O A S I S W AT E R
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OASIS WATER
Taking Finest Quality Purified And Oxygenated Water
Where It Is Needed Most PRODUCTION: Karl Pietersen
It may sound ironic that Oasis Water, South Africa’s water franchising specialist, continues to expand and grow in a time when the country’s supply of water is at an all-time low. Strict water saving measures are in force but Oasis Water is thriving. With more and more enquiries for franchise opportunities coming every day, it is clear that Oasis Water has become a trusted name when it comes to delivering water where it is desperately needed. www.enterprise-africa.net / 3
INDUSTRY FOCUS: FRANCHISING
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“If there was ever a time when we should be working together as a people, this water crisis is the time when we should all join hands and make sure that we address this water challenge that we now face,” stated Cyril Ramaphosa as he addressed a Cape Town crowd while commemorating Nelson Mandela’s release from prison in February. The ongoing water crisis has received international attention thanks to its severity, with the local government threatening that the taps would run dry if extreme water saving measures are not taken up by all. ‘Day Zero’ is the rather apocalyptic term used to describe the date when reserves in the regions six-dam reservoir system reach 13.5%. The effects on the city if Day Zero arrives will be undeniably catastrophic. Water shortages, sanitation failures, disease outbreaks and anarchy due to competition for scarce
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resources have been outlined by Cape Town’s head of disaster operations as major concerns. But, following a major public and private water savings drive, Day Zero has been pushed out to August 2018 with some residents claiming that, with ongoing hard work, the city will not reach the dreaded dry out. Should Day Zero arrive, Capetonians will only be entitled to 25 litres per day and the taps, which have already been depressurised, will be turned off completely. This has led to a run on the stores for bottled water and fill ups of storage tanks. While the big retailers have struggled to meet this demand, and specialist water outlets have quickly become overwhelmed, there is one company that has continued to serve the needs of South Africans by bringing clean, high-quality,
// WATER IS NOW MORE RECOGNISED AS A VALUABLE COMMODITY AND PEOPLE ARE STARTING TO TREAT IT WITH AN INCREASED LEVEL OF RESPECT // environmentally friendly, sustainable water to communities all over the country. That company is Oasis Water, the specialist franchising operation that sells purified water through a network of more than 280 stores. Managing Director, Mynhardt Oosthuizen tells Enterprise Africa that
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wherever people need water, Oasis Water can help. “Water is now more recognised as a valuable commodity and people are starting to treat it with an increased level of respect,” he says. “All of our franchise stores are still in operation whereas competitors have been closing down because of various operational factors and their dependency on one specific water source. We can bring in water from different water sources and our decentralised model has served us very well in the current situation.” RESPONSIBLE BUSINESS Oasis Water has displayed its responsible mantra since its founding in 2003. One of the key elements in its strategy has been using packaging that is environmentally friendly and easily recycled, but Oosthuizen says that overall company culture is now in the spotlight as consumers look for organisations that are trustworthy in all aspects of business. “Society holds companies responsible for the policies on water and we’ve seen that specifically with waste and recycling policies – people actually want to know what you are doing as a responsible company to protect this rare commodity. “What we see at global level is corporate governance becoming more inclusive at the public level. It’s something that you have to be transparent with. Companies that produce products and remain quiet on the waste that they produce are now being held to account. Accountability is pushing business forward in a new direction that we have not seen before.” Oasis Water’s core business revolves around a refill model which sees customers bring large containers into stores to be refilled with purified water – keeping more than 150 million bottles out of landfill. The company creates sustainable jobs and invests in local community development projects. It’s also committed to having products and packaging tested by accredited bodies to
ensure adherence and quality. But what is driving this intense focus on business ethics and responsibility? Oosthuizen suggests that it could be down to competition for scarce resources and a mind-set of everyone being a part of the problem and the solution and the feeling of ‘if we have to be responsible with water, so should the companies that serve us’. “Globalisation and urbanisation means people are moving to the cities and what tends to happen is that there is more people compared to the available water resources and people start to compete for availability of water,” he says. “Because there are many different spheres in our society, those spheres all compete and if you ask the poorer, they will say water is a basic right and they need uninterrupted access but if you ask a company that is producing, they will say
MANAGING DIRECTOR, MYNHARDT OOSTHUIZEN
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INDUSTRY FOCUS: FRANCHISING
they need water to continually produce products and secure jobs, so we must find a balance. What we’ve seen over the last few years is that Cape Town has managed to reduce its daily consumption by around 50% and even at that level, there isn’t sufficient levels to address the needs of all of these spheres of society. “I think there is enough water available but it’s the share of water that people are asking questions about.” FLOWING DEMAND Oosthuizen was quick to explain that Oasis Water does not see the country’s water crisis as a business opportunity and that the company would never look to increase prices or drive demand off the back of the situation. But he did admit that the current problem has had an impact on sales. “Because of the other water companies closing down, there is demand for clean drinking water and we have had to upgrade our infrastructure and water availability to ensure that we can serve these additional customers. In some instances, we have seen 100%
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// IN BOTSWANA, WE’VE BEEN VERY SUCCESSFUL AND WE ARE IN THE PROCESS OF ROLLING OUT ANOTHER 10 FRANCHISES THIS YEAR // growth rates but the average is around 50-55% increase in sales.” The company is careful with its resources and does not push resources where they are not necessary; it listens to the feedback from its franchisees and delivers the products that are demanded by a specific community. “We follow a process in the franchise business called cluster management where we rely on specific knowledge that comes out of communities. We can quickly see that demand in one area is such that availability of water is more
important than absolute quality,” details Oosthuizen. “We can then adjust our processes around a specific situation. In other instances, we hear that certain areas want water but they don’t want it in plastic containers as that is not environmentally friendly. They prefer to refill water in big containers and reuse those containers. Cluster management allows us to tailor make our offerings to customers depending on the knowledge that is available in that community. “There is no more one size fits all customer requirement, you have to adapt and listen to what customers are saying and what they value. If there is a big push towards a green environment, we must respond to that, and that is exactly what we are doing in the Western Cape,” he adds. The Pretoria-headquartered company stated last year that it held 23% market share and covered 80% of South Africa while also creeping up into subSaharan Africa. This is still the case in 2018 but the Managing Director expects figures to increase as the company’s store roll-out continues and while the country’s water
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shortage lingers. “We still cover 80% of South Africa but we have increased our coverage in Botswana. We will definitely increase our market share thanks to our brand receiving such a favourable response in the Western Cape.” MAKING A SPLASH According to a 2013 World Bank report, southern Africa could be set for an increase of two to four degrees Celsius on average temperatures and significantly decreasing average rainfall. Of course, this would be a major blow for the region’s food producers and a worry for local governments. Oasis Water has already started its movement into Africa and is now active in Namibia and Botswana and has eyes on Zambia, Zimbabwe, Lesotho, Swaziland and Mozambique. This expansion is good news for the host communities as the Oasis model brings high-quality drinking water and other products, jobs, and community support. Movement into Africa is often one step too far for SA businesses looking for
the next growth frontier but the franchise model operated by Oasis minimises risk. Botswana and Namibia remain key focus markets for future growth. “We are still trying to attract the right candidates in Windhoek,” explains Oosthuizen. “In Botswana, we’ve been very successful and we are in the process of rolling out another 10 franchises this year. Candidates have been selected, store sites have been identified, supply chains are gearing up to supply there and training is taking place so Botswana remains a high growth area for us.” Botswana, like South Africa, is a large country with an irregular spread of large centres and so site positioning is important, alongside carefully planned logistics and supply infrastructure. “We need to make sure the supply chain is able to deliver products to those new stores,” highlights Oosthuizen. “We work very closely with our suppliers on those projects to develop new transport routes and warehouses to store our products. That happens in the background but on the frontline, we need to ensure we have the right people to
operate the franchise in an environment that hasn’t experienced franchising before – we operate in some towns where we are the first and only franchise. It’s a different approach to opening up a standalone store. Those stores we open in Botswana have to receive the same benefits that we offer local franchisees. Our products and quality and our offering that we take to market, even in the rural areas, are the same as you would receive in a CBD market in the major cities. “Customers appreciate the quality that we offer and franchisees in Botswana are definitely benefitting from the economies of scale that our business operates. They can go to market a lot faster, they can open stores with or without support, and we regularly travel across the border to facilitate training. The community of franchisees support each other and that local flavour is important.” STRONG CURRENT IN 2018 Oasis Water’s predicted growth statistics for 2018 are impressive. The company’s extremely strong history, experienced leadership team and exciting product
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portfolio have resulted in a positive outlook – especially considering that the country’s GDP growth rate remains low. “We pay a lot of attention to our national growth rate year-on-year and that is sitting at around 9%,” says Oosthuizen. “Our growth has been very consistent over the past 12 years with around 30 franchise stores opening every year. In the past year, we‘ve had more stores opening up outside of Cape Town so it is not just localised to Cape Town or the Western Cape - Cape Town only represents around 8% of our business.” Another target that the company is successfully achieving is a seven-year plan set out in 2016 to sell one billion litres of water. While ambitious, Oosthuizen is optimistic about the company’s chances of reaching this goal on schedule. “That was part of our seven year plan and we are now in the second year of that plan but on target to achieve it and everything is going to plan.” Since last year, the company’s product mix has remained almost the same with food products and fruit juices still growing but representing a small portion of revenue. Energy drinks have been a successful growth product for the company. “We’ve introduced our alternative products on a national scale and energy drinks are where the strong growth is coming from. With small snacks and
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foods, we’ve found that people are not associating our brand with those kind of products. They are buying water and energy drinks as they associate us with drinks only.” The company groups its products two categories: happy and healthy. Happy includes sugary drinks, carbonated products, energy drinks and all things that ‘make you feel good’. Healthy includes all water-based beverages. “We give our franchisees freedom of choice to stock which types of product suits their
// WE ARE KEEPING OUR EXISTING CUSTOMER BASE AND ADDING NEW CUSTOMERS EVERY MONTH // community,” explains Oosthuizen. “What we’ve seen is that there has been an increase in bottled water sales because of our new rebranding exercise. We followed environmental guidelines with the design and there’s no colourants or anything harmful used in our bottles, they are easy to recycle and appeal to the modern consumer. “Our refill business remains strong,
between 65% and 70% of our business on average. Previously, the division between our bottled and refill business was 70-30 but now that is more like 65-35. We think the reason behind this is customer convenience – people are moving and travelling a lot and bottled water is so convenient.” The immediate growth focus for Oasis Water in 2018’s second quarter will be on new store openings. Intriguingly, interest in new stores is coming from areas where drought is prominent and this may seem counterintuitive considering the situation – selling water although there is no water supply. But the decentralised supply model operated by Oasis Water is effective across all areas, regardless of water supply issues. “We are seeing an increase in franchise enquiries in areas where there are water shortages. The stores will open where communities feel there is a requirement for clean drinking water. We will always have our consistent growth but we expect exponential growth in the drought-stricken areas. “As dam levels drop, the municipal water treatment plants come under pressure to produce water of consistent quality and so consumers turn to the private sector to supplement their water supply with purified clean drinking water. “We are busy with the roll out in Botswana and then there are some stores opening in the large metros in South Africa.” LIQUID ECONOMY Oasis Water, like many companies, is one that is seeing an improvement in the business environment of South Africa since the appointment of Cyril Ramaphosa as President of the Republic. We have previously reported on many intangible feelings since the new President took office but Oasis is seeing actual business confidence numbers improving. “We definitely see an upswing following his appointment. In general, business confidence is climbing and we are seeing a return to levels that we had before the 2008 financial crisis,” says Oosthuizen.
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“We are seeing that right now people are not investing into new projects. People are nervous about their return on investment and the risks involved with big spends. The way that the government views big investment and the appetite of the private sector is misaligned in terms of time scales. Political instability has held the country back when it comes to investing into the fourth industrial revolution but when we get the sense that things have stabilised in the political environment for the long-term, you’ll start to see companies invest again.” But, despite the slow return to regular and significant GDP growth, Oasis Water remains positive about its own development and about the fortunes of South Africa.
“Drought and water scarcity is a reality,” Oosthuizen admits, “but drought is not new to us - it is a country-wide issue and we continue to adapt and find solutions. “We have changed our marketing and there has been a lot of activity going on and it has been received very well. We measure it by looking at feedback from franchisees about how many new customers they are receiving. We are keeping our existing customer base and adding new customers every month. “We are very confident about the next few years ahead. We have a good plan, good leadership, and we know what we want to do in the technology field. Our customers see value in our products and we have a low turnover on the franchisee side, indicating confidence in the
system. We are very positive about new opportunities and there is a real sense of optimism within the leadership team right now,” he concludes. Indeed, the future for this franchising success story looks bright. It continues to flow across borders into Africa, it continues to deliver a stream of innovative products to customers all over South Africa, and it continues to bring high-quality drinking water to those who need it during these times of shortage. With new stores opening regularly and growth being achieved every year, this is one business that will not be drying up anytime soon.
WWW.OASISWATER.CO.ZA
CAPE TOWN DROUGHT RELIEF Oasis Water is currently running the Donate a Drop scheme in partnership with the Water4Good fund which is looking for the public to make donations so that the company can source and distribute water across Cape Town where it is so desperately needed.
Follow the link for more information: lovingthyneighbour.org/donateoasis www.enterprise-africa.net / 9
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AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com
April 2018
www.enterprise-africa.net
EXCLUSIVE INTERVIEW WITH OASIS WATER MANAGING DIRECTOR, MYNHARDT OOSTHUIZEN
Taking Finest Quality Purified And Oxygenated Water
Where It Is Needed Most
ALSO IN THIS ISSUE:
Rolfe Laboratories / Wonga SA / NFB Financial Services / RussellStone Group
AS FEAT UR ED IN
ENTERPRISE AFRICA
APR IL 2018