Strategy & technology for the industry
&
Including
Reporter
Reporter
July 2009
2010 SOCCER
WORLD CUP
• Opportunities
for food packers
• Meat
consumption
estimates
FORTIFICATION
SA’s nutrition
status may have
deteriorated
AVOCADO OIL
Soaps, cosmetics
may eclipse
edible oil
FOOD GRADE
RPET CHIP
Available in SA
by year-end
SPECIAL FEATURE: DARSOT FOODS INVESTS IN COMPLETELY NEW PRODUCTS
DARSOT FOOD CORP
DARSOT - in for the long haul
Darsot Food Corp, a South African manufacturer of canned foods, vegetable oils and
detergents, is likely to become increasingly known to shoppers who buy from the dominant supermarket chains following its achievement of an International Star for Leadership
in Quality Award recently.
But even without the award, the company has been growing rapidly recently, reflecting strong consumer demand
for its products. Its founder, Ismail
Darsot, says it has doubled its turnover
every year in the past three years.
And it is gathering even more
pace. Currently there are 11 factories
on its 200-acre estate near
Walkerville south of Johannesburg,
but three new factories are under
construction.
Within a few months it plans to
commission a peanut butter plant,
then a carbonated soft drinks plant.
And by end-2009, it plans to have set
up a mill and biscuit plant, and
thereafter tomato sauce and mayonnaise production.
The owners - Ismail Darsot and his
four sons - have, in the past 16 years,
established a pattern of consistently
successful investment.
The most recent evidence of this
was the establishment of Tin Can
Man, a plant which produces steel
food cans so that Darsot Food Corp
and others can have an alternative to
the dominant steel food can producer in SA.
History
The Darsots' pattern of rejecting
domination goes back much further
than that. Ismail was once a diamond
grader, but always an entrepreneur
who looked for opportunities to take
products to the market.
He had recognised opportunities
in the canning market in the early
1980s. Ismail recalls wanting to be in
the food industry "to give it some
love and flavour ... to me, the existing products were bland and flavourless."
But he was in political trouble and
the food industry was "a white man's
club", he says. The family went into
exile in Britain where Ismail gained
more knowledge of the canning
industry through his African National
Congress friends.
In 1993, when the family was
confident that the transition in SA
was irreversible, it returned to SA.
Immediately Ismail bought an
asparagus canning business, Banquet
Foods, which was canning 15,000
cans per month.
Today Darsot Food Corp is canning almost 3m cans per month.
Despite the political transition, the
Darsots immediately felt the effects of
the former Group Areas Act, apartheid
and the dominance of big, whiteowned wholesalers and retailers.
Ismail recalls that Darsot Food
Corp inherited the listing which
Banquet Foods had with retailer OK
Bazaars. OK Bazaars then said it
wanted to expand the supply relationship, but to do this, Darsot would
have to pay a listing fee of R100,000.
The family was aghast since
monthly turnover at that time was
about R50,000, and R100,000 would
be the company's entire year's profit.
But it was decided to comply.
Within six months, turnover had
risen to R600,000/month and the family was pleased with the investment.
Says Ismail: "But within a month
of paying the listing fee, we were
suddenly delisted, for a reason which
we know but we cannot, even now,
disclose. Other corporate chains also
did not want to carry our products.
"We had expanded our staff from
15 to 60 and we faced a decision of
whether to shut down or to go to the
few non-white (Indian and black)
owned wholesalers and traders with
our product. Those wholesalers and
traders then accounted for about
0.3% of the total market, but we
decided to go that route.
"There were very few non-white
owned wholesalers in all the
provinces except KwaZulu-Natal. So
we concentrated on KwaZulu-Natal
and on distributing direct to spazas
in the Gauteng townships.
"We also then, as a family, took
the decision to never again pay listing
fees to a wholesaler or retailer.
"We were never asked to pay listing fees by independent wholesalers
who became our customers - but
more than that, our partners."
Darsot is in the food industry for
the long haul and its strategy is that
retailers which do not list its products
currently because they require listing
fees will eventually see that they are
denying good-value products to their
customers.
Despite the domination which it
still experiences, both in the wholesale/retail sector and the producer
sector, it has a vision to be a company whose brands "will be household
names in SA within 20 years," says
Muhammed Darsot, the sales and
marketing director.
His father, Ismail, goes further:
"The target is to be the brand leader
in our canned food categories by
2020, and our range is evolving all
the time!"
The Darsots' unchanging mission
from the start has been to supply the
SA market with quality products at
affordable prices.
Expansion
The canning factory acquired by
the Darsots began supplying
Dürsots canned beans in 1993 and
expanded the range from this core
product into other canned vegetables, canned meats and jams.
Today, its main canned products
are baked beans, spaghetti, mixed
vegetables, peas, vegetable curry,
chakalaka, tomato puree and paste,
meat lines and jam.
But Ismail is an entrepreneur and
besides these core products, the
company has entered other food and
drinks products, including:
Magic Mushroom, an operation
started by the family in 1997.
Continued on next page.
The award being presented to Muhammed Darsot (right) in Paris.
INTERNATIONAL AWARD FOR QUALITY
Darsot Food Corp earlier this year received an international accolade for consistently producing premier quality food products, when it achieved a Gold category International Star for Leadership in Quality Award for "Outstanding business achievement, perseverance and leadership in excellence and quality in
accordance with the QC100 criteria".
The award is judged by global association Business Initiative Directions (BID).
The BID International Trophy for quality has been awarded to manufacturers
worldwide since 1986.
Darsot Food Corp was chosen ahead of entrants from 178 countries. To qualify for the award, independent assessors tested the Dürsots brand products for
five consecutive years. After these tests had been verified, Darsot Food Corp was
identified as the leader in providing consistent high quality food products.
Ismail Darsot said he accepted the award for SA, and not just for his company. "I liken it to our sporting achievers bringing home Olympic Gold Medals
for SA." He said the award confirms what Darsot already knew, and is increasingly being told by consumers - ''we have three lever arch files of unsolicited mail
from people who have tried our products and found them to be excellent … but
it took the outside world to show SA retailers that our products are great."
Muhammed Darsot adds: "We have kept Dürsots under radar screens until
now. Having achieved this award and consistent Entrepreneur of the Year
awards in recent years, we are ready to raise our voices in the marketplace."
The quality of Darsot's products is reflected in a remarkable phenomenon:
although its products in SA are fully directed at the lower market, it is also a
well-known export brand in the rest of Africa and the Indian Ocean. About 2025% of its production is exported - a high percentage compared to other food
companies - to Zimbabwe, Zambia, Mauritius, Seychelles, Comores, European
and South American countries, etc.
DARSOT FOOD CORP
Continued from previous page.
Aquazone Mineral Water, pumped
from its 200-acre estate, which fortuitously has excellent quality underground water as verified by the SABS
and Food Consulting Services (and
endorsed by the Heart and Stroke
Foundation for its low sulphur content), says Ismail. This has also been
important in the success of the canned
products, he says. Its Cheeki Cola
brand and other carbonated soft
drinks (an appropriate name which
could have been applied to all of the
Dürsots products) will soon be produced using the same water.
A vegetable oil operation, under
the Dürsots brand (for its main product, sunflower oil), as well as the
Sunlite brand for other vegetable oils.
Although this is a highly competitive
market, it gives the Dürsots brand
excellent brand exposure, says
Muhammed.
The basket of products is continually expanding. New products recently launched have been chakalaka and
the chemical range Pinegel, and
household detergents under the
Spick & Span brand in retail and
industrial sizes.
Muhammed says a basket is necessary because distribution costs are
high and trucks must be filled.
The company has its own distribution fleet of 23 trucks. Its factories are
simple and labour-intensive, but it has
state-of-the-art distribution software.
Canned foods is a mature, lowmargin market. Ismail jokes that the
government should really operate
canning factories because they are so
low-margin and seasonal. "Making a
margin out of canning is like eating
soup with a fork!" he says.
Its household detergent products
and polishes particularly "balance the
load". For instance, baked beans
might be sold for R45 per 5.5kg tray
whereas polish might be sold for
about double that price.
Muhammed says it is important
both for the viable profit margins of
Darsot Food Corp as well as those of
their partners, the wholesalers and
retailers, to have both lower and
higher margin products.
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The original factory premises
measured 1,400 sq metres in 1993.
This has grown to 20,000 sq metres
for food and drink today (and 40,000
sq metres for all factories currently,
including Tin Can Man and a steel
fabrication business).
Muhammed says there is still
strong demand for canned foods even
though manufacturers in many countries have started to use other competing packaging formats - for instance,
ready meals in doypacks, multilayer
plastic bottles for fruit, etc.
Darsot Food Corp believes there is
an excellent future for canned products, particularly because of their very
long shelf life. However, they always
examine other packaging formats.
The company has only one factory complex which, although not close
to all raw materials suppliers, is close
to the major markets. The multiproduct canning factory is flexible in contrast to some more seasonal
factories of other producers.
All of the company's growth, after
the initial purchase of Banquet
Foods, has been organic.
JMB Labels
is proud to be
associated with
Darsot Food Corporation
and wish them every
success for the future.
For Self Adhesive Labels “Stickers’
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36
JULY 2009
FOOD & BEVERAGE REPORTER
19 Bessemer Street, Amalgam, Johannesburg
PO Box 42828, Fordsburg 2033, South Africa
Tel: 011 830-0790 • Fax: 011 830-1234
E-mail: [email protected]
www.developtechnology.com
We are proud to be loyal suppliers to Darsot Food Corporation!
Suppliers of Spices, Seasonings, Sprinkles, Soups, Marinades, Sauces, Butcher
Requisites, Pie mix, Jellies, Custard Powder, Baking Powder and Soya.
21 Amalgam Place, Amalgam, Johannesburg. PO Box 2161, Cresta 2118 • Tel: (011) 837-1304. Fax: (011) 837-2063. E-mail: [email protected]
DARSOT FOOD CORP
Tin Can Man
A major factor which has recently
reinforced the credibility of the
Darsot group has been the successful
establishment of Tin Can Man.
This investment, which cost
R40m, is of a full production line for
the manufacture of tin cans with
conventional closures.
When news of the development
first reached the industry, many
believed that it would not succeed,
being virtually the only challenger to
the dominant producer in SA.
Although there were challenges
in the beginning - for instance, a
complete coating line had to be
installed because of lack of reliable
suppliers - by end-2007 the new factory was producing well.
The factory is no small enterprise
- its production may now be a quarter of that of the dominant producer,
Nampak Foodcan, which has factories in three locations in SA.
TRANSVAAL POTATO
WHOLESALERS
WHOLESALERS & EXPORTERS
OF VEGETABLES & FRUIT
Kishor Daya
Manish Patel
Cell: 082 651 3729
Cell: 082 924 5292
Tel: (011) 613-3729/3310 • Fax: (011) 613-3116
PO Box 86031, City Deep 2049
Hall 9, Store 937/938,
Johannesburg Fresh Produce Market
38
JULY 2009
FOOD & BEVERAGE REPORTER
The COLLECTIVE 0833111101 / 0825625642
Transvaal Potato
Wholesalers
are proud
suppliers to the
Darsot Food
Corporation.
Inside Tin
Can Man
factory.
New Age Plastics
is proud to be
associated with
Darsot Food
Corporation, and
wishes them
every success in
the future.
New Age Plastics
P.O.BOX 1329, SOUTHDALE, JHB 2135
9 JASPER RD, ROBERTSHAM, JHB 2091
Tel: (2711) 680 5778 • Fax: (2711) 433 8942
E-mail: [email protected]
www.developtechnology.com
DARSOT FOOD CORP
The coating line in Tin Can Man factory.
Coming from a small country
and an underprivileged
background, this is truly a great
achievement for the Darsot
Family.
Their perseverance to quality
has been recognised and
chosen from 178 participants
from all over the world.
Colour Art is proud to be
associated as a supplier of
some of their printing and
promotional requirements for
the past 10 years.
Congratulations to the Darsot
Family!
GENERAL PRINTING & CONTINUOUS COMPUTER FORMS
Harish Maharaj
Tel/Fax: (011) 854-4440 • Mobile: 082 632 8625
PO Box 219, Lenasia 1820
www.developtechnology.com
The COLLECTIVE 0833111101 / 0825625642
Tin Can Man produces seven different sizes of steel cans and conventional closures; and it has plans in
future to produce ring-pull closures.
With the recent rapid growth of
the Dürsots brand products (partly
because of the savings and price
reductions achieved through own
production of steel cans), 80% of Tin
Can Man's production has been for
Dürsots products and 20% has been
sold to other canners, particularly
small canners.
Says Muhammed Darsot: "Bigger
canners wanted to see if we survived.
Now they see our product on the
market. Recently we had approaches
from some of the bigger canners,
including some in the dog food and
fishing industry."
Tin Can Man's products are competitive in price, but not if the costs
of long haul transport must be added
in. It is therefore looking at a joint
venture partnership with another
company in another region.
Suppliers of flavours,
colours, modified
starches and speciality
raw materials to the food
industry.
Cell-Chem (Pty) Ltd
is proud to be
associated with
Darsot Food Corporation.
Cell-Chem (Pty) Ltd
Johannesburg Tel (011) 867-0777 • Fax: (011) 867-0781
Cape Town Tel 086 111 4398 • Fax: 086 667 2155
Durban (031) 765-3547 • Fax: 086 627 5505
FOOD & BEVERAGE REPORTER
JULY 2009
39
DARSOT FOOD CORP
MARCHING TO A DIFFERENT DRUM
Darsot Food Corp is not to be judged
with the same ruler as more corporate, pressured Western-type food
companies. Among the many distinctive features of Darsot Food Corp are:
An emphasis on calmness, lack of
stress and lack of pressure on
employees.
Complete family control and top
management, avoiding considerable
corporate costs. All major decisions
at Darsot Food Corp are taken by
"papa" Ismail Darsot and his four sons
- Muhammed (accountable for sales
and marketing), Bilal (technical),
Shuaib (operations) and Raees (financial). The success of almost all its ventures is testimony to the effectiveness
of a family-run business.
The family's strong role is reflected in individual touches (like the current slogan on its hoarding advertisement: No doubt in quality, Mrs
Doubtfire). But this is no ordinary
family: it appears to be afraid of neither big competitors nor big labour.
For instance, it is willing to expand by
taking on much big competitors - in
canned food, in steel can production
and in beverages.
The Darsots do it their own way,
and they don't accept domination.
On the other hand, they have not, for
instance, pushed their black economic empowerment (BEE) status to gain
access for their products in supermarket chains. Says Ismail: "We felt it
would be reverse apartheid. I have a
history of fighting apartheid."
The
ethic of accountability
spreads from the family throughout
the workforce. Minimum wage legislation is adhered to but wages are
not high. However, employment
involves many perks - contrary to the
corporate trend of "outsourcing" benefits, Darsot Food Corp offers free
housing, free electricity, and free
lunch. Its workforce (450 currently) is
extremely stable, with many having
been employed by it for the full 16
years of its existence.
Its offices and factories are simple to
the point of being spartan. Costs are held
to an absolute minimum.
It is willing to integrate backwards in order to gain control of the
value chain if necessary and thereby
reduce input costs. Tin Can Man is
the most obvious example of this and the most successful. The company also entered mushroom farming
when fresh supplies from outside
sources contracted; and it has now
set up its own soft drinks production
facility following the cessation of production of Cheeki Cola by a contract
packer.
It does not rely on outsourcing,
which it sees as an abdication of
management. For instance, it has set
up its own distribution facilities in
every major centre in SA and has its
own distribution fleet.
Despite its focus on cutting costs,
it uses best-quality ingredients.
It places emphasis on loyalty. While
hard bargaining is a sine qua non,
Darsot gives, and expects, loyalty
from its "partners" along the value
chain. - Teigue Payne
Supplier to Darsot Food
Corporation.
We are specialist distributors to
the food service and industrial
market.
Proud to be associated with the
Darsot Food Corporation and wishing
them continued success.
Contact Dillin Gramani
Cell: 083 270 1771
Tel: +27 31 539-4786
Fax: +27 31 539-7483
E-mail: [email protected]
www.billboardsonthemove.co.za
40
JULY 2009
FOOD & BEVERAGE REPORTER
We supply everything from
baking to canned products
including our Liberty Select
Range as well as a variety of
imported lines.
We are agents for Heinz Foods,
Unilever, Southern Canned
Products and Pioneer Foods.
Cape Town
Johannesburg
Durban
Port Elizabeth
+27
+27
+27
+27
21
11
32
41
552-4707
695-2300
944-1284
365-2609
www.developtechnology.com
DARSOT FOOD CORP
HOW DARSOT GREW
leverage with the brand leader.
For instance, last year Dürsots
gained access to Pick n Pay hypermarkets nationally and Pick n Pay
supermarkets in KwaZulu-Natal.
And in mid-2009 Dürsots gained
access to Pick n Pay Transvaal and
Eastern Cape regions.
In that way, the products have
spread nationally.
But obviously this has not happened uniformly - as evidenced by
the fact that it is still not listed in
Shoprite and Spar. However, that may
change soon, Muhammed believes.
But the products continue to be
bought mainly in the lower market,
with the upper half of the SA market
hardly knowing them. This is because
Dürsots products are still largely
excluded from 83% of the FMCG
market, which is accounted for by the
big four retailers in SA. Its main area
of operation is still the other 17% of
the market, in which its canned food
categories hold a 23% market share,
according to Muhammed.
The COL
CO
OLLECTIVE 083
0833111101
1/0
0825625642
Given its lack of listings in corporate
wholesalers and retailers in the past 16
years, how has Darsot Food Corp managed to sell its production and grow?
It has built up its distribution and
its brand entirely via independent
wholesalers and traders like Jumbo
and CBW, where it has been particularly popular because it addresses the
lower markets, with sharp pricing.
And when - as is happening
increasingly - those independent cash
and carries were taken over by large
wholesale/retail groups, Dürsots
products gained access to those larger wholesale/retail groups.
For instance, Massmart is now the
owner of both Jumbo and CBW, and
Pick n Pay is the owner of Boxer, and
Dürsots products are still offered
(without listing fees) in those stores.
Pick n Pay's ownership of Boxer
has further encouraged some of the
retail chain's regional managements
to take Dürsots products.
In some cases, retailers have also
listed Dürsots because they needed
Its price differential compared to
the brand leader (Tiger Brands) is
15-20%.
But, Muhammed says, according
to Darsot Food Corp's own tests and
according to much customer feedback which it receives, its quality is
superior to the brand leader.
He says that the superiority of its
quality is accounted for by the fact
that it can benchmark against the
brand leader, and improve on its
products, and that it uses the very
best raw materials and takes care
with many of the smaller elements of
manufacturing.
The credibility of the company in
the industry generally has been raised
by Tin Can Man and the International
Star for Leadership in Quality Award.
It is now building on this with
increased promotion and advertising.
In-store wet demos have always
been its most successful method of
promotion because, says Ismail "you
cannot fool consumer taste buds".
Continued on next page.
Specialised Tools
are suppliers of
specialised tools
to the Industry,
and is proud to
be associated
with Darsot Food
Corporation.
Shop 18-20, Crownwood Square,
11 Crownwood Road, Evans Park, Johannesburg
P.O. Box 2225, SOUTHDALE, 2135
Tel: +27 11 496-1008 • Fax: +27 11 496-1010
E-mail: [email protected]
www.developtechnology.com
FOOD & BEVERAGE REPORTER
JULY 2009
41
DARSOT FOOD CORP
Continued from previous page.
But it is now also going into external advertising, particularly hoardings.
"Retailers often gripe with manufacturers like us that
we do not do any marketing to back our brands. We
don't want to assure them that we do, we want to show
them that we do!" says Muhammed.
The increased marketing will also, he says, benefit
independents "who have supported us all along".
"Once the product becomes more pervasive in the big
four retailers, Darsot will consider national advertising
on TV, as large food companies do, but that would be
too wasteful now because many consumers would not
find the product on the shelves."
The key
Ismail says that smaller companies like his can never
match the advertising spend and the technologies which
the larger food companies have.
"As Muslims we have had to rely on a proven Islamic
law business: to be consistent, quality conscious, and
trade as honestly as possible.
"Our policy is to produce the best quality products
possible, with the keenest prices possible. We have come
to rely on the loyalty of independent traders and we look
upon them as partners, not just customers."
In the past 16 years, group area settlement patterns
have dispersed and many more non-white and independent wholesalers have arisen (though many have also
Suppliers of Coatings to
Darsot Food Corporation
Dekro Paints have been manufacturing paint
for a diverse range of industries for over 50
years. We manufacture to SABS standards and
have ISO 9001 / 2000 certification.
Our superior product range consists of the
following:
• Specialized Hygiene coatings where sterile
conditions are of importance
• Drum & Can Coatings for the packaging
industry
• Decorative Coatings
• Automotive Coatings
• Industrial Coatings
• Heavy Duty Coatings
• Marine Coatings
• Waterproofing Coatings
*We can manufacture and supply products to your
specifications.
Contact our Helpline: 0800 222 423
or e-mail us on: [email protected]
Tel: +27 (21) 903-3131 • Fax : +27 (21) 903-2307
42
JULY 2009
FOOD & BEVERAGE REPORTER
been bought out by large wholesalers).
But through loyally supporting these traders, what was
once a weakness - that the company could only trade in this
market - has become a strength. Says Ismail: "We have a base
of 700 loyal customers who will follow us with our new products. They have not found us wanting in the past."
Darsot Food Corp: Tel 011-948-9949/50;
[email protected]
CORPORATE
SPECIALIST SPICE SUPPLIER
TO SOUTHERN AFRICA
Founded in 1990, South Spice offers premium products
from around the world directly to all sectors of the food
industry including butchers, wholesalers, spice distributors,
manufacturers, caterers, bakeries and retail stores. Our distribution network covers the whole of Southern Africa.
We stock only the finest products available and maintain the most competitive pricing possible. We do this by
negotiating directly with growers and importing in bulk. All
spices are packed to order in 1kg and 25kg packs. In addition to our own retail lines, we also custom-design and
print packaging for customers' own retail sales.
To maintain the quality of our products, we only use
superior quality raw materials which are freshly ground to
create our amazing blends. Our manufacturing operation
and processes are working toward HACCP standards - we
look forward to obtaining our certification in the very near
future. We are Halaal and Kosher-certified.
South Spice supplies 10 different product lines:
Spices. These are imported whole and then processed
to powder. Our range covers all spices and seeds, etc.
Seasonings. In the 17 years that we've been in business,
we have personally developed our seasoning blends which
cover all of your BBQ spice, chicken, steak and chop requirements.
Sprinkles. Over eight fabulous flavours are available,
and can be used as seasoning or to sprinkle on a dish. We
also do a range for popcorn.
Soups. Available in 20 flavour-filled varieties, our soups
and instant soups have become one of our most popular
lines. They are delivered in dry product form to which water
must be added.
Marinades. This is a dry product to which you add
water, and is simply delicious.
Sauces. We offer both wet and dry sauces, which are a
tasteful tribute to our years of experience in recipe formulation.
Pie mixes. Great tasting, wholesome ingredients that
are also available in ready packs.
Jellies/custard/baking powders. The finest ingredients
ensure the finest flavours.
Soya. We provide a full range of delicious soya products.
Butcher requisites. The list is extensive and ranges from
saw blades and twines to patty papers, batch packs and
labels.
Product development. We develop food products to
specific customers' requirements, for their exclusive use.
South Spice: Tel 011-837-1304; fax 011-837-2601;
[email protected]
www.developtechnology.com