Sense of Simplicity: - People nostalgic for simpler times, and simpler foods - Back to Basics has driven interest in natural and clean-label foods - Natural ingredients, including natural sweeteners extracted from source (apple, agave and maple syrup) - EU approval of the high-intensity natural sweetener stevia also looks close - The natural trend has been particularly evident in beverages: * 13% of global soft drinks launches in the first 9 months of 2009 period were positioned on a “natural” platform,dominated by bottled water and fruit drinks Trend 2: Sustainable Gathers Steam: - Well-informed consumers looking for locally-sourced, fairly-traded products - The organic trend has flattened in the downturn - Fairtrade new product activity is continuing to rise * major confectionery companies Cadbury and Mars making fairtrade commitments - The notion of carbon footprinting also looks set for a move into the mainstream

World food TRENDS Trend 3: Inherent Nutrition: - It is a tough time to be in the functional foods - Strict EFSA policies demanding scientific support for ingredients such as probiotics - Consumers increasingly skeptical of foods that fail to provide immediate benefit - Foods with traditionally perceived benefits (fruit, vegetables, milk) pushed further as inherent health benefits are communicated Trend 4: Functional Superstars: - The relatively few healthy ingredients have survived EFSA’s early rulings will move to the fore in functional foods - Others will be forced to rely on softer claims - With EFSA decisions thus far, it is difficult to predict exactly which ingredients will triumph, but tough times ahead for radical and obscure ingredients making outlandish claims. Trend 5: Going Immune: - Swine flu fears have fuelled a demand for immunity boosting products - Expect ingredients (probiotics, various antioxidants) to be marketed on this - Manufacturers will have to be careful overdoing claims

(E.g. Danone has found itself in trouble with the Advertising Standards Authority UK over claims that its Actimel probiotic drinks could help support children’s defences and Kellogg’s has already dropped an immunity claim it was using on Rice Krispies in the US)

World food TRENDS Trend 6: New Delivery for Energy: - “Energy” is the hot concept in functional foods - Stimulating ingredients are used in new applications - Energy shots, essentially US concept, now well and truly arrived. - The “energy” concept increasingly hot in confectionery product activity, E.g chewing gum Trend 7: “Free From” Rises: - Move toward more “gluten-free” and other “free-from” foods - Focus more on taste and quality - High-quality brands are positioned as “easy to digest,” - At ANUGA : a product formulated with konjac gum addressing needs of seafood allergie indicating that previously untapped markets are now starting to be addressed. Trend 8: Continuing to Cook at Home: - Grocery retailing enjoying a boom in both budget and high-end products - While………….. the mid-sector is squeezed (majority of consumers) - One of the catchphrases “Staying in is the new going out” - Despite some indications of “green shoots of recovery” on the horizon, consumers do not have the confidence to foresee complete economic recovery as yet - Foodservice will continue to struggle…: Consumers continue to rediscover their cooking and entertaining skills.

Development Profiles for 2013 Ingredients black garlic, padron chile, horseradish, quail eggs, durian, ramps, pine needles, fish milt, whey, seaweed, ashes, sawtooth herb, green chickpeas, kimchi, fermented everything

Flavors dukkah, sumac, sour, torridly hot, katsu sauce

smoked, turmeric, barrel-aged hot sauce, gochujang (Korean hot sauce), Japanese

Vegetables cauliflower, broccoli romanesco, parsley root, chiogga beets, pumpkin, baby sweet potatoes, turnip greens, beet tops, collards. Fruit cherries, baobab, huckleberries, finger limes, calamondin, rambutan, heirloom apples, grapefruit, white strawberries Grains freekeh, farro, bulgur, noodles (udon, soba, cellophane, rice), millet, teff, buckwheat Desserts Doughnuts, artisanal soft serve, push-pops, savory flavors, boozy desserts Drinks Tea (the new coffee?), coconut water Snacks popcorn, homemade snacks, popped grains Authentic Ethnic Nordic, Middle Eastern (my favorite!), Asian, Nex Mex (high-end Mexican), South American (Brazil, Argentina, Peru) center of the plate, sunchokes, raw winter vegetables,

Overcoming export barriers for South African SME's TRADE AGREEMENTS: DOHA Round suspended EU local import duties waived Free Trade Agreements signed with Mexico (2000) & Chile (2003) Generalised System of Preferences (GSP) in place Negotiating Bi-Lateral Trade Agreements with Brazil and India….and others (not RSA)

FOOD SAFETY LEGISLATION New impetus after 1990’s food scares General Food Law – placing responsibility with the industry HACCP, BRC, GlobalGAP, EurepGAP, Nature’s Choice, Fairtrade Stronger role for European authorities

STRICTER FOOD LAWS Contaminants, including MRL’s Labeling & Consumer Alertness (allergens, nutritional & health claims) Additives & Flavouring Full Ingredient Statements Organic Foods Genetically Modified Foods (GMO’s)

Preservatives (Long-Life stabilisers)

Growing control of LARGE Retailers Concentration in buying power Demand for high level of professionalism of the producers, food safety programs, continuity, volume, competitive pricing, marketing support Chain control from seed to shelf/field to fork

Value Chain Analysis Participant

Role/Contribution

Benefits/Interest

Retailers

(PnP, Spar, FreshMark, Whole Foods, Tesco, Woolworths)

1.Merchandising of produce; 2. Channel products to satisfy consumer demand 3. Producer Support

1. Competitive Pricing, Compliance, New Market Development; 2. Consolidation of diverse primary and value added produce for the end consumer

Traders

(Exporters, LMA, NMA,etc )

1. Market Linkage and contracting, Market Intelligence; 2. Procurement

1. Product consolidation 2. Competitive pricing and information 3. Creation of markets 4. Satisfy market demand by accessing certified, traceable products.

Wholesalers

1. Provide storage, distribution network and logistical support

1. Easy access for marketing agents and consumers 2. Act as a distribution hub

Processors

(Millers, Dehydrators, Canneries, Packhouses)

1. Value addition to primary products 2. Provide market for the raw products

1. Diversification of markets for primary products 2. Gaining Economies of Scale and gaining access to a large pool of suppliers Increasing market demand for the value added product

Transporters/ Contractors

1. Provides Logistical support and supply chain management

1. Creation of competitive advantage ( cost efficiency and timeous supply of produce) 2. Provide efficient cartage services 3. Provides mechanization

Producers

1. To produce quality, secure and traceable products

1. Satisfy market demand, compliance to local and international standards 2. Improve efficiency of production 3. Creation of vibrant agricultural sector 4. Generating Sales, and Sustainable Income

Input Suppliers

1. Supply seeds, fertilizers, medicine, pesticides, energy to the producers, R&D, etc.

1. Increased producer base 2. Bulk supply of certified input Improve the volume and efficiency of agribusiness

(Massmart, Fresh produces markets, etc)

(Karos, Seloane, Nwanedi Tomatoes, Nkuna)

(Sasol, Panaar, Intervet, Kynoch, Agricol, Du Roi etc)

Value Chain – Supporters and Influencers Participant

Role

Benefits/Interest

Government

Capacity building and policy

1. Leverage additional capacity for skills improvement 2. Increase BBBEE participation

NGO's

Networking, lobbying and advocacy

1. Leverage additional capacity for skills improvement Increase SME participation

National Business Chambers

Leverage with large corporates

1. Increased BEE & Corporate participation 2. Increased BEE participation 3. Diversify supply and sales to corporates

Financial Institutions

Provide access to finance and risk mitigation strategies

1. Deal flow 2. Access to government facilities 3. Access to CAPEX 4. Access to production finance 5. Access to large pool of BEE SMEs, 6. BEE complicity

Business Consultants & Service Providers

Business plans; Training; Capacity building; Mentor-ship

Capacity building

Donor Agencies (USAID)

Funding, Lobbying, Advocacy, Credibility

1. Leverage, influence, trade opportunities, Poverty reduction, growth, business opportunities, job creation.

Dev Agencies

Policy implementation and process support

1. Increase the number of SME participating 2. Improve the environment in which SME operates Capacity building of SME to ensure implementation of government policies & strategy

(Land'o Lakes, Limdev, FAMU, Technoserve, UFF, etc)

IDC, Dev & Com Banks

(GEDA, GEP, TIL, TIKZN, TISA) NDA, SEDA CEF

Complicated Value Chain in South Africa CONSUMER MARKETS

Informal Traders

Retailing

Product Export Markets

Juiced/Canned Dried/Processed

Product Local Markets

Large Retail Stores

Direct Stores

Wholesaling

PROCESSING

Bakkie Trade

Producing

Municipal & Fresh Produce Markets

Processed Products

Commercial Pack Houses

Packaging Sorting

Commercial Farmers

Small Holders

Nurseries

Root Stocks /Trees CHANNEL 1: SMALL/SURVIVOR

Grower Self Export & General Marketing

CHANNEL 2: EMERGING & COMMERCIAL

Export Marketing Agents Large Pack House Facilities

Large Vertically Integrated Farmers

CHANNEL 3: LARGE CORPORATIONS

Clear Business Strategic Position for SME Competitiveness  Price

relative to competitors

Above Average

 Product Quality

Premium

 Brand Image

High Profile

Uses of Cost-chain Rebates  Overall Business Strategy  Service to Customers

Medium/High (Economies of Scale) Best Cost/ Premium Quality Superior

Key Success Factors  Attunement to market signals, incentives, value chain intelligence, competitors, regulatory, policy and compliance frameworks and specifications; consumer habits; patterns and trends  Adaptability to market, technological systems, process, cultural, ecological shifts, trends and standards  Alignment of capability, systems, instruments and processes, research and development to mast benchmarked globally competitive factor conditions and productivity levels. …SCM Participation in trade shows, co operative shipping and group representatives Sharing knowledge, logistics, contacts without sharing IP

Membership Application Process Flow

Obtain & Check Application in Office

Application for WCFFI Membership

Send Pre-Approval and Member Criteria

Fail Pass CEO Submit for Authorisation

Fail

Board Approve Application

Pass Conduct Initial Audit/Assessment - Desktop

Basic Corrective Actions/Missing documents

Conduct Onsite Assessment (Accredited BSP’s)

Review Results/Membership Criteria Satisfaction

Serious Corrective Actions & Interventions

Fail

Board Accepts/ Rejects

Pass Approval Process (Letter, Unique Member No, etc)

Issue Member with Copy of Constitution

Issue Certificate & Logo Usage Guidelines & Website Access Codes

Member Toolkit/Folder (Events Calendar, Vouchers, etc)

WHAT YOUR WCFFI MEMBERSHIP MEANS TO YOU Access to

Sector Information & Knowledge Management Food Industry Service Providers (Database) Programs covering Capacity Building and Skills Transfer; Best Practices; Innovation & Technology; Market Development, Research & Intelligence; Enterprise Development & Competitiveness; Preferential Market Access & Export Promotion; Value Chain rebates …..Economies of Scale.

Trade Shows, Trade Missions, Trade Exhibitions (with Partners)

In the Future…….E-commerce opportunities…….AND MORE!!!! SIGN UP NOW!!!

Thank You