- 28 October 2019
Seeing the Future First
Strategy, innovation and connecting the dots: Libstar CEO Andries van Rensburg reflects on 30 years in the food business.
In the food industry, rather ask for forgiveness than ask for permission. Why? Because buying food is not like buying a car. If somebody goes out today to buy a particular brand of honey, and she doesn’t find it, she’ll purchase a different brand. And that sale you’ve lost, you’ve lost forever.
The food business used to fall under the fast-moving consumer goods (FMCG) industry. Now it’s called consumer packaged goods (CPG), but that doesn’t mean anything has slowed down. In fact, the opposite is true. Things are moving faster than ever.
To operate successfully in such a fast-moving environment, a business needs to be agile, with the ability to adapt quickly as trends develop. But it also helps if you can see the future first.
Implementation is about the ‘how’. The question “How are we going to do it?” is important, but it comes later. First you need to know what you’re going to do. Strategy is all about the ‘what’: “What are we aiming to do?”
At Libstar, strategy is about seeing the future first. Seeing where the market is headed. Seeing the opportunities, the gaps. Seeing where there is space for innovation.
Strategy drives the future of our business, and two subsets of that strategy are the habit of innovation and the art of joining the dots.
TRUST YOUR GUT
Lancewood has a special place in the Libstar family. And in the story of Lancewood, innovation has always been a key ingredient.
In 2008, Lancewood was a bankrupt dairy. The banks had literally put padlocks on their doors. Libstar took on the Lancewood business and 11 years later Lancewood is the most profitable natural cheesemaker in South Africa.
If you create a hundred new product ideas, some will probably make it to market and many of those will fail. But if you’re asking the right questions – the what, and then the how – more of those new products will be viable. But you’ve got to be brave enough to act on your beliefs. You have to trust your gut. That’s a lesson I’m still learning – to trust my gut more often.
For instance: everyone told us to stay out the yoghurt category. Apparently it was too competitive for a newcomer to make an impact. But when I was travelling in Portugal, I noticed how amazingly good their yoghurt was. Much better than what was on offer in South Africa. Why?
Why couldn’t we in South Africa do a yoghurt that was better than anything they have overseas?
It took us a year, but it’s fair to say that Lancewood now has the best double-cream flavoured yoghurt in South Africa – it won one of only six Qualite awards handed out at the 2019 Dairy Association Annual Fair –and sugar-free and low-fat-high-protein versions will be launching soon.
Another example of how to connect the dots is Lancewood Sauce Delight – we took fresh cream, which all the dairies have on shelf, and added real cheese, mushrooms or peppercorns to produce three brand-new flavoured white sauces that are, as they say, “so fresh you can only find them in the supermarket fridge”.
A few months ago, that product sector did not exist. Now we’re producing about 30 tons of Lancewood Sauce Delight every month.
Multi-Cup – the small food packaging company that Libstar owns – has also seen the future first, in this case by moving away from manufacturing plastic cutlery and cups and lids and towards producing wooden cutlery, paper straws and compostable cups.
Environmentally sustainable packaging has been on Multi-Cup’s radar for years. Initially we imported biodegradable cups and straws, but that turned out to be far too expensive. So now we are the first to manufacture eco-friendly packaging solutions in South Africa, supplying customers like KFC and our new Precious Planet brand. It’s a market opportunity that we’ve grown from zero to R3-million turnover per month.
Innovation and connecting the dots is not just about new product development, or radical invention. It also involves thinking about challenges in a different, smarter way – or understanding a particular market need better and evolving, re-positioning and re-launching.
A culture of innovation can certainly benefit from being exposed to developments and trends in international markets. For example, from what I see, the SA market tracks the UK market more closely than any other. So it can be a rich source of insights, if you know where to look – and also if you know how to look.
Can you encourage a culture of innovation in a formal way by, for instance, aiming to generate a certain amount of turnover through new products? Absolutely, and at one stage everybody aimed for that magical 15% of turnover coming from new products. But exactly what constitutes a new product can be subjective and something of a slippery slope.
But even if such targets have gone a bit out of fashion, Libstar still measures and reports those numbers to illustrate our ability to innovate. So far, 6.7% of Libstar turnover YTD has come from genuinely new products, which to me is an excellent return.
You get a culture of innovation, which is great, but then you get innovation that’s in your DNA. If, like Libstar, you have the latter, then growing profitability in a hands-on, more efficient and more innovative way will come naturally.
From building a machine to inject nitrogen into peanut butter to make it easier to spread, to a new forex management system that secures better exchange rates on our imports and exports, to working with our retail partners to drive innovation in product categories – because of our entrepreneurial background, at Libstar innovation never sleeps.
THE MANY FACES OF INNOVATION
A successful strategy doesn’t have to be fancy. Daniel Jacobs, our CEO at Ambassador Foods, is not scared to employ what he calls “a bucket and shovel” philosophy. He looks for gaps in the market and then he finds a way to fill them – by any means necessary. Even if it’s by hand! Then, once Ambassador has achieved volume, Daniel will invest in buying, building or customising equipment.
Ambassador currently packs 54 tons of product for Woolworths per week – all of which is based on expanding simple nut production into categories like cereals, snack bars, confectionary, groceries, and health and wellness. Achieving that kind of product diversity (147 lines in total) is rooted in continual innovation.
Daniel’s approach to recruitment is also interesting. “No-one works for me,” he says. “If people work with me to accomplish a goal, that’s something different. That’s called a team.”
Because Ambassador Foods is based in the small town of White River in Mpumalanga, a place that big city people might struggle to adapt to, Daniel recruits students with a rural background from universities like North-West University. On average, Ambassador’s office staff are 28 or 29 years old, highly educated (Honours or Masters degrees), completely empowered to contribute, and have been with the business for seven or eight years. A goldmine of talent.
Amaro Foods, who bake exclusively for Woolworths, is another great example of how connecting the dots can be a key skill, and how technology can play an important role.
Tony Amaro, the CEO of Amaro Foods, prides himself on developing scratch recipes – which means using no pre-mixes, only pure raw ingredients. Tony spent eight years perfecting the current Woolworths hot-cross bun recipe and, in fact, everything baked by Amaro Foods is from scratch recipes.
Woolworths recently asked Amaro Foods to develop a gluten-free hot-cross bun (and gluten-free baking is not the easiest), which Tony duly did. But along the way Tony was also inspired to deconstruct that gluten-free hot-cross bun recipe and develop an entirely new gluten-free recipe for a high-volume product that will taste better and be cheaper than any other gluten-free rival on the market.
In terms of high-tech innovation, Amaro Foods will become the first Libstar company to run a totally paper-free production facility when their new artisanal bakery opens in December. The point of going paperless is not only that it’s green, more efficient and will drastically improve data management – it’s also another way of seeing the future first.
THE REAL SECRET TO CONNECTING THE DOTS
As the biggest private label manufacturer in South Africa, Libstar has the significant advantage of having certain business streams within which we can – with our partners – move quickly to bring innovative products to the market. Of course, we’re also lucky to have partners who themselves are exceptionally innovative.
But there is one final thing that is central to connecting the dots of successful business collaborations and relationships.
Many years ago I remember meeting Barney Rogut, the doyen of Shoprite, for the very first time in his office. It turned out that he would always sit in the same position at his table, with his back to the wall. You’d be talking to Barney and, if you raised your eyes, in the picture frame that hung above his head, you’d see his favourite saying: “If you tell the truth, you don’t have to remember a lie.”
My mother used to say something similar. “My son,” she’d say, “You’ve only got one name. If you throw that one name away, you don’t have another name. You’ve been given one name.”
I think it’s important to realise that in the trade you only have one name. Yes, Libstar works hard at innovating, but integrity and absolute honesty and openness are at the heart of everything we do.
Without these core values, I believe that it would be difficult to stay in business long enough to see much of the future anyway.