Spur moves up the supply chain with new acquisition

The Spur group is one of those quiet businesses that is seldom in the headlines, and just goes on, year after year, growing, making money and delivering value to shareholders under the radar. It just announced the acquisition of a 30% stake in a meat processing company called Braviz Fine Foods, a move up the supply chain that will help the company ensure its supply of ribs – although Spur CEO Pierre van Tonder is quick to point out that Braviz will remain an independent businesses (he clearly doesn’t want a Competition Commission investigation into collusion in the food business). Spur is a good defensive company – it’s restaurants are on the low end, and usually don’t see a major fall-off in customers even during downturns. – FD

To watch this CNBC Power Lunch video click here

Pierre Van Tonder Spur CEOALEC HOGG:  Spur Group has come through. Chief Executive Pierre van Tonder is with us on the line because today, Spur acquired a 30 percent stake in Braviz Fine Foods.  It specialises in the processing of rib cuts.  Joining us now on the line to discuss this further, is the Chief Executive Pierre van Tonder.  You’re pretty famous for your ribs, Pierre.  Have you been receiving supplies from this business for a long time?

PIERRE VAN TONDER:  Yes Alec, we’ve been buying from Braviz – previously known as The Rib Company – and we’ve been buying from them for about 11 years or so.  When they decided to upgrade the facility, there was an opportunity for us to invest in this factory and obviously, from a supply chain point of view and a product point of view, the consistency, quality, and the standards going into this factor, was very attractive to us.

ALEC HOGG:  Just explain that.  They decided they wanted to expand.  They clearly needed more money.  By bringing you in as a 30 percent shareholder presumably, they also got some guarantee that you’re going to be taking their off take.

PIERRE VAN TONDER:  No, that’s the one thing in the current business environment in South Africa; you wouldn’t want to guarantee anybody a supply chain into the stores.  What we’ve structured with them is a deal that, from a market-pricing point of view, it will be sold on quality and on price, but it’s a free market opportunity – if I might say that.  Again, it’s in our interests to make sure that the quality we have…that our franchisees would want to purchase it.  The guys have an existing track record with them as well.  They do about 55 percent of the business.  All things being equal, we should be able to increase that volume through quality and through price.

GUGULETHU MFUPHI:  Pierre, it’s Gugu here with Alec.  Just coming back to the client base of this business, I understand they won’t only be supplying rib cuts to Spur.  Are you hoping to expand on this?

PIERRE VAN TONDER:  Yes, they currently supply to the general restaurant market, not only in Johannesburg but in other parts of the country as well, and they will continue looking after their existing clients.

ALEC HOGG:  How big are these guys, Pierre?

PIERRE VAN TONDER:  I would say they probably do in the vicinity – currently – of about 250 to 300 tons per month.  The one guy has about 22/23 years’ experience in buying ribs in Europe, which is an art within itself, and the other two production guys have been in the production game for about 20 years, so they know their craft so to speak.

ALEC HOGG:  How many pigs or cattle are we talking about?  250 to 300 tons sounds like a lot of livestock.

PIERRE VAN TONDER:  Yes, it’s a big business in South Africa in terms of the import of pork products into this country.  We are one of the bigger users in the country, but there are some other guys out there as well, where big volumes go through.

ALEC HOGG:  That was Spur’s Chief Executive, Pierre van Tonder

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