Meat and dairy alternatives offer fresh opportunities for SA firms
NON-EXECUTIVE directors should be the first to recognise that yesterday’s skills and experience need continual supplementing to deal with today and tomorrow.
Covid-19 is teaching us many lessons, one of the most important of which is that our existing knowledge and experience are often inadequate in the face of the unexpected.
For non-executive directors, who fulfil such an important leadership role on boards and governing bodies, keeping skills updated and acquiring new ones are not only a mark of excellence but also essential in discharging their duties.
The first thing they need to learn is what their duties actually are. Once that’s clear, it’s equally important to ensure they have the skills to fulfil them.
To risk stating the obvious, a non-executive director’s probity and desire to help the organisation succeed are not enough; they need to ensure they have the skills to make a difference in a rapidly changing world. Directors have to commit time and resources to make sure they keep up.
The King IV Report on Corporate Governance for South Africa 2016 makes this point clearly in the recommended practices to achieve principle 1: the governing body should lead ethically and effectively. Relating specifically to effectiveness, competence is one of the characteristics of a governing-body member.
It outlines three elements: Members of the governing body should take steps to ensure they have sufficient working knowledge of the organisation, its industry, the triple context in which it operates, the capitals it uses and affects as well as of the key laws, rules, codes and standards applicable to the organisation.
Members of a governing bodies must act with due care, skill and diligence, and take reasonably diligent steps to become informed about matters for decision. They should continuously develop their competence to lead effectively.
It’s also worth noting non-executive directors don’t need to ensure they are competent just to discharge their fiduciary and other duties; they also need to be demonstrably competent in order to protect themselves.
Members of governing bodies are increasingly
THE consumption of plant-based meat and dairy food alternatives is growing fast in many overseas markets, creating new opportunities also for South African food producers, according to Berlin-based ProVeg.
Around the world there had been a big increase in consumption of plantbased products that mimic the taste and texture of meat, milk, seafood and cheese, according to the food awareness group’s head of food industry, Verena Wiederkehr.
The company recently did a consumer survey across nine European countries to identify priorities for product improvement in the plant-based food market. The research identified gaps in the market that South African food manufacturers could take advantage of.
It showed that even in other meat-loving countries, such as Germany, the move away from meat was significant. Only 26 percent of Germans ate a meat product every day compared to 34 percent in 2015 – and it’s not just Europe. Demand for plant-based products in China was also growing rapidly.
The market for milk alternatives had “exploded”. “You know there’s something to take note of when a company like Coca-Cola enters the market, which they have done by launching a new brand of plant milk – Simply Almond,” Wiederkehr said.
For predictions on the growth of plant-based products, manufacturers could look to the market for plantbased meat alternatives, which was being held accountable for their actions and their effect on the organisations they lead, and in the private sector can be held personally liable. Competence is at a premium, however, you look at the topic.
What to focus on: Having accepted the link between their skills and their ability to deliver on their commitments as directors, non-executive directors need to give serious thought to the practicalities: What skills and how to obtain them.
One key area is obviously governance and law. They need to have an excellent working knowledge of governance best practice as embodied in King IV and the various practice and guidance notes published by the Institute of Directors in South Africa (IoDSA).
They will also need to be conversant with the Companies Act (71 of 2008) and any other applicable legislation.
Industry knowledge should be another key focus. Non-executive directors need to understand the dynamics of the industry in which the organisation operates.
It’s also essential they are well versed in the fundamentals and long-term strategy of the organisation, and how they interact with the industry and the economy as a whole. predicted to double in the next five years.
This global market was valued at $12.1 billion (R200bn) in 2019 and predicted to grow at 15 percent a year, reaching almost $28bn by 2025.
“Market insiders will tell you this is a conservative estimate – Beyond Meat alone currently has a market capitalisation of $9bn alone. The global meat market, by comparison, was predicted to grow by only 3 percent a year.”
In Europe, plant-based cheese was the product that was highlighted in the survey as the biggest opportunity for plant-based food producers.
Wiederkehr, who oversaw the research, said the data “supports the view that good quality, affordable, plant-based cheeses have a good chance of penetrating, capturing and retaining a large part of this fast-growing
McKinsey cites the case of a company that requires its directors to accompany staff on customer visits at least once a year. Other companies require them to visit production or R&D facilities annually. NEDs need to understand the business and its industry very well.
This point is worth stressing because the emphasis on their independence can create the mistaken impression that they should not have an intimate knowledge of the organisation whose affairs they are employed to safeguard. Independence is an attitude, and should not preclude knowledge.
Non-executive directors should also consider improving or gaining skills in a specialist business discipline such as strategy, finance, marketing, IT or production. There are arguably too many generalists among them, whereas business is increasingly reliant on highly specialised skills.
To direct an organisation effectively, they need the capacity to interrogate and assist those specialists. IT, including digitalisation, artificial intelligence and cyber security, is a specialisation of particular importance given the continuing technological disruption characterising the modern world – something Covid-19 appears to be accelerating.
It goes without saying that non-executive directors need a certain level of numeracy because many board discussions hinge on financial matters. When it comes to how these skills should be gained or maintained, there are many options open and the chairperson should provide guidance in this regard.
The IoDSA has long advocated the need for directorship to be professionalised so that non-executive directors and other directors can ensure they are focusing on the right skills considering the rapidly changing business environment.
The IoDSA’s certification programmes offer this framework within the context of continuing professional development; perhaps as important for directors in an increasingly litigious world, a professional certification offers an objective method of demonstrating competence.
Parmi Natesan and Dr Prieur du Plessis are respectively chief executive and facilitator of the IoDSA; email: info@boardgovernance.co.za and lucrative sector.”
Gaps had been identified in the European market, and there was good reason to think these export opportunities exist elsewhere.
Additionally, there was an opportunity to be the first mover in some of these categories locally; for example, all of the plant-based cheeses available in our large retailers are imported.
Infinite Foods, a local importer of plant-based based products like Beyond Meat’s burger, mince and sausages, Miyoko’s plant-based butter, Nature & Moi plant-based cheese, and recently Oatly oat milk, agreed with the ProVeg findings.
“Research like this confirms a lot of what we have been seeing. We are creating partnerships with local producers to bring more home-grown products to the market in the categories mentioned in the report,” said Infinite chief operating officer Neil Taylor.
In 2019, South African meat company Feinschmecker Deli Meats was the first local meat producer to market a plant-based meat replacement product when they launched Gudness – a range of plant-based deli slices.
Feinschmecker managing director Alistair Hayward said plant-based products were not just there for vegetarians – most of the growth in the category had been driven by people who still eat some meat, but were trying to cut back – or just trying new sustainable options.
Other opportunities highlighted in the report included plant-based egg and plant-based convenience meals.
The only major local manufacturer in this market is Durban-based The Fry Family Food Co.