Strategy & technology for the industry

Including

ReporterJuly 2009

&Reporter

FORTIFICATION

SA’s nutrition

status may have

deteriorated

FOOD GRADE

RPET CHIP

Available in SA

by year-end

AVOCADO OIL

Soaps, cosmetics

may eclipse

edible oil

2010 SOCCER

WORLD CUP

• Opportunities

for food packers

• Meat

consumption

estimates

SPECIAL FEATURE: DARSOT FOODS INVESTS IN COMPLETELY NEW PRODUCTS

But even without the award, the com-

pany has been growing rapidly recent-

ly, 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 mayon-

naise 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 produc-

er 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 exist-

ing products were bland and flavour-

less."

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 can-

ning 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, white-

owned 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 rela-

tionship, but to do this, Darsot would

DARSOT FOOD CORP

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 fam-

ily 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 list-

ing fees by independent wholesalers

who became our customers - but

DARSOT - in for the long haulDarsot 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 domi-

nant supermarket chains following its achievement of an International Star for Leadership

in Quality Award recently.

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 whole-

sale/retail sector and the producer

sector, it has a vision to be a compa-

ny 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 vegeta-

bles, 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 QUALITYDarsot Food Corp earlier this year received an international accolade for consis-

tently producing premier quality food products, when it achieved a Gold cate-

gory International Star for Leadership in Quality Award for "Outstanding busi-

ness 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 qual-

ify 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 com-

pany. "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 increas-

ingly 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 20-

25% 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.

36 FOOD & BEVERAGE REPORTERJULY 2009 www.developtechnology.com

DARSOT FOOD CORP

� Aquazone Mineral Water, pumped

from its 200-acre estate, which fortu-

itously has excellent quality under-

ground water as verified by the SABS

and Food Consulting Services (and

endorsed by the Heart and Stroke

Foundation for its low sulphur con-

tent), 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 pro-

duced using the same water.

� A vegetable oil operation, under

the Dürsots brand (for its main prod-

uct, 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 continu-

ally expanding. New products recent-

ly launched have been chakalaka and

the chemical range Pinegel, and

19 Bessemer Street, Amalgam, JohannesburgPO Box 42828, Fordsburg 2033, South Africa

Tel: 011 830-0790 • Fax: 011 830-1234E-mail: sales@jmblabels.co.za

JMB Labels is proud to be associated with Darsot Food Corporation and wish them every success for the future.

For Self Adhesive Labels “Stickers’

household detergents under the

Spick & Span brand in retail and

industrial sizes.

Muhammed says a basket is nec-

essary because distribution costs are

high and trucks must be filled.

The company has its own distribu-

tion 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, low-

margin 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.

Continued from previous page. 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 coun-

tries have started to use other compet-

ing 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 prod-

ucts, particularly because of their very

long shelf life. However, they always

examine other packaging formats.

The company has only one facto-

ry complex which, although not close

to all raw materials suppliers, is close

to the major markets. The multi-

product 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.

21 Amalgam Place, Amalgam, Johannesburg. PO Box 2161, Cresta 2118 • Tel: (011) 837-1304. Fax: (011) 837-2063. E-mail: sspices@global.co.za

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.

Tin Can ManA 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 fac-

tory was producing well.

The factory is no small enterprise

- its production may now be a quar-

ter of that of the dominant producer,

Nampak Foodcan, which has facto-

ries in three locations in SA.

38 FOOD & BEVERAGE REPORTERJULY 2009 www.developtechnology.com

DARSOT FOOD CORP

Tel: (011) 613-3729/3310 • Fax: (011) 613-3116PO Box 86031, City Deep 2049

Hall 9, Store 937/938,Johannesburg Fresh Produce Market

Kishor DayaCell: 082 651 3729

Manish PatelCell: 082 924 5292

WHOLESALERS & EXPORTERSOF VEGETABLES & FRUIT

TRANSVAAL POTATO WHOLESALERS

Transvaal Potato Wholesalers

are proud suppliers to the

Darsot Food Corporation.

The

CO

LLEC

TIV

E 08

3311

1101

/ 0

8256

2564

2

New Age Plasticsis proud to be

associated withDarsot Food

Corporation, and wishes them

every success inthe future.

New Age PlasticsP.O.BOX 1329, SOUTHDALE, JHB 2135

9 JASPER RD, ROBERTSHAM, JHB 2091

Tel: (2711) 680 5778 • Fax: (2711) 433 8942

E-mail: newage@iburst.co.za

Inside Tin

Can Man

factory.

39FOOD & BEVERAGE REPORTER JULY 2009www.developtechnology.com

DARSOT FOOD CORP

Tin Can Man produces seven dif-

ferent sizes of steel cans and conven-

tional 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 com-

petitive 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.

GENERAL PRINTING & CONTINUOUS COMPUTER FORMS

Harish MaharajTel/Fax: (011) 854-4440 • Mobile: 082 632 8625

PO Box 219, Lenasia 1820

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!

Cell-Chem (Pty) LtdJohannesburg Tel (011) 867-0777 • Fax: (011) 867-0781

Cape Town Tel 086 111 4398 • Fax: 086 667 2155Durban (031) 765-3547 • Fax: 086 627 5505

Cell-Chem (Pty) Ltdis proud to be

associated withDarsot Food Corporation.

Suppliers of fl avours, colours, modifi ed

starches and speciality raw materials to the food

industry.

The

CO

LLEC

TIV

E 08

3311

1101

/ 0

8256

2564

2

The coating line in Tin Can Man factory.

40 FOOD & BEVERAGE REPORTERJULY 2009 www.developtechnology.com

DARSOT FOOD CORP

Darsot Food Corp is not to be judged

with the same ruler as more corpo-

rate, pressured Western-type food

companies. Among the many distinc-

tive 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 (finan-

cial). The success of almost all its ven-

tures is testimony to the effectiveness

of a family-run business.

� The family's strong role is reflect-

ed in individual touches (like the cur-

rent slogan on its hoarding advertise-

ment: No doubt in quality, MrsDoubtfire). But this is no ordinary

family: it appears to be afraid of nei-

ther big competitors nor big labour.

For instance, it is willing to expand by

Cape Town +27 21 552-4707 Johannesburg +27 11 695-2300

Durban +27 32 944-1284 Port Elizabeth +27 41 365-2609

Supplier to Darsot FoodCorporation.

We are specialist distributors to the food service and industrial

market.

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.

Proud to be associated with the Darsot Food Corporation and wishing

them continued success.

Contact Dillin GramaniCell: 083 270 1771

Tel: +27 31 539-4786Fax: +27 31 539-7483

E-mail: dillin.g@mweb.co.zawww.billboardsonthemove.co.za

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 econom-

ic empowerment (BEE) status to gain

access for their products in super-

market 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 legis-

lation is adhered to but wages are

not high. However, employment

involves many perks - contrary to the

corporate trend of "outsourcing" ben-

efits, 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 back-

wards 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 compa-

ny 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 pro-

duction 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

MARCHING TO A DIFFERENT DRUM

41FOOD & BEVERAGE REPORTER JULY 2009www.developtechnology.com

DARSOT FOOD CORP

Given its lack of listings in corporate

wholesalers and retailers in the past 16

years, how has Darsot Food Corp man-

aged 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 particu-

larly 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 larg-

er 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 feed-

back 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".

OLL

ECTI

VE

0833

1111

01 /

082

5625

642

CO

083

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0Th

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OL

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: sptools@futurejhb.co.za

leverage with the brand leader.

For instance, last year Dürsots

gained access to Pick n Pay hyper-

markets 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 hap-

pened 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. Continued on next page.

HOW DARSOT GREW

42 FOOD & BEVERAGE REPORTERJULY 2009 www.developtechnology.com

DARSOT FOOD CORP

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 dis-

tribution network covers the whole of Southern Africa.

We stock only the finest products available and main-

tain 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 addi-

tion 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 require-

ments.

� 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 formu-

lation.

� 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; southspices@global.co.za

Contact our Helpline: 0800 222 423or e-mail us on: info@dekro.co.za

Tel: +27 (21) 903-3131 • Fax : +27 (21) 903-2307

Suppliers of Coatings toDarsot Food Corporation

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But it is now also going into external advertising, partic-

ularly 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 indepen-

dent wholesalers have arisen (though many have also

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 prod-

ucts. They have not found us wanting in the past."

Darsot Food Corp: Tel 011-948-9949/50;mndarsot@dursots.com

Continued from previous page.

C O R P O R AT E