ADC Africa Business Briefing Lord Charles Hotel 5 th March 2013

1. ADC Africa Business Briefing Lord Charles Hotel 5th March 2013 “An Overview of the Western Cape Fine Food Initiative”

2. What is food? "any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans.” ….. EU Excludes: "(a) feed; (b) live animals unless they are prepared for placing on the market for human consumption; (c) plants prior to harvesting; (d) medicinal products within the meaning of Directive 65/65 (…); (e) cosmetics (…); (f) tobacco and tobacco products (…); (g) narcotic or psychotropic substances (…); (h) residues and contaminants."

3. Definition of Fine Food Fine Food products shall mean: “Foods and beverages that exemplify quality, innovation and style in their category” The Fine Food specialty nature derives from some or all of the following characteristics: Their originality, authenticity, ethnic or cultural origin, specific processing, ingredients, limited supply, distinctive use, extraordinary packaging or specific channel of distribution or sale. By virtue of their differentiation in their categories, such products maintain a high perceived value and often command a premium price. Adopted from NASFT National Association for the Specialty Food Trade

4. Clear Vision To guide the growth of the South African Fine Food (and related Agro-Processing) Industries toward achieving worldwide recognition as a supplier of premium products and brands

5. History Time lines 2008 Idea of an Association conceived at meeting at Blouberg’s Blue Peter Hotel Steering Committee Elected 2009: Strategic Planning Interim Board Elected Structure and Organisation 2010: Implementation, Project Management Section 21 Company, Constitution, Programs & Events identified 2011: Membership of 50 TOP FINE FOOD CO’S Sustainable, Self Funding Participate in Events (SATH, FFS) Appointment of CEO 2012: Series of Capacity Building Workshops Towards Full Corporate Governance Compliance Improved Strategic Partnerships 3-Year Budget AGM

6. Partnerships & Associates Western Cape Department of Economic Development & Tourism Supporter of WCFFI from inception – ongoing commitment Provides funding, people and facilitation support Strategic Partner in the spirit of a Public Private Partnership WCFFI Project Management, Project Planning, Funding CPUT – AFS Projects, events and progammes (Larry Dolley) South African Global Trade Hub – Funding, Export Development Government - DTI, SEDA, SETA, Agriculture, Embassies Development Agencies – USAID, NorAid, Swiss Contact, etc. Corporate SA – as Associate Members

7. Business Service Providers Industry Development Officer OPERATIONAL & OVERSIGHT STRUCTURE WCFFI Board Chief Executive Officer Admin assistant Dingaan Goodwell Board Member Earl Starr Board member Shelldon Breda Board member Amina Abrahams Board Member Shreef Abass Chair Person Debbie Payne Deputy Chair Person Nazeem Sterras Acting CEO Larry Dolley Board Member

8. Objectives Manage, promote and protect theinterests of the Fine Food Industry; Create closelinksbetween suppliers, producers and retailers; Share information ontraining provision to fulfill the needs of the organization; Create a conducive environment for the development of the Fine Food Industry by means of a membership-based platform.

9. Promotion of services, operations and functions of the Fine Food Industry including procurement, processing, marketing, sales and distribution in respect of the products of the industry; Promote the protection of consumers by adhering to international food safetystandards and the Consumer Protection Act; Promotion and implementation of innovative measures in line with local and international requirements; Adhering to the transformationcharter by employing an affirmative approach to the industry

10. PROGRAMS, SERVICES & EVENTS • Improve Competitiveness in Supply Chain • Identify Trade Opportunities, Trade shows & Trade missions • Enterprise Development & Supplier Diversity (BEE) • Market Access & Compliance • Access to Business Finance, Funding & Risk Management • Capacity Building, Mentorship & Incubator program • Market Research & Market Intelligence/Information • Workshops & Industry Applicable Events

11. LOGISTICS TRAINING & SKILLS DEV. MACHINERY QUALITY ASSURANCE INVESTORS RSA Agro-Processing Value Chain Matrix

12. Selected Sectors/Sub-Sectors Agri Business Processed Products Benefication Technologies Fresh Produce Fruit Flowers Eggs Vegetables Milling– Grains,Oilseeds Dehydrated Products – Soups, Sauces, Spices,Dried Fruit Non/Alcholic Beverages - Wine,Tea,Juice Canning – Fruit,Vegetables Meat – Poultry,Red.Wool Seed Oils Fuel Energy Waste Management

13. Needs of target Group DEMAND SIDE SUPPLY SIDE Small, Emerging, Commercial Enterprises Large Agribusinesses & Commercial Corporations Small, Emerging, Commercial Enterprises Large commercial retailers, export & consumer markets Manufacturing, Sorting, Packing Agro-Businesses SME & CORPORATE SUPPORT Information Knowledge management Marketing& Business Development Six pillars of support Training & Capacity Building Technology Advisory assistance SME Infrastructure Financial Assistance

14. SME readiness/ Deficiency report Facilitate necessary support to build capacity Periodic review of progress SME readiness/ Deficiency report SUPPLY Existing Supplier that is Linkage Ready Potential Supplier that is Linkage Ready DEMAND • Mobilise corporate support for SME supplier development Company Diagnostic • Org & management improvements • Accounting/MIS • Quality assurance • Certification (ISO) • Product/ Production improvements • Marketing strategy • BEE certification • Mentorship, coaching • Analyse corporation value and supply chains Business Service Providers provide support • Identify and quantify linkage opportunities for SME suppliers • Strategise & plans for SME linkages & support to procurement practitioners No progress REFER to STRATEGIC PARTNER • SMEs engaged in accordance with corporation requirements INCREASED BUSINESS LINKAGES

15. Dilemmas Balance Product/supplier Market/Buyer SME

16. World food TRENDS Trend 1: Sense of Simplicity: - People nostalgic for simpler times, and simpler foods - Back to Basics has driven interest in natural and clean-label foods - Natural ingredients, including natural sweeteners extracted from source (apple, agave and maple syrup) - EU approval of the high-intensity natural sweetener stevia also looks close - The natural trend has been particularly evident in beverages: * 13% of global soft drinks launches in the first 9 months of 2009 period were positioned on a “natural” platform,dominated by bottled water and fruit drinks Trend 2: Sustainable Gathers Steam: - Well-informed consumers looking for locally-sourced, fairly-traded products - The organic trend has flattened in the downturn - Fairtrade new product activity is continuing to rise * major confectionery companies Cadbury and Mars making fairtrade commitments - The notion of carbon footprinting also looks set for a move into the mainstream

17. World food TRENDS Trend 3: Inherent Nutrition: - It is a tough time to be in the functional foods - Strict EFSA policies demanding scientific support for ingredients such as probiotics - Consumers increasingly skeptical of foods that fail to provide immediate benefit - Foods with traditionally perceived benefits (fruit, vegetables, milk) pushed further as inherent health benefitsare communicated Trend 4: Functional Superstars: - The relatively few healthy ingredients have survived EFSA’s early rulings will move to the fore in functional foods - Others will be forced to rely on softer claims - With EFSA decisions thus far, it is difficult to predict exactly which ingredients will triumph, but tough times ahead for radical and obscure ingredients making outlandish claims. Trend 5: Going Immune: - Swine flu fears have fuelled a demand for immunity boosting products - Expect ingredients (probiotics, various antioxidants) to be marketed on this - Manufacturers will have to be careful overdoing claims (E.g. Danone has found itself in trouble with the Advertising Standards Authority UK over claims that its Actimel probiotic drinks could help support children’s defences and Kellogg’s has already dropped an immunity claim it was using on Rice Krispies in the US)

18. World food TRENDS Trend 6: New Delivery for Energy: - “Energy” is the hot concept in functional foods - Stimulating ingredients are used in new applications - Energy shots, essentially US concept, now well and truly arrived. - The “energy” concept increasingly hot in confectionery product activity, E.g chewing gum Trend 7: “Free From” Rises: - Move toward more “gluten-free” and other “free-from”foods - Focus more on taste and quality - High-quality brands are positioned as “easy to digest,” - At ANUGA : a product formulated with konjac gum addressing needs of seafood allergie indicating that previously untapped markets are now starting to be addressed. Trend 8: Continuing to Cook at Home: - Grocery retailing enjoying a boom in both budget and high-end products - While………….. the mid-sector is squeezed (majority of consumers) - One of the catchphrases “Staying in is the new going out” - Despite some indications of “green shoots of recovery” on the horizon, consumers do not have the confidence to foresee complete economic recovery as yet - Foodservice will continue to struggle…: Consumers continue to rediscover their cooking and entertaining skills.

19. Development Profiles for 2013 Ingredientsblack garlic, padron chile, horseradish, quail eggs, durian, ramps, pine needles, fish milt, whey, seaweed, ashes, sawtooth herb, green chickpeas, kimchi, fermented everything Flavorsdukkah, sumac, sour, torridly hot, smoked, turmeric, barrel-aged hot sauce, gochujang (Korean hot sauce), Japanese katsu sauce Vegetablescenter of the plate, sunchokes, raw winter vegetables, cauliflower, broccoli romanesco, parsley root, chiogga beets, pumpkin, baby sweet potatoes, turnip greens, beet tops, collards.Fruit cherries, baobab, huckleberries, finger limes, calamondin, rambutan, heirloom apples, grapefruit, white strawberries Grains freekeh, farro, bulgur, noodles (udon, soba, cellophane, rice), millet, teff, buckwheat DessertsDoughnuts, artisanal soft serve, push-pops, savory flavors, boozy desserts DrinksTea (the new coffee?), coconut water Snackspopcorn, homemade snacks, popped grains Authentic EthnicNordic, Middle Eastern (my favorite!), Asian, Nex Mex (high-end Mexican), South American (Brazil, Argentina, Peru)

20. Overcoming export barriers for South African SME's TRADE AGREEMENTS: DOHA Round suspended EU local import duties waived Free Trade Agreements signed with Mexico (2000) & Chile (2003) Generalised System of Preferences (GSP) in place Negotiating Bi-Lateral Trade Agreements with Brazil and India….and others (not RSA) FOOD SAFETY LEGISLATION New impetus after 1990’s food scares General Food Law – placing responsibility with the industry HACCP, BRC, GlobalGAP, EurepGAP, Nature’s Choice, Fairtrade Stronger role for European authorities STRICTER FOOD LAWS Contaminants, including MRL’s Labeling & Consumer Alertness (allergens, nutritional & health claims) Additives & Flavouring Full Ingredient Statements Organic Foods Genetically Modified Foods (GMO’s) Preservatives (Long-Life stabilisers)

21. Growing control of LARGE Retailers Concentration in buying power Demand for high level of professionalism of the producers, food safety programs, continuity, volume, competitive pricing, marketing support Chain control from seed to shelf/field to fork

22. Value Chain Analysis

23. Value Chain – Supporters and Influencers

24. Complicated Value Chain in South Africa Product Export Markets Juiced/Canned Dried/Processed CONSUMERMARKETS Product Local Markets Large Retail Stores Informal Traders Direct Stores Grower Self Export & General Marketing Retailing Wholesaling Bakkie Trade Municipal & Fresh Produce Markets Processed Products PROCESSING Export Marketing Agents Commercial Pack Houses Sorting Packaging Large Pack House Facilities Commercial Farmers Small Holders Producing Large Vertically Integrated Farmers Nurseries Root Stocks /Trees CHANNEL 2: EMERGING & COMMERCIAL CHANNEL 3: LARGE CORPORATIONS CHANNEL 1: SMALL/SURVIVOR

25. Clear Business Strategic Position for SME Competitiveness • Price relative to competitorsAbove Average • Product Quality Premium • Brand ImageHigh Profile • Uses of Cost-chain RebatesMedium/High (Economies of Scale) • Overall Business StrategyBest Cost/ Premium Quality • Service to Customers Superior

26. Key Success Factors • Attunement to market signals, incentives, value chain intelligence, competitors, regulatory, policy and compliance frameworks and specifications; consumer habits; patterns and trends • Adaptability to market, technological systems, process, cultural, ecological shifts, trends and standards • Alignment of capability, systems, instruments and processes, research and development to mast benchmarked globally competitive factor conditions and productivity levels. …SCM • Participation in trade shows, co operative shipping and group representatives • Sharing knowledge, logistics, contacts without sharing IP

28. WHAT YOUR WCFFI MEMBERSHIP MEANS TO YOU Access to Sector Information & Knowledge Management Food Industry Service Providers (Database) Programs covering Capacity Building and Skills Transfer; Best Practices; Innovation & Technology; Market Development, Research & Intelligence; Enterprise Development & Competitiveness; Preferential Market Access & Export Promotion; Value Chain rebates …..Economies of Scale. Trade Shows, Trade Missions, Trade Exhibitions (with Partners) In the Future…….E-commerce opportunities…….AND MORE!!!! SIGN UP NOW!!!

29. Thank You