Silver linings: SA foodbev sector could emerge stronger from pandemic
While the pandemic and restrictions dealt a blow to revenues during lockdown, businesses that pivoted fast and marketed themselves well have managed to cushion the blows, and now have the potential to emerge from lockdown stronger than before.
CRAFT DISTILLERS SURVIVE HARD LOCKDOWN
Craft distillers were particularly hard hit by restrictions on trade in alcohol and the shutting down of restaurants. However, those that have stepped up marketing and sales through digital channels have survived through the lockdown, and now have potential to grow, says Hendre Barnard of the SA Craft Distilling Institute (SACDI) and training and marketing manager at Distillique. [But sadly now dealt another nasty blow! Ed]
Barnard says the billion rand craft distilling sector, with around 130 distillers producing for over 270 brands, directly employs over 1300 people and supports a huge value chain – from farmers through to logistics.
Following a slow December season, craft distillers were hit hard by the lockdown and the threat of massive excise tax payments due. However, the industry’s lobbying for a three-month excise tax grace period may have helped craft distillers survive long enough to benefit from the spike in sales after the ban on alcohol sales was lifted.
“Small distillers have so far managed to hang on, but if we don’t see a return to normal in the next two months, those who are vulnerable could start to fold,” he says.
However, he also notes that the lockdown produced some silver linings for the sector: “A handful of new craft distillers actually set up shop during the lockdown, and the trend for South Africans to try home brewing and distilling generated newfound interest in the craft.
“Those craft distillers who launched online sales and used social media to position themselves correctly have seen a surge in sales after the lifting of the alcohol ban.”
With restrictions on movement and tourism still a threat to the sector, Barnard believes now is the time for craft distillers to innovate: “They need to use new marketing techniques, get online and gear up for whatever comes next. Those who relied on reps and tastings to market their products must change their modus operandi and become more creative about how they reach people.
“This sector, with massive potential to drive job creation and economic growth, must change its narrative and put a face to the organisations. Now is the time for them to position themselves correctly, use their resources like extra time on their hands to develop their websites and social media, create content, enable virtual tastings and tours. If they do, they could come up stronger on the other side.”
“Innovation now is paying off in spades,” Barnard says. He also sees potential for the sector to work together to create new tourist destinations, much like South Africa’s wine route.
Suzette Scheepers, CEO of food & drink technology Africa organisers Messe Muenchen South Africa, says active marketing will remain key to business growth in the short to medium term.
“Businesses have to highlight their value propositions now more than ever before. Channels such as social media and trade events are crucial for building communities of loyal customers.”
FOOD MANUFACTURERS FOCUS ON STANDARDS, SUSTAINABILITY
As an essential service, food and beverage manufacturers worked throughout lockdown. While travel restrictions did impact the supply chain and cause some delays in the payment chain, the sector is working together to overcome these challenges, and could be poised to emerge from the pandemic better than before, say the experts.
Global manufacturing automation and pneumatics manufacturer, SMC, reports that local food manufacturers adapted quickly to constraints in the early weeks of the lockdown.
Peter Findlay, SMC Corporation GM, says: “Cancelled flights and slower shipments into the country were a challenge, but we were fortunate in that we have local manufacturing capacity. In addition, local logistics teams have been very responsive, and any supply chain bottlenecks are now correcting.
“An interesting development is that our engineering department has been busier than ever: those customers who previously did not get around to improvement projects have now had time to give some thought to modernisation, and are looking to implement more advanced processes and improved energy efficiency programmes.”
JBee Steyn, national sales manager at SMC Corporation, believes that many local manufacturers are now planning to fast-track their plant modernisation programmes.
“Efficiency and energy saving has become very important for everyone, and it appears that during lockdown, many people found time to analyse data and calculate the ROI on modernisation and energy efficiency,” he says.
Ecolab a global leader in water, hygiene and infection prevention solutions and services, reports that the stringent new health and safety standards being implemented as a result of the Covid-19 pandemic are set to improve food production standards in the long term.
“The food production industry has long held itself to high standards of hygiene and food safety, so the new guidelines simply increase awareness, says Ecolab VP, Qasim Abraham.
“Covid-19 is forcing the industry to accept what we been trying to preach: that proper environmental hygiene procedures are crucial across the entire value chain, from farm to fork. This is a good opportunity for the industry to elevate standards and reinforce the importance of personal and environmental hygiene to guard against a multitude of risks.”
To read more, click here.