Kraft Foods Southern Africa is in the spotlight as the region becomes an increasingly important revenue stream for the world’s second largest food company.
Kraft Foods is renowned across every continent as the powerhouse that punches with the tastiest and best-loved snacks. Forty of the 100 or so brands that Kraft holds in its global portfolio have been in existence for over a century and the company now ranks as the second largest food company in the world. Through a clutch of iconic brands that include Cadbury, Jacobs, Oreo, Oscar Mayer and Philadelphia, not forgetting Kraft itself of course, the company markets an eclectic mix of biscuits, confectionery, beverages, cheese, grocery products and convenient meals in over 170 countries.
Last year, Kraft had revenues of $49.2 billion, more than half of which was earned outside North America. As disposable incomes rise across the developing world and instantly impact on food budgets, emerging markets are a priority and the company is eyeing the African continent with a new zeal.
Southern Africa, in keeping with its economic status, has the most keenly developed appetite of all for snack foods. The region has been added to the roster of 10 priority developing markets that will receive disproportionate investment from the company.
In a visit to Africa earlier this year, Kraft’s president of Developing Markets, Sanjay Khosla, outlined his ‘Winning through Focus’ strategy for the company's $13 billion Developing Markets business, which he highlighted as Kraft’s growth engine for the future. The strategy has already succeeded in tripling the company’s developing markets net revenues from 2006 to 2010. It is centered around three pillars: focus, people and what Kraft has termed ‘glocal’—or adapting the lessons learned from global best practice to realities on the ground.
For Khosla, focus means understanding what you do well and then pursuing the opportunity single-mindedly, rather than using the company’s sheer weight and size to bombard the market with multiple brands in multiple categories. “We focus on just five categories, 10 power brands and 10 priority markets. South Africa is a priority market for us and we focus on power brands like Cadbury chocolate," he explained.
People represent the central pillar of the strategy and Khosla is committed to investing in the development of local talent and nurturing future leaders who will have the opportunity to gain experience not only in South Africa, but around the world. "South Africa is a great source of global talent. Regional and international mobility is a phenomenal development opportunity for our people and South Africa’s diversity is a major competitive advantage,” he said.
Kraft is keen to leverage its global might, but there is clear recognition that each local market has its own unique characteristics. “We encourage independent thinking and entrepreneurship among local leaders who understand the local market, while taking full advantage of our worldwide strengths in areas like technology, sales and marketing,” he added.
He has announced that Kraft is set to invest US$150 million into local manufacturing operations in Africa over the next three years, targeting the operations that manufacture high profile brands such as Stimorol chewing gum and Cadbury Dairy Milk chocolate. The company is also investing in increased capabilities and capacity for its research and development facilities in Johannesburg, which will serve as a centre of excellence throughout Africa.
Today, Kraft has a headcount of 2,400 employees in Southern Africa and operations are guided by a head office situated in Johannesburg, South Africa, with manufacturing plants in Port Elizabeth, Swaziland, Botswana, Kenya, Johannesburg and Namibia.
Kraft’s presence in Southern Africa received a major boost through its recent amalgamation with Cadbury. The Cadbury brand became part of Kraft in February 2010, with both companies already having an established presence in Southern Africa. The integration of the two companies into a single legal entity—Kraft Foods South Africa—was formally completed on March 1, 2011.
Cadbury had the larger presence and the move dramatically and instantly gave Kraft a much more sizeable footprint in the region, particularly in confectionary markets. The company now manufactures and markets candy, chewing gum, biscuits, coffee and groceries.
New Zealand-born Sean Murphy has recently been appointed managing director of Kraft Foods Southern Africa and is tasked with overseeing the integration. He admits it is a major undertaking to bring the two companies together in one culture but believes that his extensive experience within the Kraft group in the Middle East, South East Asia and New Zealand has equipped him well for the task in hand.
The biggest benefit for the Cadbury workforce, he believes, is Kraft Foods’ commitment to people development and the opportunity for career growth, either within the local organisation or within the company’s extensive international footprint. “My priority is doing the right thing for the people and the business and I won’t compromise on that,” he stated, adding that the company is currently combining the ‘best of both’ from each company to ensure that the best resources are in place to carry the business forward.
Kraft is gearing up to double turnover in just five years, despite the increasingly competitive snacks and groceries market. Murphy is convinced that focusing on people development within the company’s operations is the key to meeting this ambitious target, by ensuring maximum output from investment in new technologies and manufacturing processes.
A pilot programme has already been initiated at the company’s Cadbury Botswana sugar-free gum manufacturing plant in Gaborone. Investment worth R160 million—aimed at increasing volumes and transforming the plant into a world-class African operation—has been made into the former family-owned business.
Johan van Zyl is manufacturing director for Kraft Foods’ sub-Saharan Africa region, comprising Southern Africa, Central East Africa and West Africa, across which nine wholly-owned operations are located. He too is convinced that employee competency and capability must underpin the improved manufacturing infrastructure.
“We’re marrying the hardware and software—that is, the physical assets with the people and skills—to create a sustainable operation,” he said, adding that staff at the Botswana plant had increased the plant’s competency level from nine per cent to 52 per cent over a period of just nine months. At the same time output on the existing technology platform had increased by 40 per cent.
“This has proved that there is a strong correlation between competence and capability development and operational performance,” he said of the gum manufacturing operation which, with good margins and growth rates, is a strategically important category within Kraft.
The people development concept at Cadbury Botswana utilises internal assessors to evaluate competence against job standards through formally defined job outputs, roles and responsibilities, as well as learning aids and objectives. “It is a move from acquired competence to applied competence,” said van Zyl of the training programme.
The Botswana model, which typifies the growth potential that Kraft sees in its sub-Saharan network of operations, is to be rolled out at other plants where significant investment is being made in transformation programmes. These include South Africa’s Port Elizabeth chocolate manufacturing plant, site of a R750 million investment in capacity and capability technology. Meanwhile, Cadbury Nigeria is investing in a new Bournvita (a fortified chocolate beverage food drink) manufacturing facility at a cost of R350 million which is being constructed just outside Lagos.
According to van Zyl, investments like these are proof of the company’s confidence in the African market. “Kraft Foods South Africa is committed to creating locally-led sustainable operations that comply with the global company’s rigorous safety and manufacturing practices. We believe that our Botswana competence development programme is an indication of what we can achieve at our other regional operations. We are demonstrating on the ground that Africa has the potential to produce world-class facilities that can compete in the global marketplace.” www.kraftfoods.com
