Iberchem leveraging quality, speed and cost to grow in South Africa
Iberchem is bringing together the teams of its three South African businesses and unifying them into a single entity.
Iberchem, Scentium and Versachem – which deal with fragrances, flavours and colourants and seasonings – will become Iberchem South Africa.
The announcement comes two years after the group acquired 70% of Versachem, a company specialising in food colourants and seasonings. Iberchem recently took control of the remaining 30% and made the decision to integrate the portfolios.
Iberchem South Africa will be managed by Quentin Questiaux, who joined the company in May.
According to the South Africa region head, integrating the businesses will deliver a number of benefits. “We are improving our capabilities and we will have a more focused sales staff,” he told FoodNavigator.
Quality, speed and cost
Questiaux revealed that the company hopes to leverage three distinct strengths to win South African customers.
“We are not trying to come in as a corporate but someone who can supply and develop briefs fast, which we are able to do in a very short time compared to other multinationals.”
Alongside speed and agility, Iberchem is also able to deliver highly cost competitive ingredients thanks in part to its streamlined structure. “We are very cost efficient,” the chief executive stressed.
Given the impact COVID-19 has had on the South African economy, Questiaux emphasised that this is a very relevant consideration.
Even before the coronavirus hit South Africa, the country was in a recession with repeated power cuts and weak business confidence. COVID-19 and mitigation efforts have had wrought further damage still. According to predictions from the OECD, South Africa’s economy will shrink by 7.5% this year – and that will only be achieved if the country avoids another spike in infections. A second wave would see a sharper drop in economic output, which could fall 8.2%, according to the economic forecaster.
“Pricing, especially in the COVID time, when many people are unemployed and purchasing power is limited, is a big advantage.
“People have lost their jobs, so they don’t have an income. They are reliant on family members to support them. A lot of consumers… rely on state help which is obviously lower than salaries. Price efficiency in any market is important but in the South African context is extremely important so you can provide a product that is affordable.”
But competitive pricing alone is not enough. “You can’t just reduce your price. What is important is to retain the quality of the product, the impact of the flavour, while offering it at a competitive price.”
Currently, Iberchem’s production is largely located in Spain. But ‘in time’ the company intends to expand production in South Africa.
This reflects the importance Iberchem places on its local presence. The company operates technical labs in the country and has developed a library of flavours and fragrances specific for the market in southern Africa.
Questiaux elaborated: “We have a local flavour library that we can draw on, we have local staff who know the taste profiles of South Africa, and we can do this in a far shorter timeline than most multinationals. If a company wants to develop a product it can do so rapidly, if they want to be supplied they can do so very rapidly, while meeting the sensory taste and fragrance profiles relevant to south Africa.
“Somebody in the UK, US or South Africa have different taste profiles. That knowledge is important to supply what the customer needs. It is imperative that you cater to their tastes.”
Iberchem is also aware of the key innovation drivers within South Africa. According to Questiaux, the country’s sugar tax places reformulation high up the agenda.
The tax, introduced in 2018, is set at 20% or 2.29 cents per gram of sugar. According to the WHO, it has generated a profit of R3.2bn for the South African Treasury and reportedly slashed the beverage sector’s use of sugar by a third.
“The South African market has a tax on sugar to reduce obesity and improve the quality of foods. It is definitely a sector which is predominant, a very important market that we want to work with,” Questiaux elaborated. He predicted that other areas of reformulation – such as salt reduction – are ‘only going to become more and more important’.
Building the brand
Looking to the immediate future, the South African chief executive said that the challenge for Iberchem will be to increase awareness among customers.
“Our ambition is to develop the brand so people know we are in the market, we are able to offer local services, we have three divisions – fragrance, flavours and dustings – and each one carries its own brand under the umbrella of Iberchem.
“We have the technologies to reduce sugar, to meet the needs of a country like South Africa as well as the neighbouring countries.
“We need to make sure people perceive us as prompt, quality, cost-efficient suppliers.”