VENTURES: Bowler Gets Fizzical
Recent Western Cape Business News
OTTERY-based plastics packaging group Bowler Metcalf appears to have found traction in its Quality Beverage bottling subsidiary.
Quality, which was founded by local entrepreneur Sharief Parker, showed an encouraging profit of R5.3 million in the year to end June from its core Western Cape markets – where brands like Jive, Dixi-cola, Planet and Aqua Blue have found viable niches.
But total profit from Quality was a mere R800 000 after the company’s expansion into new markets in Gauteng and Mpumalanga incurred losses of R4.5 million.
Bowler is now considering alternative strategies for Quality, including the installation of a new plant currently on order.
It would seem that Bowler is on the cusp of interesting things with Quality. But can a small soft-drink bottling business really thrive in a market dominated by imposing global brands?
Bowler CEO Mike Brain explains that the original idea behind the investment in Quality was to secure a bottle supply contract. “Equipment for manufacturing PET bottles is expensive and operates well on continuous high output. Bottles for the CSD market are commodities and buyers can move for fractions of a cent which might only be sustainable for a month, say. This plays havoc with production. So while it is entrenched that we remain competitive with a continuous ‘mark to market’, we have the security of this outlet.”
Brain stresses that the greatest challenge for Bowler has been insuring that Quality’s product cuts no corners with regard to quality and innovation of flavours. “We have positioned ourselves above ‘the rats and mice’ and on a par, or above Coke’s brands of Sparletta.” He says the Jive brand is being continuously expanded with flavour variations and pack sizes.
Quality runs up to nine flavours at any one time, offering 250ml, 330ml, 500ml, 1lt and 2lt formats. The 500ml and 2lt are the lion share of the market.
Brain says Quality is careful not to rattle Coke’s cage and consequently stay away from the cola market. “We also do not see ourselves competing in the Fanta range but, by necessity, we compete directly with Sparletta.”
He points out that Coke have been running a Western Cape based promotion called ‘Project Blue’ for some time now offering unbelievable deals on Sparletta, which is not offered in the other major centres. “The reasons are obvious. We believe that we now outsell Sparletta in the Western Cape.”
Brain estimates Quality holds about 1,1% of the national market, but holds around 7,5% of the Western Cape market. “This translates to significantly more when you take it as a percentage of the ‘flavours’ market.”
Brain says Quality currently sells more than 40 million litres a year in the Western Cape with an average volume growth rate of approximately 7%. “It would be nice if we could maintain the same rate over the next five years,” he says.
He believes the general euphoria of the Soccer World Cup will stimulate sales, but not necessarily from the visitors. “If only 450 000 visitors are coming here and each one watches six games, that is 2.7 million seats in stadium. We have about 4 million seats available, which means that a lot of the local fans will be needing to slake their thirst”. Explaining Quality’s Gauteng and Mpumalanga thrust, Brain points out that Gauteng accounts for about 42% of the soft-drink market and Mpumulanga another 14% with the Western Cape only 12.9%.
“This has wonderful potential but we need to have a critical mass before we can start driving down costs, in particular the transportation costs. We will have to chew some salt for a couple of years while we waited for the numbers to pick up, specifically if we go with a new filling facility in Gauteng.” Brain says Quality has made budgeted losses in the past. “But we are not happy with this and we will have to reassess the situation very shortly.”
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