You certainly wouldn’t rely on a 110 year old person to deliver efficiency, quality and growth but at 110 years old Defy Appliances is offering all of this and more. This is one of South Africa’s most popular brands and now is certainly a good time to invest.
In this the 110thyear of Defy Appliances operations in South Africa, the company is doing better than ever and contemplating further growth in the prosperous continental African market. In 2011, the company posted net sales results of R2.5 billion and now boasts three state-of-the-art ISO 9001-2009certified facilities in Durban, Ezakheni and East London.
Defy is now the largest manufacturer and distributor of major domestic appliances (including stoves, ovens, microwaves, refrigerators, washers and dishwashers, air-conditioners and small appliances) in South Africa and a major exporter to Africa and the Indian Ocean Islands.
To celebrate its 110th anniversary, Defy is rolling out a large promotion for customers which involves the company offering five year warranty on all fridges and freezer purchasesvalid from 1st June to 31st December 2015, they are giving their customers a chance to win a premium trip for two people to the exclusive Champagne district in France and there is also a chance for 110 lucky customers to win one of 110 Defy appliances.
Winners of these prizes will most certainly have to count themselves lucky as Defy is well known for its world class quality and reliability – we are all familiar with the slogan ‘you can rely on Defy’.
“It’s very important for us to have products which are truly differentiated; that have features and benefits that transform the lives of our consumers,” says Defy Marketing Director, Rajan Gungiah.
And after 110 years of success in South Africa and across the borders, it looks like now might be the time for Defy to make a real assault on the markets to the north, bringing those benefits to consumers in previously underserviced African regions.
AFRICA
The African market is a developing market that holds huge potential, not just for companies like Defy, but for any business operating in the consumer retail market. Global professional services firm KPMG describes the nature of the market in its 2015 report on white goods in Africa saying: “Africa is currently home to one billion people, presenting a massive potential consumer market. Furthermore, the continent’s population will surpass the 1.5 billion mark by 2026 and the two billion mark 15 years later. The strong growth in African consumer spending over the past decade and the positive outlook for demographic dividends over the coming decades is part of the consumer evolution story that is perennially talked about in African business and investment circles.”
While many international companies are dubious about investing in underdeveloped African nations because of the notion that expenditure is directed more to necessities, KPMG states that there is still a huge number of potential customers to be serviced.
“Thecontinent’s middle class (those households spending more than US$3000 per annum) totals almost 40 million,” the report says.
Defy has already started making its move on the continent and this will be ramped up over the coming years as Gungiah explains: “Our development has been in the Southern African region, in key countries on our borders. In time, the company’s strategies and goals are to develop strategic countries within Africa but it’s very important we do this in an opportunistic way so that we are able to offer something in a way that we do here locally in South Africa.
“We have a broad coverage in terms of our areas of responsibility. We do have plans to broaden into Africa but at the appropriate time. We have an expansion plan that includes one or two countries every year for the next ten years. When we open in a country like Zambia or Kenya or Tanzania; that comes with the full weight of Defy support, operating centrally from Johannesburg but working in a decentralised fashion based on what works in that market.
“We have an export division here at our head office and based on their recommendations, we will choose two countries to move into next year. There are four or five that are ripe for investment and we will go through a process to single out one or two,” he says.
South Africa, and Defy, exports all types of goods to African countries with the main partners including Namibia, Botswana, Mozambique and Zambia. Defy is well established in these nations with local dealers in place but it is further afield where the company, and its parent organisation, wants to expand.
Koç Holding purchased Defy in 2011 in what is reported to be the largest investment ever by a Turkish company into Africa. The Turkish organisation immediately set about upgrading production so that exports into sub-Saharan African could increase. Reports suggest that renovation of theJacobs facility in Durban (key products includestoves, build-in ovens and air conditioners) and the establishment of two more production lines at the Ezakheni facility in Ladysmith (key products include refrigerators and freezers) was completed within the first two years after the buyout.
This is great news for both Defy and South Africa as the government has identified manufacturing, and particularly the white goods industry, as a strategic industry for growth.
“We have developed a white goods strategy with key interventions of upgrading the technology and meeting the environmental imperatives,” said Trade and Industry Minister, Rob Davies.
Most of the continents white goods are currently imported from China and Africa has seen huge increases from most of the continent’s largest economies but with South Africa and Egypt both improving quality and lead times, with companies like Defy at the forefront of the industry, there is certainly opportunity for more African-made goods to increase market share.
“The main drivers for fast growth in cooling, cooking and cleaning equipment is Africa’s growing middle class, rising urbanisation rates, increasing electricity supply, as well as healthy tourism sectors,” says KPMG.
MOVING FORWARD
“We are exceptionally positive about the future despite the current climate in the market which is quite flat. We are still growing market share and we are still winning in all the segments that we compete in,” says Gungiah when speaking of the future.
The Marketing Director is optimistic about growth in sectors where Defy is less penetrated. “While we are highly penetrated in some segments such as cooking, we believe there is opportunities in others, such as dishwashing, where we have only a 7% market share,” he says.
“This opportunity for us to grow, from a business perspective, is massive over the next 10-15 years. We believe that the investments we are making in South Africa, outside of all of the external factors that affect business performance – the economy, politics and employment – give us a great foundation to expand and the signs point to even greater success to come. The potential in South Africa and Africa is massive based on the penetration numbers we know,” he concludes.