Schweet – like a pepper
Taking on the world
IT’S A RELATIVELY SMALL, privately held South African company with an increasingly global reach. Its owners are cautious about giving precise numbers, fearing competitors will utilise the intelligence to grow their own operations. Peppadew International has germinated from a practically bankrupt entity a decade ago to a firm with a turnover of between R100m and R200m – 85% of it from outside SA.
“We’re four times bigger than we were three years ago,” says MD Phil Ovens. “And there’s no slowdown in growth. The international market is huge – often we as South Africans don’t appreciate just how big an opportunity there is outside this country.”
To date the entire business has been based around a single, seasonal product: Capsicum Baccatum. You’ve probably not heard of it under that name but you probably refer to it as a “peppadew”.
“Peppadews” actually don’t exist. It’s testimony to the company’s brand development that consumers refer to the firm’s core product by the company name. Now Peppadew International is working to differentiate the product and company names as it ventures for the first time into new product lines.
Though Capsicum Baccatum is a pepper indigenous to Central America, its “discovery” in the garden of a Plettenberg Bay holiday home that once belonged to a botanist with a penchant for exotic travel has catapulted it on to the world stage under the brand name Peppadew. It was Western Cape entrepreneur Johan Steenkamp, in whose garden the pepper was found, who created the Peppadew brand and identified the commercial opportunity it presented. However, he was forced to sell the distressed business to Denny Mushrooms, at the time an independent entity that had been bought out of Tongaat Foods by Ovens and eight colleagues. “It was virtually bankrupt,” says Ovens. The consortium subsequently sold the mushroom business sans Peppadew to AVI four years ago.
“We spent a disproportionate amount on marketing,” concedes Ovens. “We knew the concept was good and spent hundreds of hours at international food shows working out the best way to enter new markets.” The product is currently available in 26 countries – eight of which make up more than threequarters of group turnover.
Each market is different and accessing it requires a unique approach. Ovens discovered Europe isn’t a homogenous state of like-minded consumers. Each country has a different way of operating. France has been the most difficult to break into. Germany is accessed through utilising its system of open markets via a professional distributor. The US is reached through getting the product into speciality olive delis, while most supermarket groups in Britain carry the product.
“We recognised early on that we were a one-trick pony. So we invested a lot of money in developing a new yellow pepper,” says Ovens. The Goldew Pepper, a hybrid developed from the Capsicum Annuum – and bred in SA – was launched four months ago. It took four years to develop: there are no quick wins in developing new product. It will also be marketed under the Peppadew brand – thus the obsession with product differentiation.
The seasonality of the product is problematic. The fruit is grown in Limpopo province around the Ohrigstad area on farms not far from the Kruger Park. About 70% of production comes from contracted commercial farmers; the rest is financed through a Section 21 company called Emerging Farmer Enterprises, which provides capital and intensive support to new farmers. Commercial farmers can produce between 20t and 30t of the fruit/hectare, while emerging farmers (with company support) produce closer to 12t/ha. “Those are the farmers of the future,” says Ovens. “We need to support them.”
The group has extended the brand “about as far as it can go”. Lays Chips has a peppadew flavour, and Clover and other food manufacturers have products laced with the fruit.
Peppadew International recently acquired Bandito’s Chile Company – a 1994 start-up that Ovens believes will balance out the seasonality of the Peppadew business. It means the factory will be used more and it will provide an outlet for some of the by-products of the core business that would otherwise simply be wasted. With Bandito’s comes the registered Mamma Africa brand. A glint comes into Ovens’s eye as he mentions it. “There’s great opportunity there.”
What about a listing? Ovens is considering his options but doesn’t fancy the rigmarole of compliance and listings requirements. A preferred exit strategy when the time comes would be a sale to an international food group. However, he insists that’s a long way off.