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FoodBev brings you an excerpt of the interview that featured in dairy innovation (issue 15) when Editor Geoff Platt talked to Marketing and Sales Director Louis Loubser about the development of South Africa's Fair Cape dairy business.

The Loubser family started farming in South Africa’s Western Cape more than 130 years ago on a farm 15 kilometres from Cape Town. In the 1950s Eduard Loubser Senior moved it from a small scale business and set it on the road to becoming a fast growing dairy company.

After six generations, the current Loubser family consists of five brothers, all of whom have inherited their father’s passion for excellence; each responsible for an important aspect of this fast growing dairy business.

Villiers Loubser (second on the left in the picture above) looks after wheat and wine farming; Melt Loubser (furthest right) is CEO; Eduard Loubser Junior (furthest left) is Financial Director; Louis Loubser (third on the left) is Director of Marketing and Sales; and Johannes Loubser (second on the right) looks after milk production.

Interview

Why was the decision taken to move forward with dairy in such a big way? How did it develop?

Dairy farming was always a small scale operation until our father decided to upgrade this activity in the mid 50s. Today the business has a well bred, healthy, strong herd of Friesland cows producing milk of outstanding quality under optimal conditions.

In the past, milk was supplied to the larger dairy manufacturers who monopolised the industry with low prices to the producer and high prices to the consumer. As a result, the family was faced with a decision to either close the dairy business or identify ways to add value to dairy – which is what we did.

A relationship with one of South Africa’s premier retail chains, Woolworths, developed soon afterwards and has subsequently grown into a strategic partnership. This partnership was critical to our business, as Fair Cape had finally identified a customer that understands the buying needs of the public, as well as the ability to recognise and exceed the expectations of its customers.

As a result of the strategic partnership which developed with Woolworths, the Fair Cape business expanded and a new company was formed, The Dairy Connection. The Dairy Connection’s facilities were constructed along technical specifications and guidelines provided by Woolworths. These were officially opened in December 1997 by Simon Susman, then Foods Director and currently Chief Executive Officer of the Woolworths Group.

In 1998 Fair Cape Holdings Group acquired majority shareholding in a fruit processing plant - Fruitique. This acquisition ensured that the Fair Cape Holdings group could continue its quest for product excellence, having total control over the supply of fruit syrups and fruit preparation used in the production of yogurt.

You work very closely with Woolworths. Tell us more about that relationship, how it works and how it has developed.

Yes, we have regular meetings to ensure that we keep our product quality at the highest level and that we are always in tune with the market’s needs. We make 70% of the Woolworths yogurt nationwide. Its market share is estimated at around 9% of the market.

We tie in very strongly with the Woolworths ‘Good food strategy’ of producing good food with no preservatives and only natural colours and flavours. The Dairy Connection has aligned itself to this philosophy through the process of major innovation. This has resulted in unique yogurts and other dairy products being manufactured free of preservatives and other additives and also using only natural flavours and colours.

Furthermore, the company has aligned itself to further exceed this expectation of the consumer by ensuring food is manufactured in world class production facilities, enabling the complete removal of all hormones and other additions to the production of raw milk. We offer the consumer complete traceability of raw product by exclusively offering Woolworths production of the majority of Woolworths’ regular yogurt requirements from one production facility.

Woolworths is also very committed to the triple bottom line - this includes environmental and social welfare considerations, not just financial ones. Fair Cape, with its unique environmentally friendly milk production facility - where not a drop of effluent is spilled into the environment - contributes materially to this.

Tell us a little about the range of dairy products from Fair Cape, how these have developed and grown. Are there plans for more new products?

Our range of products can be split into four groups: three principal dairy groups - milk, yogurts and desserts - and juice (which contains a fruit dairy mix).

We launched a range of Fair Cape Free Range milks in PET bottles – available in full cream and low fat varieties in two litre, one litre and 500ml sizes. We also do milk sachets - but these are not marketed as Fair Cape Free Range.

We have a wide variety of yogurts: including nine and six pack offerings of our Silky Smooth and Fruit Ful varieties; Fair Cape low fat yogurt (500ml & 175ml); 250ml drinking yogurt sachets; 150ml layered yogurts; Bulgarian and Greek yogurt.

Our desserts include chocolate mousse, vanilla custard, crème caramel, chocolate dessert and caramel dessert.

Our juice range includes Splash - a dairy fruit blend available in orange, pineapple, peach and apricot flavours in 2l, 1l and 35cl sizes.

We are consistently looking for new product ideas and new potential categories within the dairy market. We have a detailed new product development plan which we are continuously rolling out, so you can definitely expect to see a consistent flow of new products from Fair Cape in the future.

Where are Fair Cape dairy products available? Just in South Africa or beyond? In what sort of retail outlets are your products available? Are you planning to widen the list?

Fair Cape products are predominantly available in the Western Cape, distributed through the major retailers - Shoprite, Checkers, Spar, 711, Makro, OK, BP Forecourts and various general dealers.

We also distribute selected products to Gauteng through the Spar retail group and our yogurts are available internationally on South African Airways flights around the world.

And we have national representation in Woolworths, for whom we distribute nationally on a daily basis.

Our strategy as far as market penetration is concerned is to optimise current markets before expanding horizontally.

Your website features school visits to the farm. Tell us about those.

Our school outings are very popular. We have between 2,500 and 3,000 kids that visit us every year. The biggest number of the school groups are booked through the MySchool Woolworths project. Other open days are then booked with the tour guide at Fair Cape.

The MySchool Project is aimed at improving the quality of learning in South Africa - one of Woolworth’s key focus areas. MySchool is an effective programme that we use to make a positive difference. The enhancement of teaching and learning in our schools is greatly hampered by a lack of resources at school level. MySchool is an innovative programme to address this need by raising funds for schools.

How do you see the future for dairy in South Africa in general and for Fair Cape in particular? How are you dealing with the environmental challenges that are facing all dairy companies?

The future of dairy, like many commodity products, is about adding value. More and more companies are coming to understand that they are not meeting customer demand by simply producing a commodity product and then trying to capture market share by discounting it to the market.

With the dynamic growth of the South African middle class, people are looking for ways not only to enhance their own family’s health, but that of the environment. People are looking for ‘greener’ ways to live and make a difference. Companies will need to innovate in terms of their production, not only their product to maintain customer delight.

Therefore Fair Cape has taken - and continues to take - strong steps to become increasingly more environmentally friendly in our production processes.