ADC Africa Business BriefingLord Charles Hotel

5th March 2013

“An Overview of the Western Cape Fine Food Initiative”

"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."

What is food?

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 NASFTNational 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 lines2008 Idea of an Association conceived at meeting at Blouberg’s Blue Peter Hotel

Steering Committee Elected

2009: Strategic Planning Interim Board ElectedStructure and Organisation

2010: Implementation, Project ManagementSection 21 Company, Constitution,Programs & Events identified

2011: Membership of 50 TOP FINE FOOD CO’SSustainable, Self FundingParticipate in Events (SATH, FFS) Appointment of CEO

2012: Series of Capacity Building Workshops Towards Full Corporate Governance ComplianceImproved Strategic Partnerships3-Year Budget AGM

Partnerships & AssociatesPartnerships & AssociatesWestern Cape Department of Economic Development & TourismSupporter of WCFFI from inception – ongoing commitmentProvides funding, people and facilitation supportStrategic Partner in the spirit of a Public Private PartnershipWCFFI 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 SACorporate SA – – as Associate Members as Associate Members

OPERATIONAL & OPERATIONAL & OVERSIGHT STRUCTUREOVERSIGHT STRUCTURE

Industry Development Officer

Business Service Providers

WCFFI Board

Chief Executive Officer

Admin assistant

Shreef Abass Chair PersonDebbie Payne Deputy Chair PersonNazeem Sterras Acting CEOLarry Dolley Board Member

Dingaan Goodwell Board MemberEarl Starr Board memberShelldon Breda Board memberAmina Abrahams Board Member

ObjectivesObjectivesManage, promote and protect the interestsinterests of the Fine Food Industry;

Create close linkslinks between suppliers, producers and retailers;

Share information on trainingtraining provision to fulfill the needs of the organization;

Create a conducive environmentconducive environment for the development of the Fine Food Industry by means of a membership-based platform.

Promotion of services, operations and functionsPromotion 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 safetyfood safety standardsstandards and the Consumer Protection Act;

Promotion and implementation of innovative measuresinnovative measures in line with local and international requirements;

Adhering to the transformationtransformation chartercharter by employing an affirmative approach to the industry

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

PROGRAMS, SERVICES & EVENTSPROGRAMS, SERVICES & EVENTS

LOGISTICS TRAINING & SKILLS DEV. MACHINERY QUALITY ASSURANCE INVESTORS

RSA Agro-Processing Value Chain Matrix

Processed Products

FruitFlowersEggsVegetables

Seed OilsFuel EnergyWaste Management

Selected Sectors/Sub-SectorsSelected Sectors/Sub-Sectors

Agri Business

Fresh Produce Benefication Technologies

Milling – Grains,OilseedsDehydrated Products – Soups, Sauces, Spices,Dried FruitNon/Alcholic Beverages - Wine,Tea,JuiceCanning – Fruit,VegetablesMeat – Poultry,Red.Wool

DEMAND SIDE

Needs of target GroupNeeds of target Group

SME & CORPORATE SUPPORTSME & CORPORATE SUPPORT

SUPPLY SIDE

Small, Emerging, Commercial Enterprises

Small, Emerging, Commercial Enterprises

Large Agribusinesses & Commercial Corporations

Manufacturing, Sorting, Packing Agro-Businesses

Large commercial retailers, export & consumer markets

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Six pillarsof support

Existing Supplier that is Linkage Ready

Potential Supplier that is Linkage Ready

Company Diagnostic

SME readiness/

Deficiency report

Org & management improvements

Accounting/MIS

Quality assurance

Certification (ISO)

Product/ Production improvements

Marketing strategy

BEE certification

Mentorship, coaching

Business Service

Providers provide support

Periodic review of progressNo progress REFER to

STRATEGIC PARTNER

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

Mobilise corporate support for SME supplier development

Analyse corporation value and supply chains

Identify and quantify linkage opportunities for SME

suppliers

SMEs engaged in accordance with corporation requirements

INCREASED BUSINESS LINKAGES

Strategise & plans for SME linkages & support to

procurement practitioners

Facilitate necessary

support to build capacity

SME readiness/

Deficiency report

SUPPLY

DEMAND

SMESME

Product/supplier

Market/Buyer

BalanceBalance

DilemmasDilemmas

Trend 1: Sense of Simplicity: 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: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 TRENDSWorld food TRENDS

World food TRENDSWorld food TRENDSTrend 3: Inherent Nutrition 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: 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 ImmuneGoing 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 TRENDSWorld food TRENDSTrend 6: New Delivery for EnergyNew 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:“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: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 Development Profiles for 2013 Ingredientsblack garlic, padron chile, horseradish, quail eggs, durian, ramps, pine needles, fish milt, whey, seaweed, ashes, sawtooth herb, green chickpeas, kimchi, fermented everythingFlavorsdukkah, sumac, sour, torridly hot, smoked, turmeric, barrel-aged hot sauce, gochujang (Korean hot sauce), Japanese katsu sauceVegetablescenter of the plate, sunchokes, raw winter vegetables, cauliflower, broccoli romanesco, parsley root, chiogga beets, pumpkin, baby sweet potatoes, turnip greens, beet tops, collards.Fruitcherries, baobab, huckleberries, finger limes, calamondin, rambutan, heirloom apples, grapefruit, white strawberriesGrainsfreekeh, farro, bulgur, noodles (udon, soba, cellophane, rice), millet, teff, buckwheatDessertsDoughnuts, artisanal soft serve, push-pops, savory flavors, boozy dessertsDrinks Tea (the new coffee?), coconut waterSnackspopcorn, homemade snacks, popped grainsAuthentic EthnicNordic, Middle Eastern (my favorite!), Asian, Nex Mex (high-end Mexican), South American (Brazil, Argentina, Peru)

Overcoming export barriers for Overcoming export barriers for South African SME'sSouth African SME's

TRADE AGREEMENTS: DOHA Round suspended EU local import duties waivedFree Trade Agreements signed with Mexico (2000) & Chile (2003)Generalised System of Preferences (GSP) in placeNegotiating Bi-Lateral Trade Agreements with Brazil and India….and others (not RSA)

FOOD SAFETY LEGISLATION New impetus after 1990’s food scaresGeneral Food Law – placing responsibility with the industryHACCP, BRC, GlobalGAP, EurepGAP, Nature’s Choice, FairtradeStronger role for European authorities

STRICTER FOOD LAWSContaminants, including MRL’sLabeling & Consumer Alertness (allergens, nutritional & health claims)Additives & FlavouringFull Ingredient StatementsOrganic FoodsGenetically Modified Foods (GMO’s)

Preservatives (Long-Life stabilisers)

Growing control of Growing control of LARGE RetailersLARGE 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 AnalysisValue Chain AnalysisParticipant Role/Contribution Benefits/Interest

Retailers (PnP, Spar, FreshMark, Whole Foods, Tesco, Woolworths)1.Merchandising of produce;2. Channel products to satisfy consumer demand3. 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 consolidation2. Competitive pricing and information3. Creation of markets4. Satisfy market demand by accessing certified, traceable products.

Wholesalers(Massmart, Fresh produces markets, etc)1. Provide storage, distribution network and logistical support

1. Easy access for marketing agents and consumers2. Act as a distribution hub

Processors(Millers, Dehydrators, Canneries, Packhouses)1. Value addition to primary products2. Provide market for the raw products

1. Diversification of markets for primary products2. Gaining Economies of Scale and gaining access to a large pool of suppliersIncreasing market demand for the value added product

Transporters/ Contractors 1. Provides Logistical support and supply chain management1. Creation of competitive advantage ( cost efficiency and timeous supply of produce)2. Provide efficient cartage services3. Provides mechanization

Producers (Karos, Seloane, Nwanedi Tomatoes, Nkuna)1. To produce quality, secure and traceable products 1. Satisfy market demand, compliance to local and international standards2. Improve efficiency of production3. Creation of vibrant agricultural sector4. Generating Sales, and Sustainable Income

Input Suppliers (Sasol, Panaar, Intervet, Kynoch, Agricol, Du Roi etc)1. Supply seeds, fertilizers, medicine, pesticides, energy to the producers, R&D, etc.

1. Increased producer base2. Bulk supply of certified inputImprove the volume and efficiency of agribusiness

Value Chain – Value Chain – Supporters and InfluencersSupporters and Influencers

Participant Role Benefits/Interest

Government Capacity building and policy 1. Leverage additional capacity for skills improvement2. Increase BBBEE participation

NGO's(Land'o Lakes, Limdev, FAMU, Technoserve, UFF, etc)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 participation2. Increased BEE participation3. Diversify supply and sales to corporates

Financial InstitutionsIDC, Dev & Com BanksProvide access to finance and risk mitigation strategies 1. Deal flow2. Access to government facilities3. Access to CAPEX4. Access to production finance5. Access to large pool of BEE SMEs, 6. BEE complicity

Business Consultants & Service ProvidersBusiness 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 (GEDA, GEP, TIL, TIKZN, TISA) NDA, SEDA CEFPolicy implementation and process support 1. Increase the number of SME participating2. Improve the environment in which SME operates Capacity building of SME to ensure implementation of government policies & strategy

Complicated Value Chain Complicated Value Chain in South Africain South Africa

CHANNEL 1:SMALL/SURVIVOR

CHANNEL 2:EMERGING & COMMERCIAL

CHANNEL 3:LARGE CORPORATIONS

NurseriesLarge Vertically Integrated

Farmers

Small Holders

BakkieTrade

Informal Traders

Commercial Farmers

Large Pack HouseFacilities

Export MarketingAgents

Municipal & Fresh Produce Markets

ProcessedProducts

Grower Self Export&

General Marketing

Large RetailStoresDirect Stores

ProductExport MarketsJuiced/Canned

Dried/ProcessedProduct

Local Markets

Commercial Pack Houses

Retailing Wholesaling

Packaging

PROCESSINGPROCESSING

Sorting

Producing

CONSUMERCONSUMERMARKETSMARKETS

Root Stocks /Trees

Clear Business Strategic Position for Clear Business Strategic Position for SME CompetitivenessSME Competitiveness

Price relative to competitorsPrice relative to competitors Above Above AverageAverage

Product QualityProduct Quality PremiumPremium

Brand ImageBrand Image High ProfileHigh Profile

Uses of Cost-chain RebatesUses of Cost-chain Rebates Medium/High Medium/High (Economies of Scale)(Economies of Scale)

Overall Business StrategyOverall Business Strategy Best Cost/Best Cost/ Premium Premium

QualityQuality

Service to CustomersService to Customers SuperiorSuperior

Key Success FactorsKey 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

Fail

Pass

Fail

Pass

Fail

Pass

Application for WCFFI Membership

Obtain & Check

Application in Office

CEO Submit for Authorisation

Conduct Onsite Assessment

(Accredited BSP’s)

Board Approve

Application

Conduct Initial Audit/Assessment - Desktop

Review Results/Membership Criteria Satisfaction

Board Accepts/

Rejects

Approval Process

(Letter, Unique Member No, etc)

Issue Certificate & Logo Usage Guidelines & Website Access

Codes

Issue Member with Copy of Constitution

Member Toolkit/Folder

(Events Calendar, Vouchers, etc)

Send Pre-Approval and Member Criteria

Basic Corrective Actions/Missing documents

Serious Corrective Actions

& Interventions

WHAT YOUR WCFFI MEMBERSHIP

MEANS TO YOUAccess 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