CEO: KEVIN HEDDERWICK COMPANY: FAMOUS BRANDS
1-year return: 59,9%
The money quote: “... people who have subsequently j oined me [at Famous Brands] there from SAB can say we can smell a sniff of SAB here...” Grade: A- YOU MIGHT NOT be a particular fan of Mugg & Bean’s new breakfast sausage but there are enough South Africans prepared to shell out hard earned cash to consume Famous Brands fare for you to own the shares without setting foot over the threshold of any one of the group’s nearly 20 brands.
Famous Brands has spent about R90m on acquisitions this year. It is now a substantial shareholder in Coega Dairy, which means it has a stake in its own cheese and long-life milk supplier while it is also now one of the country’s biggest coffee roasters since acquiring a 60% controlling stake in Java Lava. The strategy of owning the supply chain and producing much of what its customers consume, itself, is one of the key features of a company that operates multiple brands from a single platform.
Hedderwick’s success is underpinned by the fact that the business has more than doubled revenues and earnings through the recessionary environment sparked by the 2008 financial crisis. Through a mixture of organic growth and through strategic acquisitions, revenues have more than doubled to over R2bn, profits have risen by the same quantum while dividends have more than tripled to 200c. The share price has grown from 1624c in 2008 to current levels higher than 7000c.
The chink in the Famous Brands armour remains its failure to break into the chicken business. By far the biggest single QSR category in South Africa is chicken, dominated by KFC and Nando’s. If Hedderwick can crack that beyond what’s a poor showing so far from Giramundo – that will be the next shape-shifting move the group requires to keep it in the A-stream.