First-Hand Experience Of An African Retail Giant

South Africa’s Shoprite Group has had to jump over numerous hurdles to expand its network of stores across Africa. Today, as the largest retailer on the continent, the group sources produce from 450 South African farmers and 700 farmers from elsewhere in Africa. Dr Johan van Deventer, general manager of Freshmark, the group’s fresh produce division, believes that trustworthy relationships have been at the heart of this success. He spoke to Lindi Botha.

- Lindi Botha

WHAT ARE YOUR GREATEST DIFFICULTIES IN EXPORTING FRESH PRODUCE TO THE REST OF AFRICA?

The African market presents numerous challenges. One of these is being able to offer consistent, quality exports, as this builds trust in the marketplace and with consumers, ensuring a loyal customer base.

Cold chain maintenance forms part of this; we require reliable logistics, which often means higher costs for us. Supplyline cost is a big drawback: a refrigerated container from South Africa to Spain costs $1 500 to $2 000 [between R26 700 and R35 500], but from South Africa to Angola it costs $5 000 [about R88 800]. This means we have to ensure that within the total package we offer we can still make a profit. But our margins are not what they would be in South Africa.

We source as many products locally as we can and only import those that cannot be grown in those countries.

Because we have to contend with unreliable power supply in many African countries, with high generator costs, we limit what has to be kept in cold storage.

The market also requires functional packaging that is reusable as far as possible. In South Africa, we use plastic crates that are returnable and refundable, which saves millions of rand in packaging costs. Such systems are not in place in the rest of Africa, so we rely on cardboard boxes, which can be recycled and used for other purposes afterwards.

Harbour costs and inefficiencies are a major difficulty in Africa. Exporting into the continent often requires crossing a number of borders, so our paperwork must be correct and submitted on time to ensure we have the correct permits, or we risk losing entire containers of perishable foods. To keep costs low, we use the shortest route possible to a market, using the most affordable mode of transport.