RUSSELLSTONE GROUP
RUSSELLSTONE GROUP
Agricultural Investment House Aims for
5000 Employed by 2023 PRODUCTION: Karl Pietersen
With operations spanning six countries and 26 companies, the growth of the RussellStone Group over the past 15 years has been nothing short of remarkable. This is a seed to shelf, farm to fork agricultural sector leader that acts as an example to the wider industry. CEO, Russell du Preez tells us more about the organisation’s plans for further African expansion. 2 / www.enterprise-africa.net
www.enterprise-africa.net / 3
INDUSTRY FOCUS: FOOD & DRINK
//
Agriculture is one of the oldest industry sectors in the world and farming is widely regarded as one of the oldest occupations. But there is a new wave of technology and innovation that is turning this age old profession into a modern goliath of an industry – especially in Africa where a major portion of the world’s population sits, and where a major amount of consumption is happening. The World Bank reports that agriculture is responsible for 65% of the continent’s work force and 32% of GDP. By 2030, the agricultural market will be worth a reported $1 trillion and the ability of Africa’s farmers to meet demand for food will be vital in ensuring economic development continues.
// RussellStone Group companies include: Primary Agriculture • Willow Creek • Southern Hemisphere Seeds • IBIS Piggery • Grainvest Farming • Donnybrook Poultry • Granary Normandien • KMF Sugar Risk Management • RussellStone International • RussellStone Treasury • Dalevest • Coalvest • Grainvest Livestock • Grainvest Futures • Grainvest Physicals • In2Fresh • iMPAC • Smoke and Wild Agro-Processing & Logistics • United Refineries Ltd • RussellStone Protein • Ingogo Mills Group • Grainvest Oil • Elangeni
4 / www.enterprise-africa.net
The large farming and agriculture companies are often closely scrutinised as stakeholders look to ensure that food production and job creation is maximised but ethical principles are also strictly adhered to. One of those large businesses is the Pretoria-based RussellStone Group. Founded 15 years ago, this agri-focussed, total-value chain expert is looking forward to a connected future that is sustainable and steeped in technology. “The growth of technology is one thing that makes me so excited about Africa - there is no legacy of bad technology here,” CEO, Russell du Preez tells Enterprise Africa. “We have seen that people can transform. We will be a wireless continent; we will not have electricity travelling over thousands of kilometres, we will be using sustainable electricity without a grid. Now, Africa has one billion of the world’s seven billion total. In the next 50 years, Africa will have four billion of the world’s 10 billion people. This will make for a totally different future for the continent. “We believe technology will gain exponentially in Africa. People are the biggest asset of any community and when every single person has a wireless phone that is constantly connected – that will have a huge impact,” he adds. One of the key results of an increase in the use of technology is the amount of specialist information now available to farmers. Cloud computing, open-source software and digital tools have helped to smooth operations, and aerial imagery from drones or satellites, weather forecasts and soil sensors are allowing for planning like never before. Financial service providers are also coming with tools that help even the smallest of agricultural businesses – money transfer, communication services, savings and investment opportunities, and general financial inclusion have helped farmers and farming
communities to become increasingly involved with a wider audience. The RussellStone Group owns more than 25 companies across six countries, and employs more than 1000 people. The group touches the entire value chain, moving with product from seed to shelf, and often even further. In a time where ‘farm to fork’ is a trend for consumers, this is one of the only businesses that can truly claim to be vertically integrated in such a way. “We are an agricultural value chain player and we’ve been around since 2003,” confirms du Preez. “Myself and a partner started the business; we started out with just a handful of people and today we’re up to 1000 + people. We do everything from genetics right through to retail. That’s animal genetics and plant genetics, and includes trading, planting, logistics, processing, crushing, refining of oil, bottling and retailing. On the animal side, we do genetics, we do farming and we do the trading. We are fully equipped with an abattoir and a processing plant which produces bacon, ham and other meats, and we sell to retailers and directly to customers.” RussellStone Group is an investment house and centres its drive around a ‘commitment to uplifting all people and their communities by encouraging them to make career choices based on passion and commitment’. The group brings scale, finance, experience and motivation when it makes acquisitions, and this is what has helped the business to grow across not just Africa but also as far as the USA, Argentina and Australia. Technology helps this mammoth business stay connected. “We work across the total value chain across the entire SADC region,” details du Preez. “We have farms in Mozambique, Swaziland, South Africa, Zimbabwe, Zambia and we grow all kinds of crops. “We have chickens in Australia, pigs in South Africa, we have big processing capacity in SADC, we have capacity for crushing of soya beans –
INDUSTRY FOCUS: FOOD & DRINK
around 250-260,000 tons per year, we crush around 60,000 tons of sunflower seeds per year, and we trade around one million tons of grain. “We’re very excited about the demographics of Africa, it’s not going to be easy to grow as it’s not an easy place to operate. The political instability and stupidity is unbelievable sometimes and this makes for a volatile environment but we can’t control that. The continent’s demographics mean there is large demand for foods and we have plans for the long-term. We are not building a one generation family business, we are building as a company that can make a difference in society by creating sustainable jobs,” he adds. MEETING DEMAND WITH SUPPLY South Africa itself has a population that is growing at around 2% each year according to the WWF. And within this population, consumption trends are ever-evolving. One of the latest foodtypes that is gaining huge momentum,
6 / www.enterprise-africa.net
// THERE ARE CERTAIN CROPS THAT ARE ‘NO BRAINERS’ FOR THE FUTURE SUCH AS AVOCADOS WHERE WE ARE SEEING CONSTANT GROWTH IN CONSUMPTION // both locally and internationally, is the avocado. Recognised as being a fantastic source of fibre, healthy fats, antioxidants, potassium, and many nutrients and vitamins, the avocado has become a symbol of the modern healthy-eating lifestyle. Thought to have originated in Mexico, the avocado comes from the Lauraceae flowering plant family. Conditions in
certain areas of South Africa are ideal for growing this in-demand fruit. “We definitely think that there are certain crops that are ‘no brainers’ for the future such as avocados where we are seeing constant growth in consumption,” says du Preez while discussing plans for increasing the group’s crop portfolio. “We really believe this is an interesting crop that we would like to expand over the coming years. “We have migrated towards more intensive farming of wheat, maize, soya bean, pecans, sugar and we are now starting to plant avocados.” RussellStone Group companies will also be tasked with developing the company’s protein business. Already a strong supplier of plantbased proteins, du Preez is keen to bolster the group’s meat contribution of this vital foodstuff. “With pork, we believe this is a very cheap protein for Africa and the potential is huge,” he says.
RUSSELLSTONE GROUP
// WITH PORK, WE BELIEVE THIS IS A VERY CHEAP PROTEIN FOR AFRICA AND THE POTENTIAL IS HUGE // “We are reshuffling the portfolio and moving more towards protein. We have always been big in plant proteins but we will be moving more into animal protein. We are developing our pork business, especially north of South Africa.” The group’s geographic spread will help it with this reshuffle as South Africa’s regional soil types are vastly different. Just 12% of the country’s land is classed as fertile – suitable for rain-fed crop production - and only 3% is regarded as land with high potential. However, more than 50% of land is suitable for grazing and livestock farming is a large and established part of the industry. A Trade Probe in 2015 found that South Africa is consuming more pork than it produces meaning the opportunities detailed by du Preez are real. When it comes to fruit and vegetable farming, the current concern for South Africa is water. The country’s water crisis has had a major impact on the ability of agricultural companies to operate at full capacity. But, following ‘Day Zero’ in the Western Cape being pushed back, du Preez looks beyond the short-term and is planning the next fruits to add to the portfolio. “There are many crops that we are looking at but it is regionally based and dependent on micro climates. Right now, we are excited about macadamia nuts; it’s a growing product in the nut group and is relatively unknown in Africa compared to cashews and almonds. It’s an easy transport, highvalue crop and we believe it is an exciting product. “Obviously, we see a growth in apples into the region. It’s a very healthy
meal that can be eaten in the street so we think there is potential as there are only a limited number of varieties that can be grown in Africa. However, you need cold units and infrastructure to succeed with apple production. “We see big growth in mandarins or easy peelers. Seedless grapes are also growing; the trends come and go so quickly and we have to be swift with our varieties. We see a lot of blueberries being planted all over the region, mainly for export, and there are so many other crop varieties being successful.” AFRICAN EXPANSION Already with a presence across a number of African markets, the RussellStone Group is keen to exploit opportunities in the various very fertile, and quickly growing markets. Without
doubt, any chance that could add value to the group’s operation will be explored and, where suitable, land and business will be acquired. “We believe agricultural land should be a part of our portfolio and we like to keep 20-25% of our portfolio as land. We buy land on a freehold basis and look to benefit from capital gains while understanding that our revenue comes from a combination of sources,” explains du Preez. “The one country that excites us, and that will be a big turning point for us, is Zimbabwe. It’s exciting politically and it has fantastic micro climates. I definitely see that country as one that now has brilliant opportunities to rejuvenate its agriculture area. “Tanzania has opportunities but is not a place where we would
www.enterprise-africa.net / 7
INDUSTRY FOCUS: FOOD & DRINK
invest right now because of politics. Country’s like Uganda and Ethiopia are interesting. We are focussed on Southern and Eastern Africa and don’t go to Western or Central Africa because of the language barrier.” These ideas are exciting, particularly in Zimbabwe where RussellStone is active through United Refineries, as investment from the group can result in fast creation of large numbers of sustainable jobs, which in turn feeds consumption. Previously, new President Emmerson Mnangagwa has singled out agriculture as an industry with the ability to turn around this ailing economy. “In Zimbabwe, there is 90% unemployment and we are part of the 10% supplying jobs and paying people on time, every month. We are also
8 / www.enterprise-africa.net
contributing to taxes and economic activity,” reminds du Preez. How has RussellStone managed to excel in Africa, especially across a number of different countries with different cultures, regulations, laws and land types? du Preez puts it down to a philosophy of always solving the problem of the customer or consumer. “Our attitude of service separates us from the limited competition we face in Africa. We subscribe to several industry best-practice philosophies such as Blue Oceans and Purple Cows. Our attitude and approach is all about the customer being key – he isn’t always right but he is key. “We only care about what the customer and consumer wants. Throughout history, you’ll see that successful companies work to solve
problem of their customers rather than push their own agenda – even in the bible it says you must give before you receive,” he says. AMBITIOUS BUSINESS With many South African businesses buoyant following the appointment of a new president – a man who is business friendly, keen on job creation and rooting out corruption – now seems to be a time when businesses are considering their future growth strategy, rather than looking over the shoulder. RussellStone has always been an ambitious, forward thinking business and du Preez says that several growth options are now under consideration. “We have two models,” he starts. “We are not scared to do greenfields
RUSSELLSTONE GROUP
// WE WANT TO DOUBLE THE BUSINESS IN THE NEXT FIVE YEARS. WE’D LIKE TO HAVE 5000 PEOPLE BY 2023 // and we have completed a number of greenfield projects through our history. We are not a normal private equity investor. We run what we call a managed private equity model. We don’t buy a company and sit on the board and only worry about compliance and finance – we go in and buy and then manage. We grow organically but you cannot double the size of a business without mergers and acquisition. “We believe we have a superior culture to any other business and so we would not merge unless we could spread that culture.” In the period October to December
of 2017, Stats SA reported that the country’s economy grew by 3.1% - a marked improvement on previous quarters since 2016. Agriculture registered the highest growth at 37.5% quarter-on-quarter, although the expansion was slower than in July to September when the sector expanded 41.1%. Perhaps now is the time for agricultural businesses with scale and experience to come to the fore and lead the country, and region, on a path back towards meaningful economic growth. And proving the ambition of this determined and aspiring CEO, du Preez details his goals for the next five years:
“We want to double the business in the next five years. We’d like to have 5000 people by 2023. We enjoy what we do, it gives us a real kick to contribute to society and pay people’s salaries.” The RussellStone Group is passionate about building world class companies and is actively seeking growth opportunities. Find out more about how to get involved: www.russellstone.co.za
WWW.RUSSELLSTONE.CO.ZA
www.enterprise-africa.net / 9
CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2018
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