Aiming to be Africa's best
February 01, 2007
by World Grain Staff
Pioneer Foods continues to diversify and expand its portfolio of staple and value-added foods
by Bryan McGee
Pioneer Foods, the South African company whose stated aim is to be "Africa’s best food company," is a major producer of staple and valueadded foods in the southern African region.
The group, which employs more than 11,000 people, was formed in 1997 when long-established farmer-owned cooperatives Sasko and Bokomo, in the country’s Western Cape Province, agreed to merge and become a public company in order to meet the challenges of a new political and deregulated environment.
Allan Bishop, executive director of Pioneer Foods, said the merger enabled the company to modernize and rationalize its staple foods production facilities while diversifying its portfolio into an even wider range of valueadded household name brands.
Pioneer Foods has strengthened its technology and trading base by entering into several licenses and affiliations with overseas companies, Bishop said. These include:
• the bottling and distribution of soft drinks for PepsiCo;
• the manufacture of ketchup and other sauces for Heinz;
• a joint venture with the British milling company, Jas. Bowman, to manufacture their brands of heat-treated flours and coatings.
The Group also acquired businesses and leading brands such as Marmite and Bovril, Moir’s, GoldenLay and Kwality biscuits during recent years.
Meanwhile, overseas Pioneer Foods established with Sanitarium of Australia a breakfast cereals plant in Wellingborough, England, initially known as Grain Health Foods. This is now wholly owned and has been renamed Bokomo Foods U.K.
Bishop also explained how the company’s core activities and diverse products derived from cereal grains for human, animal and pets are complemented by a wide range of products with strong brand names in dried fruits, nuts, spices, jellies, custards, instant puddings, fruit juices, jams and spreads, peel and fruit pulp, salads and eggs broilers.
SOUTH AFRICAN ECONOMY Pioneer Foods operates mainly within the context of the South African economy, which has continued to grow in recent years. Despite a high incidence of HIV/AIDS in the region, the population has continued to grow by 1% to 2 % annually, largely due to an influx of refugees from impoverished neighboring states.
The country has inherited a sound infrastructure and power generation capacity that is unrivalled on the continent. So far, the planned land reform has not damaged commercial farming production. Of the 7 million tonnes of grain that is produced for human consumption, about two-thirds of that total is maize and one-third is wheat.
In 2006, GDP grew by 4.5% through the third quarter. However, inflation remains a concern, especially food price inflation in a country with high unemployment and a large unskilled population. As of September 2006, inflation for food was running at 8.5%, about 2.5% higher than the year before.
Good winter rains in the Cape and early summer rains in the interior bode well for a good harvest of both wheat and maize in this crop year, which would help stabilize the costs of staple foods.
Bishop, who at one time chaired the South African Wheat Board and is currently a member of the South African Producers Association, which is responsible for international lobbying and negotiations on trade tariffs and tariff barriers, explained that the milling industry was deregulated in 1992 and cereal raw materials in 1997, when the wheat and maize boards ceased to operate.
Politically, the multi-racial elections of 1994 brought a black government to power for the first time, and thus Pioneer Foods, formed three years later, has operated in this new environment since its inception.
MILLING INDUSTRY Although the boards no longer exist, Bishop said there remains a need for the National Chamber of Milling, the National Association of Maize Millers and the Animal Feed Manufacturers Association to address issues of common concern. The Grain Milling Federation, which operates under the auspices of the two milling associations, administers a number of industry-sponsored activities, particularly in the educational field.
According to the South African Grain Information Services (SAGIS), there are currently 123 wheat millers and 433 maize millers in the country. However, the top five companies in each sector represent about 80% of wheat milling and 65% to 70% of maize milling capacity. Current national milling capacity utilization is about 87% for wheat and 67% for maize. GRAIN
After good winter rains this year, the wheat harvest is expected to be around 2.1 million tonnes. Consumption is running at 2.7 million tonnes and the shortfall will be imported, including varieties better suited to special products, such as crackers, than the local wheat crop. Generally, imports average 800,000 tonnes but can be as high as 1 million tonnes.
Maize, although originally introduced from the Americas by the Portuguese, is by far the most important staple crop of southern Africa, where it thrives in good years. Most of the maize for human consumption is of white varieties and is grown in the inland summer rainfall region.
Yellow maize, principally produced for animal feed purposes, is regularly imported into coastal regions, partly because of the cost of internal transportation.
BAKERIES Bishop said that Sasko Bakeries is considered the market leader in bread baking in South Africa and has built several state-of-the-art plants to meet HACCP food safety and quality standards to recover the market share lost by plant bakeries after deregulation. A new, fully automated plant has recently been commissioned in Olifantsfontein, a suburb of Johannesburg, South Africa.
Nationally, plant bakeries, which enjoyed about 90% of the bread market when the industry was regulated, saw its market share drop to about 50% when controls were lifted.
New premium brands, developed with the help of overseas bakers, are helping to reverse this trend. The growth of the premium market is, at least in part, driven by a rapidly growing middle class that is responding to the availability of these innovative, higher-quality products. In-store bakeries are primarily used for the production of confectionery goods. CEREALS BUSINESS
Following the Pioneer Foods merger, the cereals businesses were rationalized to bring all the milling, baking and pasta activities under the Sasko name and the breakfast cereals and other specialty grain-based products under Bokomo. Sasko Grain is the milling business that is now arranged in the Northern and Southern regions.
Hennie Lourens, general manager of Sasko Grain, explained that wheat flour milling is distributed over eight sites that are strategically located close to harbors or in wheat-growing areas to make best use of domestic supplies. The greatest concentration of capacity is in the historic Western Cape heartland. In years of crop shortfall, the coastal mills are the principal users of imported wheat.
With a total wheat milling capacity of more than 125 tonnes per hour (tph), Sasko is one of the three largest milling companies in southern Africa.
By contrast, maize milling has been consolidated from 12 to 3 sites, all of which are located inland for optimum supply of raw maize and distribution to the major population centers. Although Sasko was not milling maize until 1995, the company now has a combined capacity of more than 100 tph, which makes it one of the country’s three largest maize millers.
Rice, as marketed by Pioneer Foods, is largely made up of parboiled longgrain rice as well as speciality varieties imported from Asia, such as basmati from India and Thai fragrant rice. Pioneer Foods packs and distributes these predominantly under the "Spekko" brand.
Sasko Pasta was established in 1996 and has installed new state-of-the-art, long-and-short-goods lines in the Malmesbury manufacturing plant. A top-ofthe-range brand, Puccini, is produced at the Malmesbury facility from imported durum semolina to compete with foreign-sourced pasta, while a range sold as "Pasta Grande" is made from locally sourced wheat.
INVESTMENT IN TECHNOLOGY AND EQUIPMENTLourens stressed that the Group and its antecedents have always sought to exploit the best technology available at the time without favoring a particular supplier. In 1955, Bokomo built the first mill in the country that had pneumatic conveying equipment, which was manufactured by Simon. More recently, Sasko was first to use on a large scale Satake’s new maize degerming technology, developed together with its local associates, Techmach Technology Ltd. By doing so, it became the market leader with its "White Star" super maize meal, said Lourens, who has responsibilities that include all the company’s wheat, maize and related milling operations across Africa, as well as with its complex warehousing and need for distribution of its numerous products over vast distances.
Currently in Malmesbury, the historic home of Bokomo, Buhler has designed and built a new 480-tonne flour mill to supply a batch blending system and the country’s most comprehensive packing, warehousing and distribution facility. The mill is equipped with Buhler’s latest range of machines, including Newtronic 1250 double-high rollermills and Sirius 10-section plansifters fitted with Nova sieves.
The Malmesbury packing and warehousing plant is also the most modern in the country, Lourens said. Products are packed and bagged in sizes ranging from 2.5 to 50 kg in paper and polypropylene. They are then palletized and stored prior to loading and distribution by road and rail across a huge geographic region.
The equipment includes carousel packers by Buhler, bagging lines by Fawema, mechanical handling by Paterson Hughes, palletizers by NewTec and shrink wrapping by Halila.
For this plant, Fawema supplied a new packer design of its classic type to enable high-speed, in-line packing of flour in 12.5-kg (27.5-pound) bags. This has proven to be more effective than a carousel configuration for this capacity.
Inland, in Bethlehem in the Free State province, Sasko Grain operates a plant with 500 tonnes of wheat milling capacity. Techmach Technology is currently supplying Cimbria handling and cleaning equipment as well as a rail intake system with weighbridge and the latest dust suppression equipment for the new 24,000-tonne silo complex that will feed this plant.
At another inland site, Aliwal North, the milling plant is now entirely devoted to maize. Its capacity is being raised again by the addition of further Satake VBF vertical degerming machines, and SNR roller mills, the first of this new model in the region.
In Durban, on the east coast, a new Satake-supplied wheat cleaning plant, which will include an auto-moisture control system, is being installed.
In Epping, Cape Town, South Africa, the recently acquired rice processing plant of the former Accolade Trading, is also being equipped with a new packing station and an external squarebin silo complex.
These current and recent investments demonstrate the determination of Pioneer Foods to remain at the forefront in their diverse businesses.