BID­CORP’S BERSON ON CON­SUMER TRENDS

Bid­corp listed on the JSE at the end of May. Chief ex­ec­u­tive, Bernard Berson, dis­cusses the food ser­vices as­set’s suc­cess and growth tra­jec­tory, as well as how the group man­ages its var­i­ous in­ter­ests so well.

Finweek English Edition - - FRONT PAGE - By Mar­cia Klein ed­i­to­rial@fin­week.co.za

brian Joffe is the em­bod­i­ment of The Bidvest Group – which re­flects his man­age­ment and busi­ness style, his strate­gic vi­sion and his at­ti­tudes. When he an­nounced his im­pend­ing re­tire­ment from the in­dus­trial group and the un­bundling of its ma­jor food ser­vices as­set, now called Bid­corp, he left Bid­corp in the hands of Bernard Berson, who is very much a per­son groomed and moulded into “the Bidvest way”.

Berson, an ac­coun­tant by train­ing, started his work­ing life at the then two-year-old com­pany, Bidvest, in 1990. He left in 1993 when he em­i­grated to Canada, and he sub­se­quently moved to Aus­tralia soon af­ter Bidvest’s 1995 ac­qui­si­tion of a ma­jor­ity share in Aus­tralian com­pany Manet­tas – its first off­shore ac­qui­si­tion.

It was not go­ing well, and Joffe asked Berson to have a look at it. Berson came back into the Bidvest fold and it took two years, and a AU$6m loss, be­fore the busi­ness was back on track. But once the group had turned it around, es­tab­lished a bit of a track record and gained some con­fi­dence, it pro­ceeded with what has be­come a mas­sive off­shore ex­pan­sion.

Bid­corp, which dis­trib­utes whole­sale frozen and fresh food and re­lated non-food prod­ucts to the food­ser­vice and cater­ing in­dus­try world­wide, was val­ued at around R100bn when it was un­bun­dled from Bidvest in May. It now has busi­nesses in 30 coun­tries on ev­ery con­ti­nent ex­cept North Amer­ica. South Africa now ac­counts for just 8% of its profit. There was, there­fore, some sur­prise that Bid­corp listed on the JSE on un­bundling.

Berson said Bid­corp is a global busi­ness with a global foot­print, but it “didn’t make sense to do it [a list­ing] any­where else at this point in time. Maybe at a fu­ture point in time an­other list­ing may be rel­e­vant when we need ac­cess to cap­i­tal.”

How soon it may need ac­cess to cap­i­tal is un­clear, but its propen­sity to make ac­qui­si­tions is undis­puted. De­spite its rapid growth, there is still some way to go in Bid­corp’s growth tra­jec­tory. It will do this through or­ganic growth, ac­qui­si­tions and “or­ganic ac­qui­si­tions” – where it sees the op­por­tu­nity to buy small

Bid­corp, which dis­trib­utes whole­sale frozen and fresh food and re­lated non-food prod­ucts to the food­ser­vice and cater­ing in­dus­try world­wide, was val­ued at around R100bn when it was un­bun­dled from Bidvest.

built-on busi­nesses that are rel­a­tively small, in­ex­pen­sive and low risk but help build scale, Berson said.

Tog­gling its nu­mer­ous in­ter­ests in mul­ti­ple ar­eas must be dif­fi­cult, but Bid­corp sticks to the well-versed Bidvest strat­egy of iden­ti­fy­ing good busi­nesses, mak­ing sure they fit and then leav­ing them to get on with it. There is close mon­i­tor­ing, specif­i­cally on fi­nances, but there is a de­cen­tralised model in­clud­ing the em­pow­er­ment of heads of busi­nesses to do what they know best.

“The model that works is to un­der­stand that each busi­ness is dif­fer­ent. It is very im­por­tant that we get the right team for us. The dif­fi­culty is mak­ing sure we have a cul­tural fit, and a com­mon vi­sion of where the busi­ness could and would go. What we con­trib­ute is global knowl­edge, scale, ac­cess to sys­tems and pro­cure­ment, but they have the knowl­edge of their own busi­ness,” Berson said.

“There is a lot more that is sim­i­lar about in­dus­tries than is dif­fer­ent. We can see the spec­trum.”

In Bidvest’s lat­est re­sults, for the six months to De­cem­ber, the food ser­vices divi­sion, or what is now Bid­corp, in­creased turnover by 14.6% to R68.2bn (more than half of the to­tal group turnover) and trad­ing profit by 22.8% to R2.3bn. Turnover in Aus­trala­sia fell, but trad­ing profit ticked up nicely while emerg­ing-mar­ket turnover was up 9.3% and trad­ing profit up over 20%. In the UK, turnover grew over 27% and trad­ing profit over 37% while in Europe turnover was up over 13% and trad­ing profit 27.5%.

All in all, Bid­corp is pro­duc­ing strong growth, de­spite no or low in­fla­tion in many coun­tries it op­er­ates in and var­ied eco­nomic con­di­tions across its op­er­a­tions.

“We did go through a cou­ple of tough years. Europe was pretty tough. We would love to take credit, and this is partly true, but the re­al­ity is that the world started get­ting bet­ter about two years ago, and we are in an in­dus­try where the macro fac­tors are favourable for our in­dus­try.

“It is not the same as buy­ing a house or a car. When things get a lit­tle bet­ter you go out and eat a bit more and spend a bit more, so we get the im­pact of that con­fi­dence rel­a­tively quickly. The im­pact of low oil prices also had a stim­u­la­tory ef­fect on the con­sumer. We are def­i­nitely one of those busi­nesses that ben­e­fits from that quickly. Peo­ple like food and eat­ing out.”

In emerg­ing mar­kets, im­prove­ments are be­ing seen across most of its busi­nesses in­clud­ing in Africa, China, Sin­ga­pore, Chile and the Mid­dle East. Sales and profit fell in Brazil, but were af­fected not only by a chal­leng­ing eco­nomic en­vi­ron­ment, but also dis­tri­bu­tion cen­tre re­lo­ca­tion costs. Berson said Bid­corp’s emerg­ing mar­kets busi­nesses are do­ing fine. “Even in Brazil we are do­ing okay.”

Un­like many de­vel­oped mar­kets, emerg­ing-mar­ket coun­tries of­ten have frag­mented and un­der­de­vel­oped in­dus­tries where new en­trants have the op­por­tu­nity to cre­ate a base from which to de­velop the mar­ket and grow into a rea­son­able size busi­ness.

De­vel­oped mar­kets like North Amer­ica, on the other hand, have large and es­tab­lished play­ers which cre­ate dif­fer­ent chal­lenges. Bid­corp is not ac­tively look­ing for ac­qui­si­tions in North Amer­ica, the only con­ti­nent where it does not have a pres­ence.

Bid­corp’s list­ing in late May was ex­pected to re­lease value for share­hold­ers. It listed at R270 and closed at R304 on its first day of trade, but has since dropped to R262. Bidvest, fol­low­ing the un­bundling, is trad­ing at R132, with a mar­ket cap of R44bn, half that of Bid­corp, with a mar­ket cap of around R88bn. Bidvest now com­prises au­to­mo­tive, fi­nan­cial ser­vices, freight, travel, rental, in­dus­trial, elec­tri­cal, of­fice & print and ser­vices busi­nesses.

Pho­tos: Bidvest

Brian Joffe For­mer CEO of Bidvest Group

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