Pulp facts
Cape Fruit Processors has had unique success in one of the worldÔÇÖs trickiest markets, proving to John OÔÇÖHanlon that itÔÇÖs no ÔÇ£me tooÔÇØ player in the South African juice and pulp industry.
Four years after qualifying as an accountant, Max Thalwitzer heads Cape Fruit ProcessorsÔÇÖ principal production unit at Malelane in the Limpopo Valley, near the place where his grandfather, Mannetjie, first started to farm citrus fruit in the 1960s. In 2000 MaxÔÇÖs father Vonnie moved south to start a deciduous fruit businessÔÇöapples and pears, basicallyÔÇöin the Cape area, with processing facilities at Paarl in the Western Cape and Mpumalanga on the other side of the country, about 30 miles inland from Durban. Mpumalanga was home to Riverside Processors, which in 2000 combined with the other Thalwitzer family group entities and some farming interests belonging to Johann Rupert, the wealthy South African owner of the Swiss-based Richemont Group. The present-day Cape Fruit Processors is divided equally between the Rupert and Thalwitzer families, explains Max.
South Africa is not the biggest producer and exporter in the world, but it is one of the most stable, so the large global juice, beverage and canning companies like to have strategic relations with suppliers who can continue to provide them in the event of a poor lemon season in Argentina or a hurricane in Florida. And Cape Fruit Processors has a unique spread of facilities throughout the country as well as a comprehensive product range. The greatest emphasis is on citrus and apples, but guava, litchi, pineapple, mango, mandarin oranges and paw-paw are all in the portfolio.
Around 60 percent of production is exported, and Cape Fruit Processors supplies significant quantities of product to Japan. About 80 percent of exports from the big citrus plant at Malelane are shipped to that market. ÔÇ£Japan is a very important market for us,ÔÇØ says Thalwitzer. ÔÇ£It was a difficult market to get into because quality has to be perfect.ÔÇØ Japan is known as the world leader in production standards, so any lapse in quality is never accepted, he says. ÔÇ£The great thing about our Japanese customers is that they give us a lot of help to improve our processes to be more efficient, make better product, and have less problems with claims.ÔÇØ The adoption of tools like Hazard Analysis and Critical Control Points (HACCP) to forestall any problems elevate the group to global standards of excellence in the food industry.
Probably for this reason, no other South African player has cracked the Japanese market. Cape Fruit Processors built up this business over more than 20 years from small quantities of IQF (individually quick-frozen) citrus segments; since then it has grown to include concentrates and fruit pulp. Today, says Thalwitzer, the company enjoys the trust of these most demanding of customers, and there is no doubt that the rigour involved in meeting their demands has added to its strategic aims of achieving low cost through efficiency, running a lean company and forming long-term customer relationships.
Management structures are kept to a minimum, he says, and to manage the spread-out facilities, Cape Fruit Processors has introduced state-of-the-art systems. ÔÇ£We had to invest in order to stay ahead. We have a very good IT backbone that enables us to see production figures from all the plants and manage them more efficiently.ÔÇØ All the information is managed at the head office in Malelane, and the software has been custom made, he stresses. ÔÇ£It is tailor-made for the different plantsÔÇöfor example, the Paarl factory tends to ship its product in bulk, whereas the others tend to work with drums. They canÔÇÖt all use exactly the same system.ÔÇØ
Nevertheless the investment in IT has paid off in terms of cost. ÔÇ£We are very competitive in price,ÔÇØ says Thalwitzer. ÔÇ£Our main management objective is to keep costs as low as possible. We keep our structures as small as possible, introduce efficiencies wherever we can, and rely a lot on our IT systems and process automation to enable us to do more with fewer people. We are not top-heavy with management. Apart from our offices at Malelane, most of our factories just have one person in charge and a few supervisors.ÔÇØ
The fruit business is very seasonal, and the workforce can fluctuate between 600 and 1,300. ÔÇ£There is a lot of unemployment in South Africa at the moment,ÔÇØ says Thalwitzer. ÔÇ£On the other hand, there is quite a big demand for skilled people. In order to fill that demand we have to take unemployed, unskilled people and train them in the juice business. If weÔÇÖre going to expand in the future, weÔÇÖre going to need these skilled people.ÔÇØ It is, he adds, a specialised industry, and in-house training is the only way to be sure of instilling the culture and quality standards the customers rely on. ÔÇ£When you are exporting to countries like Japan, having best practices in place is very important, and that is especially so for a country like South Africa.ÔÇØ
Farming is a make-or-break issue in the South African fruit industry because there is over-capacity on the processing side. Cape Fruit Processors is fortunate in coming from a farming background, having its own farms supplemented by others owned by Rupert in the Malelane region and sound contractual arrangements with South AfricaÔÇÖs largest grapefruit grower. ÔÇ£We have plenty of fruit in the Malelane area,ÔÇØ Thalwitzer says, ÔÇ£but not far away at Nelspruit thereÔÇÖs a shortage of lemons, so that factory is not up to capacity production right now.ÔÇØ
Cape Fruit Processors acquired Nelspruit in 2008, but as it is one of the oldest factories in the country, there are plans to move it to Hoedspruit where supplies are more dependable. To the south-west, the Paarl factory near Cape Town is amply supplied by Cape Fruit ProcessorsÔÇÖ own apple orchards in the Western Cape. Further west at Kirkwood the companyÔÇÖs newest facility, purpose-built in 2008, is well situated at the heart of one of the best citrus-producing areas. ÔÇ£I am not particularly worried about fruit in that area,ÔÇØ Thalwitzer says with equanimity, adding that he is just about the only player that is equally strong in the citrus and deciduous sectors.
Cape Fruit Processors has proved it can operate in a global market. The domestic scene is no less challenging, largely because of high local demand for fresh fruit, which South African citizens prefer above chocolate. ÔÇ£ItÔÇÖs a very unstable situation, and I think in the next five years or so this whole thing will rapidly sort itself out. ThereÔÇÖs no way all the current processors can survive on the amount of fruit that is available,ÔÇØ ThatÔÇÖs Max ThalwitzerÔÇÖs realistic assessment, but itÔÇÖs a situation where Cape Fruit Processors stands to benefit.
