Pitching a business to the retail giants can be a long, drawn-out affair. Indeed, when Handri Conradie, CEO of At Source Handmade Foods first approached South Africa’s major supermarkets, it would have been easy to have dismissed his hopes as a gamble.
However, 2002 was in many ways the beginning of a dream Conradie had held from his teens, when he worked on the family fruit farm, Koelfontein.
The Koelfontein Estate is found at the foot of the Gydo Pass between Prince Alfred’s Hamlet and the Koue Bokkeveld in the Boland. This area is known as the Warm Bokkeveld or the Ceres valley, a farming district that has become synonymous with fruit production. It is located roughly 90 minutes north-east of Cape Town in the fruit growing area of the Western Cape.
“Our family has farmed here since 1832 and I am the sixth generation to do so,” Conradie affirms. “My father believed that we should all learn the values of hard work on the farm from an early age and by my teens I had been exposed to the farm and acquired a love and understanding of the soil.”
The farm grows a mixture of apples, apricots, nectarines, peaches and pears for fresh consumption, canning and sun-drying, but in recent years, through the newly-founded At Source Handmade Foods, has increasingly entered the sun-dried fruit market and launched a brand of fruit-based snacks produced on the Estate.
Speaking to Conradie, you quickly get the sense that At Source is a project that has been a long-time in the planning, with his working life permitting him insight into different business cultures and skills that he is able to put to good use today:
“When I was growing up and working on the farm, the South African fruit market was highly regulated to protect the local industry. Everything became deregulated in 1997 and by the early 2000s, having studied and worked abroad, I returned to a much more liberalised marketing environment and felt the time was right to market our dried fruit ourselves. Instead of selling to the cooperative, we would shorten the value chain and sold directly to the retailers.
“From an early age I gained a good industry knowledge of our products and had a vision that one day, when I ran the farm, I would want to be more than just a primary agriculture grower and would want more to do with the entire value chain, where I felt we could establish a point of difference in producing top quality dried fruit.
“I studied agriculture at university and then worked at an investment bank for a short while, where I met my future wife, who is an economist. I then joined a fruit marketing agency, involved in logistics and marketing – which was a seminal moment as it gave me a new perspective on the industry.
“The exposure to the consumer facing side of the fruit industry was hugely influential and I worked very closely with the very inspirational founder and leader of that company. Looking back, that whole period stimulated my thinking and gave me confidence in a dynamic and innovative environment.”
At that time the dried fruit market was somewhat stagnant and Conradie felt that innovation would provide the platform, whilst his enthusiasm and entrepreneurialism would provide the stimulus to shake-up the marketplace. And so At Source Handmade Foods was born in 2002.
“My first task was to hire a food scientist and with Anton Erwee, we were able to develop an exciting range of sexier and tastier dried fruit products. We spent the first year in product development and kicking down retail doors.
“By the end of our first year Woolworths had taken on 2 product lines and this business gradually developed. We started with a pilot plant on the farm and a year later we had a major breakthrough when one of Woolworths other suppliers was unable to deliver and we were grateful for the opportunity. Around that time Pick n Pay also took us on as a private label supplier after an equally long courtship,” Conradie recalls.
Of course taking on new business is always exciting for a fledgling company, but can cause capacity concerns. Such was the lot of At Source, which found increasing demand led to an urgent need to upscale the business.
“We got to the stage where we now have to buy-in dried fruit from other farmers in South Africa and even overseas, before we process, pack and distribute to retailers around the country,” Conradie says.
Today the company operates a 6,600 square metre factory on a piece of land that was subdivided from the 1,000 hectare Estate. The rest of the farm consists for 300 hectares of arable farmland while the remainder is unspoilt mountain fynbos. Conradie indicates that the factory footprint is big enough to double in volume throughput in the next 5 years.
“In 2004 we built a brand-new £1 million factory but by 2009 we were again running out of capacity – however that was when the recession started to bite and our margins came under pressure. We needed to grow to remain profitable but we were out of capacity to do so.”
Fortunately help was at hand in the shape of the Industrial Development Corporation of Southern Africa (IDC), who provided the funding needed to help grow the labour-intensive business.
An expansion programme took place through 2011 and 2012 and At Source is already beginning to see the benefits, as Conradie explains:
“Our margins are now on an upward curve thanks to the machinery we have bought and we are currently looking at ways to further improve our efficiency by eliminating waste and improving all our processes.
“We purchased machinery that is able to quickly separate the different grades, sizes and qualities of fruit when it first arrives here, while we also invested in an optical scanner which is programmed to separate fruit by colour shading, thanks to a high speed camera. We used to have to undertake these jobs by hand so the whole process has speeded up greatly.
“The machinery is also very accurate and has eliminated human error so the whole pre-grading process gives us a much better idea of the breakdown of the season’s harvest in a much shorter timeframe.
“We also increased our storage space by 50 per cent and we increased our fruit drying oven capacity threefold. The latter is used to produce fruit rolls and bars from lower quality grades of dried fruit. This expansion has improved our margins greatly and this is a growing area of the business. Some aspects of the preparation and application of the fruit pulp have also become automated which has eliminated waste by introducing greater precision and consistency. We also invested in our first automated form-fill-seal packing machine.
“This year our big focus is to revisit and re-engineer our production processes and process flows and we have employed an industrial engineer to analyse each process and look at recording waste, productivity and efficiency continuously. By the end of 2014 we should be realising the full potential of our efficiency gains.”
Another measure of how far the company has come is to remember that in 2002, there was just Handri and Anton. Today the business employs approximately 250 people.
For many businesses it can prove tough to retain the entrepreneurial spirit that got things started; it is a quality that Conradie is keen to retain:
“I’m very fortunate that we can retain a balance between being a professionally run business without being too corporate. The people who work here are friends and share the same values: work takes up such a large share of your life that it would be a pity to hate what you do.
“In the early days it was easier as the ratio of staff to me was much smaller and because I was more hands-on, the vision felt self-explanatory and my enthusiasm could easily rub off on people. As you grow you have to become more structured and deliberate in embedding the vision and values of the business, so our training, development and induction processes are aiming to do just that.”
Stock control has become a bigger problem as the company has scaled up. Supplying the major retailers with sun-dried fruit throughout the whole calendar year, means trying to forecast demand for a whole 12 month period.
“We have to carry stock for the whole year and that can prove a huge challenge,” Conradie admits, “even the retailers don’t carry crystal balls but it is a cardinal sin to run out of stock as the consumer has an expectation, whilst we don’t want to carry too much stock that we can’t sell. We try to work in collaboration with the retailers and make educated guesses before we procure fruit (which is usually sun-dried before it gets to At Source) but it is a balancing act to match our sales and procurement.”
In recent years there has also been a marked shift in customer base. The company still supplies the major retailers in South Africa but increasingly there has been an overseas demand for At Source’s products.
“Today roughly 75 per cent of what we do is for the domestic market, but the export side is at 25 per cent and growing. Up until 2009 there was no reason why I would ever have looked beyond South Africa as the retail sales boom was in full flow and we were riding a wave of profit and high growth.
“However since then the slowdown has affected people’s disposable income and we sought other market opportunities around the world, without neglecting out excellent local customers,” Conradie explains.
He cites Australia as a growing market, with the company now supplying Australian company Manassen Foods with raw materials as well as consumer packaged goods; while the Middle East offers great potential and Europe a traditional customer base.
With Handri Conradie at the helm, Koelfontein Estate is now steering unchartered but exciting territory, whilst retaining its historical and family traditions. Over the next few years a new generation of Conradies is going to learn the secrets of hard work and farming in much the same manner as Handri, as the family business is eventually handed over.
In the meantime, the next year will prove hectic for the current owner:
“We are in the middle of a complete revamp of the packaging material designs of our existing private label product ranges in Woolworths and Pick n Pay. One has to continuously re-evaluate product lines to remain relevant and interesting to consumers.
“For the rest of this year and 2014, our focus will be on our efficiency drive; whilst we will also be actively growing and promoting our Cecilia’s World brand (which launched in 2010 and sells products to the local market) through social media. This is a stimulating and exciting new world for us,” he enthuses.