Handri Conradie founded At Source Handmade Foods 11 years ago after he wanted to gain control of the value chain of dried fruit produced on the family farm, Koelfontein, near Prince Alfred Hamlet. He teamed up with Anton Erwee, technical manager at At Source, after Anton completed his MSc Food Science degree in 2003. Anton’s master’s degree in dried fruit focused specifically on soft dried fruit, a product that caught the attention of the business-minded farmer Handri.
Today, At Source is one of the three largest processors, packers and distributors of dried tree fruit in South Africa, capturing an estimated 15% share of the formal retail market. “The initial idea was just to process the fruit produced on Koelfontein, but as the business grew, the fruit from this farm was soon not enough to supply the growing demand. “Now the fruit we get in from Koelfontein only accounts for about 18% of all the fruit that we handle at At Source,” says Anton.
Business Strategy
“Our strategy from the start was to supply house brands to supermarkets. Currently we supply the product for both Woolworths’ and Pick and Pay’s house brands, which makes us, in terms of house brands, the largest player on the local dried fruit scene,” says Anton. “The other big decision we made was to offer a product that was unique and exciting. We wanted to get people interested in dried fruit and to attract new consumers to the category.
Anton Erwee (left), technical manager at At Source Handmade Foods and Handri Conradie, founder of At Source Handmade Foods.
“We focused a lot of attention on the design of our packaging. The fruit has to look good and taste good.” At Source is also the first and only dried fruit producer to offer ‘soft eating’ dried fruit, an innovation developed by Anton that revolutionised the dried fruit category by offering dried fruit in a non-traditional and more accessible format.
Soft dried fruit
It took Anton more than two years to fine-tune the technology they now use to produce the soft fruit. For his master’s degree, he spent two years doing research on the best method to make soft dried fruit, and after he joined At Source it took him another six months to develop their current system.
Anton explains that the soft dried fruit is bought in as regular dried fruit, but then they select only the best quality fruit and this is then put through a process of rehydration to create the succulent, soft dried fruit that has really distinguished At Source from other dried fruit companies in South Africa. “The demand for soft dried fruit will always be limited because it is an expensive product. But that is because the process it has to go through is time consuming and labour intensive.”
Production growth
Production at At Source consists of about 40% regular dried fruit, 20% soft dried fruit and 40% processed dried fruit products. Its diverse range of regular dried fruit is bought in from across the country and from overseas, which is washed, sorted and packed at the factory. About 30% of its product is exported and 80% of exports go to Australia and the rest to the UK, Europe, New Zealand and the Middle East.
At Source employs about 230 people on a permanent basis.
According to Anton, they seized the opportunity to supply dried fruit to Australia when its dried fruit industry collapsed about 10 years ago. “Many fruit farmers who supplied the dried fruit industry in Australia replaced their orchards with vineyards instead, when the country’s wine industry started booming. As a result, there was suddenly a huge supply vacuum for dried fruit and since South Africa produces similar fruit, we were in a good position to fill the gap.”
At Source processes about 1 200t of dried fruit and nuts per year after starting with about 200t, 11 years ago. Handri says the major growth in the business took place between 2003 and 2008 when business grew by about 40% per year. “After our start-up phase we enjoyed an aggressive growth period with an annual compound revenue growth rate of 43% for five years (2003 to 2008) followed by the worst global recession since the 1930s.
But while we look back with gratitude – and some disbelief – on what we have accomplished in the past 10 years or so, we are also poised for the exciting new challenges that the future holds,” says Handri. He expects the next stage in the company’s growth to be generated primarily through exports, as many of the products developed by At Source – such as its flagship ‘soft eating’ dried fruit, fruit bars, novel fruit and nut combinations, and its latest signature dried fruit ‘flatbar’ snack – are still largely confined to the South African market. He adds too, that the company will also place increased focus on Cecilia’s World, its own premium healthy snack food brand.
Product development
“At Source has always been cutting edge in terms of the products that we offer and the new products that we are willing to take a risk on. “We have always been willing to take on the products that are more difficult to produce and we have never shied away from innovation. I believe this revolutionary culture has given us a competitive advantage. We have always made it our aim to produce a product that exceeds customer expectation in terms of quality,” says Anton.
Anton explains their approach to product development, saying that, internally, they have monthly sensory evaluation sessions where they taste new products and discuss which they might want to include in their product basket going forward. Once a year the management team holds a strategic session to decide on which products to develop. “We believe that any new product should prove itself within a year of its launch. If there is no demand for it after that time, we discontinue the product.”
Some of the successful new products At Source has launched recently includes the Woolworths Kiddies Bar which contains only fruit and no sugar, as well as a slimmer’s bar. Anton says they have to keep a fine balance between having a diverse product basket, but at the same time there needs to be some consolidation because if they diversify their product range, too much production can become very expensive and oversight becomes more difficult. “We have to remain cost efficient and manage production in such a way that we never compromise on quality,” he says.
Industry challenges
One of the catch phrases used by At Source to describe its business strategy is “being a local business with a global reach”. “We are a local business and we source locally, but we will also source fruit from across the world in our search for the best possible product. We also import products that you can’t find, or that are difficult to find locally, so that we can further diversify, Anton says.
“At the end of the day we want to be able to supply our customers with the best product at the best price, it is as simple as that.” While the business seems to be keeping to a steady growth path, Anton acknowledges that the dried fruit industry is not without challenges. “I think our greatest challenge is in the primary production of dried fruit. Farmers are no longer keen to produce dried fruit. For them there are much easier ways to make money these days.
About 15% of the fruit handled at At Source is grown and sun-dried on Koelfontein farm, on which the factory is situated.
“Drying fruit is labour intensive and therefore a costly exercise, for which many farmers are fast losing their appetite.” But he is confident that they will weather the challenges by sticking to their policy of innovation and sourcing from a large pool of suppliers.
New opportunities
“The unique selling point for dried fruit has always been the health benefits, but we want to change that. The health benefits are a given. We want people to buy our fruit because it looks good and tastes great,” says Anton. In 2012 the business ventured into new waters when it decided the time was ripe to launch its own brand. Cecilia’s World, At Source’s own dried fruit line, is now available at Pick n Pay and directly from the factory.
“Having our own brand gives us more freedom to decide what our product strategy will be in future,” says Anton. Handri explains that they have built their business on being a preferred private label partner to local retailers. “This will remain a cornerstone of our operation, but the time is ripe to expand our horizons and I believe the export market and Cecilia’s World will provide new and exciting opportunities for growth in hereto untapped channels and markets for At Source,” says Handri.
“This will enable us to not only continue building this business to the benefit of all stakeholders, but also to leave behind a legacy that will continue to bear fruit for generations to come.”
Contact At Source and Anton Erwee on 023 313 3130 or email [email protected]
