BCE Foodservice Equipment is your go to, one-stop-shop for all kitchen utensils, industrial cookware and commercial kitchen appliances. Operating successfully in South Africa for the past 30 years, the company is now looking at how it can grow further internationally.
BCE Foodservice Equipment was founded 30 years ago and, now one of Africa’s leading foodservice equipment suppliers, the company is striving for further growth and advancement while always continuing to offer its valued customers quality, speed and flexibility. Servicing big name clients such as KFC, Hilton Hotels, Protea Hotels and many more through a national network of dealers, BCE supplies kitchen utensils, industrial cookware, commercial kitchen appliances and a full range of related products.
Managing Director, Jaco Engelbrecht says that in this its 30thanniversary year, BCE has launched new product lines and is searching for new opportunities in new markets in order to continue driving the industry forward in Africa and further afield.
“This year is our 30thanniversary and we’ve been at an exhibition called Hostex in South Africa and we had a special lunch there to celebrate our 30-year celebration. We launched a new category of glassware called Bormioli and we used Hostex as the launch-pad,” he says.
“Expansion is going well but sales are suppressed in Africa at this point in time. We are in a commodity cycle and Africa is commodity driven. We are well positioned to turn the screw when the cycle turns and we are already established in Kenya and Nigeria and we are looking at establishing an office in the Indian Ocean islands.
“Considering the exchange rate, we want to export. We manufacture some of our products locally and thanks to the environment, we should be competitive elsewhere and that’s why we’ve embarked on a strategy of taking our Anvil brand into global markets. We’ve booked a stand at an international trade show called Host, the biggest trade show for foodservice equipment globally, in Milan. We’ve also requested information on building international brands from external consultants as our Anvil brand is well-known in Africa and SA but it’s unknown in international markets.”
A PROSPEROUS MARKET
Right now, the SA economy is on thin ice. Growing by just 1.3% last year, and with confidence relatively low, the economic environment leaves much to be desired for growing companies. It’s a challenge that faces everyone, and something which we discuss regularly with businesses across sub-Saharan Africa.
Euromonitor International, global consumer and industrial market research company, said in a report last year that despite economic and household financial pressures, the consumer foodservice industry registered double-digit current value growth, supported by operator’s efforts to increase their value-for-money offerings.
‘In an attempt to maintain and gain share as well as differentiate their offerings, the leading players are likely to remain proactive over the forecast period, making value-for-money offerings basic components on their menus,’ the report said.
‘African nations, including South Africa, continue to be attractive markets with regard to the strategic expansion goals of global consumer foodservice players. The penetration of international players serves as a stimulus within the South African consumer foodservice competitive landscape and this is likely to continue to affect the industry over the forecast period. The recent penetration of leading global players such as Burger King and Domino’s continues to raise the level of competition, thus giving South Africans a wider choice,’ details the report.
Thanks to this stimulus, the foodservice industry is expected to maintain a healthy compound annual growth rate until 2019.
In the hotel sector, another important sector for BCE, in spite of economic conditions, growth seems to be robust. Back in December, leading African hotel industry consulting firm, Hotel Partners Africa, told us that the industry had been performing strongly in SA. “In the last six months I’ve seen some incredibly exciting news with hotel developments, refurbs and conversions in SA,” said CEO, Mark Martinovic.
But with this strong platform, BCE stills faces two main economic challenges; the exchange rate and driving demand that is constrained by the slow economy.
“We’ve been around for 30 years and any business that’s been around for that time goes through a cycle of growth. The challenge now is to stay on top of the curve and continue growing going forward,” says Engelbrecht
“We import a lot of product but we do also manufacture. We have a factory where we manufacture our brand, Anvil. We probably manufacture a range of around 600 products. A big portion of our sales to customers is international brands and when the currency is volatile it can impact on you severely. You always have to be mindful that you don’t lose margin through not acting quick enough to changes in rates.
“We keep an extensive stock – we have over R200 million of stock in our warehouses and we can keep that stock for four to six months so we are able to absorb some shocks.
“We are unique and we supply products that cannot be found elsewhere – we have exclusivity on certain product ranges. Obviously, you have to make sure you meet that price point and do not cause an oversupply. We also need to remember that all of our competitors are sitting in the same position that we are. For products that we can’t manufacture locally, we have to source internationally and whether that’s through us or our competitors, the exchange rate risk is the same.
“We’ve seen our stock position increase by around 30-40% in value and that has an impact on the overall profitability of your organisation regardless of whether you can pass on price increases. From a demand perspective, customers have been more reluctant to buy new equipment. In the past, they might have replaced existing equipment but now they will try and repair or switch to cheaper brands. We are a premium brand. We are not the cheapest in the market and we don’t pretend to be. You do have to pay a premium for quality brands,” he explains.
A QUALITY OFFERING
BCE holds the vision of ‘becoming Africa’s and the Indian Ocean Island’s leading supplier of industrial catering services and equipment though supplying only reliable, best of breed products at competitive rates and backed up by comprehensive after sales service’.
With a strong footprint and a set of closely held values, the company is certain to continue in its leading role in the industry. Three factors that are recognised internally and externally as traits of BCE success are quality, speed and flexibility and today, the company’s size also helps it dominate the market.
“Our value is built on those three pillars – quality, speed and flexibility,” says Engelbrecht.
“Our value proposition is quite unique to our customers. We have a wide range of stock and we are like a one-stop-shop. Any customer of ours can pick up the phone and order an entire range from us instead of going to 15 or 20 different suppliers. Looking at our competitors, there’s no one in SA who can do what we do to the extent that we do. We do have competitors in each of the markets but no one keeps the range that we do. Our promise to our customers is basically to make life as simple as possible. We have a 24-hour delivery period, we provide warranties on all our products, we provide quality brands many of which are international brands, we offer repairs and servicing with a 48-hour turnaround, and we offer customers 30-day payment terms. Our customers don’t need to keep stock of any items and this is a big advantage for smaller players in the market.
“Our critical mass gives us an advantage. We ship around three or four 40 foot containers a day and that’s a significant volume. We have a good relationship with many factories across the globe and they will manufacture for us on demand. We have an office in China with quality engineers that go and ensure products adhere to SA standards. Smaller dealers cannot go through the all the legislation that comes with importing equipment but we are ready to do so.”
Another big contributor to BCE’s success is that the company can very quickly build this business with small dealers all over the country. Currently, BCE has around 700 customers or dealers buying from it and it’s very easy for a dealer to set up a dealership because they don’t have to invest in stock – they buy directly from BCE.
“We’ve made an effort in the last couple of years to build closer relationships with dealers. One of our strategic goals is to move closer to the end user. We’re trying to get end users to register their products online to secure warranties and get a better idea of exactly where products end up,” explains the MD.
COOKING UP A BRIGHT FUTURE
BCE is extremely well positioned to grow significantly as we move through 2016 and further. The company’s catalogue, widely regarded as the ‘industry bible’ is packed full with world class products and each product is back up by the BCE promise of quality, speed and flexibility. With expansion in Africa already underway, the next step is looking internationally and the company has in the past stated its intention of going global. As mentioned previously, the currency market situation makes SA goods attractive to foreign investors and BCE has identified European and South American markets as regions with potential.
“The way that we’ve grown for the last 30 years is by adding products to our range but we’ve now reached the stage where it’s difficult to add new products as we have most of the products available. So the only way to grow is to expand geographically or to grow through acquisition,” concludes Engelbrecht.