Sector News

Danish Crown subsidiary ESS-FOOD enters South Africa

November 22, 2017
Food & Drink

ESS-FOOD has acquired a majority stake in the South African foodservice business Overberg Food Distributors in Cape Town

ESS-FOOD, which has to date been a pure trading company, is now pursuing a new direction and establishing itself in the foodservice sector in South Africa.

“For several years we have enjoyed stable sales to South Africa. This prompted us to look at the possibility of entering the market for the sale and distribution of meat, which we now have acted on by acquiring a 70 per cent stake in Overberg Food Distributors,” explains Morten Holm, CEO of ESS-FOOD.

In the long term, the plan is for Overberg Food Distributors to expand its activities to cover the whole of South Africa. At the same time, the company will act as the Danish Crown group’s bridgehead on the continent, where the countries in West Africa are deemed to hold particular potential.

“It’s important for Danish Crown as a group to create a strong foundation for future business on the African continent. In doing so, we’ll be able to benefit from the economic growth which is expected in Africa in the coming decades,” says Jais Valeur, Group CEO of Danish Crown.

Overberg Food Distributors has 250 employees, and serves approx. 2,000 customers, largely in the southern part of South Africa, from cold stores in Cape Town and Port Elizabeth. The company was founded 25 years ago, and today has revenue of approx. DKK 350m a year.

“Overberg Food Distributors is highly respected by its customers for its expertise, professionalism and focus on quality. This is fully in line with ESS-FOOD’s values, and so the plan is that we provide competences in areas such as procurement and financial management,” says Morten Holm.

In 2015/16, the Danish Crown group posted revenue of approx. DKK 600m in Africa, which included sales by ESS-FOOD of 25,000 tonnes of meat at a value of DKK 150m on the South African market.

Moving forward, ESS-FOOD will be responsible for selling all the Danish Crown group’s products in Africa. In other words, everything from Danish bacon and German Schweinshaxe, to Polish sausages and canned products from Tulip.

“It’s hard to say how big a market Africa can be for Danish Crown in the long term. It will largely depend on developments elsewhere in the world, but Africa may prove to be an important and profitable alternative for us if one or more of our other markets suddenly grind to a halt or are closed down completely.”

Overberg’s founder and sole owner, Guy Osler, is retaining 30 per cent of the shares and will carry on as CEO of the company.

The acquisition is subject to approval of the South African authorities.

Source: Danish Crown

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