|Product segmentation (%)||Market segmentation (%)|
Own brand 15%
of 2018 divisional revenue
Pictured: “Cooking With” a popular
|Bidcorp Food Africa||Bidfood SA||Aktaes Turkey|
|Angliss Asia||Crown Food SA||Bidfood Chile|
Hisham al Jamil
Antonio Celso Dias Avelino
|Middle East||Chipkins Puratos SA||Irmãos Avelino Brazil|
Emerging Markets delivered a mixed bag of results. The “melange” was influenced by sometimes uncertain economic environments and on a like-for-like basis (50% of South Africa’s bakery business was sold in April 2017) these businesses continue to deliver commendable results. Revenue dropped 3,1% to R18,7 billion (2017: R19,3 billion); and trading profit fell 6,7% to R1,0 billion (2017: R1,1 billion).
Bidcorp Food Africa (BFA) delivered good results in tough economic conditions. Margin and expense management was excellent, with overall expenses growth well below inflation. Trading profit rose despite deflation in Bidfood (BF) and some parts of Chipkins Puratos (CP).
South Africa’s listeriosis crisis had material effects on Crown Food Group (CFG). BF was impacted to a lesser extent.
The commitment to relationship capital was showcased by the Chipkins Puratos JV and the launch of a further joint venture with Griffiths Foods to pursue opportunities in the QSR segment. Further development of relationship capital is in prospect as cooperation is being stepped up with international brand principals who are planning to expand their involvement in African markets.
Intellectual capital is constantly reinforced, as evidenced by the launch of ecommerce initiatives at CFG and the continued success of BF’s online ordering system.
Ongoing attention is given to manufactured capital and the review period witnessed investment in a new wet plant, replacement of delivery vehicles and further spending at the new KwaZulu-Natal distribution facility
BF delivered excellent results. First contribution of newly acquired fruit and veg distributor, Famous Fresh, was recorded from February. Sales into the independent channel continued to grow. National Accounts business declined marginally while business with industrial caterers ticked higher. Online orders via the “myBidfood” platform account for more than 60% of revenue.
CFG’s results were impacted by the listeria outbreak, with ingredients for processed meat products hard hit. The lost sales impact was material while stock on hand rose, impacting working capital. CFG entered the wholesale channel to support its brands and own manufactured products. The “Crown 247” ecommerce platform was implemented.
CP made excellent progress. Introductions of its unique brands began in January. Changes to manufacturing processes are underway. Upskilling continues (indicating potential for synergies in human capital support and relationship capital development) while the Puratos influence is starting to manifest itself in terms of quality and innovation.
Angliss Asia saw profits dip, impacted by a tough second half. Sales were up on prior year, but lagged expectations.
Hong Kong failed to meet budget, hit by a slowdown in the foodservice market and the global dairy crisis. Fierce competition at the upper end of the market created added pressure.
Him Kee dry goods did relatively well. A good performance at Miumi, the Japanese foods specialist, was underpinned by increasing sales of frozen fish products.
Our new seafood business, Linson Global Seafood Trading, did well. Macau was impacted by price cutting by market entrants. Hong Kong plans a series of new brand introductions in the new period. The attention paid to relationship capital is showcased by these ongoing efforts to refresh and renew the product mix in line with changing market dynamics and shifts in consumer tastes.
Mainland China recorded a fall in sales and experienced strong margin pressure. Competition in the dairy category was intense. Work continued on the development of the product mix and brand portfolio. To reduce dependence on dairy, major subsidiaries in Beijing, Shanghai and Guangzhou redoubled efforts to build sales across a broader product range.
Renewed growth will be sought through strong focus on hotels and restaurants, meat imports and the provision of chilled and processed meats to the foodservice channel. A strong sales push is planned in second tier cities such as Shandong, Qingdao, Nanjing, Yunnan, Xiamen, Nanning and Jilin.
Singapore secured continued improvements in revenue and trading profit as economic growth moderated, but remained generally robust. Foodservice again grew sales and margins were well managed. Sales at the Miumi division grew strongly. The marine, international trading and consumer operations were under pressure, though a consumer turnaround was evident following new brand introductions. Gourmet Partner sales rose and Food Pride surpassed expectations.
Bidfood Malaysia (formerly Aeroshield) performed in line with budget in an economy that continues to achieve significant growth.
Brazil secured revenue growth on the prior year, but volumes fell short of plan. Margins were under pressure in challenging socio-political conditions. However, profits were maintained. Fourth quarter results were impacted by the Soccer World Cup (which kept patrons out of restaurants) and a nationwide truck strike.
Work has begun to standardise systems used by the core Irmãos Avelino business and Mariusso, the distribution business acquired in the previous period.
Relationship capital is a key area in a challenging economy and the annual sales promotion has become an important tool for growing the number and quality of our suppliers. Human capital is another growth area as we continue to grow sales jobs while reinforcing our geographic reach.
Chile performed strongly in an economy that is only in the first stages of recovery. Revenue growth was highly satisfactory. Launch of the Viña del Mar branch boosted volumes.
The processed meat and particularly the seafood category showed good growth, though at lower margins. Internal controls and debtor collections improved.
Late in the year, the “myBidfood” ecommerce platform was launched. Further sales growth is projected on the back of continued deployment of intellectual capital.
Middle East achieved second half gains following the implementation of a recovery plan, with sales approaching the levels of the prior year. Margin improved and steps to contain expenses proved successful. Horeca UAE faced sales challenges as several poor performing brands were discontinued.
The business put renewed focus on social and relationship capital by stepping up corporate social responsibility efforts and forming a relationship with the Manzil Centre of Special Needs in Sharjah. In addition, Horeca’s Iftar meal collaboration initiative creates an ongoing partnership with Taste Studios and the Red Crescent.
Relationship capital often goes to work in the marketing field as the business increasingly helps major customers widen their regional footprint. Al Diyafa in Saudi Arabia, delivered good revenue and trading profit growth. Intellectual capital innovations included work to strengthen Al Diyafa’s digital presence through constant website updates while exploring social media’s potential for lead generation.
Horeca Oman, recorded consistent growth and Bahrain’s results were outstanding. Early progress by Horeca Jordan was encouraging.
Aktaes Turkey registered further sales gains and the level of loss was contained. Distribution costs rose on the back of the weak Turkish lira. The purchase of the Efe distribution firm in Izmir and its nine-month contribution helped Aktaes maintain momentum. Despite economic and political uncertainty, management remains optimistic about local market prospects.
Managing sustainability in our emerging markets is as diverse as the regions in which we operate. From the sustainable sourcing of product to the social projects we invest in, each region faces unique opportunities.
Due to volatile availability and price, fuel conservation is critical to the successful functioning of our fleets. Despite the significant increase in our revenue and profit, our diesel and petrol consumption increased only marginally, indicating improved distribution efficiency.
Reported fuel consumption in this division decreased by 14% year-on-year, mostly attributable to the exclusion of CP following the Puratos JV restructure and being equity accounted from April 1 2017.
|Scope 1 emissions (tCO2e)
(excl refrigerants and aircon gases)
|Scope 1+ emissions (tCO2e)
(only refrigerants and aircon gases)
|21 756||36 743|
|2017: 25 261||2017: NR|
|Scope 2 emissions (tCO2e)||Scope 3* (tonnes)|
|2017: 43 256||2017: NR|
|Diesel (kilolitres)||6 391||(17)||7 728|
|Petrol (kilolitres)||1 714||(2)||1 751|
|Aircon gas (tonnes)||13||–||NR|
|Electricity (non-renewable) (kWh)||61 895 273||12||55 183 915|
|Electricity (renewable) (kWh)||–||–||–|
|Municipal water (kilolitres)||329||4||318|
|Depot (m2)||237 426||(3)||243 841|
Note: Natural Capital 2018 information presented above does not include Chipkins Puratos due to it being equity accounted from April 1 2017.
Driver-training programmes continue to monitor and improve driving behaviour, thereby reducing fuel consumption. Ongoing efforts in route optimisation also ensure fuel consumption is kept to a minimum.
South African operations adopted energy-efficient electric trucks fitted with on-board computers and monitoring systems. This enables the tracking and management of efficient driving.
Outsourced third-party logistics (3PL) services have also contributed to reduced reported fuel consumption in South America and our Middle East region. Measures implemented in the Middle East follow significant fuel cost increases and new local taxes. Turkey’s EFE acquisition contributed to higher fuel consumption and distances travelled.
Chinese fuel levies and government-imposed restrictions on the number of vehicles permitted in certain areas have helped reduce consumption. These initiatives are designed to curb air pollution.
In our Asian operations, consumption of liquid petroleum gas (LPG), used mainly in forklifts, has increased following investment in new forklifts and additional warehouse space. Middle East have also reported increased LPG consumption by forklifts.
Energy, and particularly electricity, is closely managed. However, scope 2 emissions rose by 9%.
Management continue to drive efficiency gains despite the challenges posed in these countries by the environment, climate and the limited availability of alternative energy sources. Energy efficiency initiatives include the use of thermostats in our Brazilian freezers and the installation of LED lighting, sensor control and timers on electrical appliances.
Ongoing retrofitting of energy-saving LED lighting continues. CFG building facilities are undergoing a full review, with the focus on energy-saving design improvements. Plans are underway to implement boiler heat recovery processes and reduce paraffin usage. Initiatives such as these in tandem with solar panel investment will improve our carbon footprint.
Increased electricity and water usage in the Asian businesses is largely attributable to the new cold storage warehouse in Hong Kong. Increased consumption on the back of our Malaysian acquisition is also noted. However, efficiencies have been gained.
BFA launched a national water-wise campaign. Where possible, borehole water was used to ease the strain on municipal water supplies. However, the quality of borehole water was not high enough to permit use in CFG water purification filtration systems. This limitation is being addressed by plans for new water purification and filtration investment.
The BFA borehole water is not suitable for consumption but is used for vehicle wash bays and grey-water ablutions. The ammonia cooling towers can operate on a mix of municipal and borehole water. In the year ahead, installation of in-line meters will facilitate the measurement and tracking of borehole and rain water usage.
Water consumption in South America has increased as a result of expansion into larger premises and increased production. Rainwater is harvested and used in Brazil for ablutions and in vehicle wash bays. High-pressure steam is used to clean equipment.
Turkish warehouse cleaning initiatives have also contributed to lower water consumption.
BF has invested in ammonia-run cooling plants, a more environmentally friendly refrigerant. Where possible, cooling systems in all businesses are moving to liquid ammonia.
Refrigerant efficiencies have been achieved by equipping the Turkish trucks with electrically charged cooling panels for temperature control during the day, reducing the use of high-emission refrigerant gases.
Many regions are focusing on waste management and recycling. Turkey reports on all potential waste that may be generated and works with the ÇEVKO Foundation to ensure packing waste is recycled.
Due to the nature of the markets in which we operate and the need for specialist commercial expertise, much of our employee development focuses on skills and career training. These efforts include both current and potential employees.
A number of training and development initiatives have been launched in our Middle East operations to embrace new opportunities provided by regime reform.
South African operations continue to drive in-house development programmes while selected high-potential employees also benefit from management development programmes. Additional training, mentoring and coaching programmes are designed to fast-track black staff into management and senior management roles.
Monitoring and ongoing efforts to prevent workplace injuries are key management functions in all operations. Occupational injuries reported during the year relate broadly to slips and falls and injury to limbs. No disabling injuries were reported during this period. Corrective action plans are designed to prevent similar injuries in future.
It is with deepest sympathy that we report a fatality in South Africa in December 2017.
Social and relationship capital
The sustainable sourcing of product is a top priority. BF upholds a sustainable food policy that ensures all food products are properly labelled, with all required information presented on the label.
Following the listeria crisis in South Africa, our businesses proactively implemented quarterly environmental testing of all chiller units, testing specifically for listeria monocytogenes. To date, no contamination has been found. These tests extend to water sources. Random product testing is also conducted. Random tests are also carried out along the supply chain.
Similarly, CFG, a manufacturer and distributor of meat, poultry, dairy and general food ingredients, requests that all its suppliers be accredited by Fairtrade or UTZ (sustainable farming certifications).
Brazilian operations continue their support for charities, schools and old age homes. UAE operations are increasing their social investment in line with government directives.
They assist foodbanks, reading projects and those with autism. During the month of Ramadan 2018, our UAE operations volunteered to provide dinner at the time of breaking the fast (iftar) to the staff and local communities.
The South African business fosters job creation, enterprise development and personal growth. Its Certificate Programme in Professional Cookery has become a springboard into the foodservice industry. A black female-owned farming and food processing business, Urban Grown, continues to supply products. BF has supported this operation’s growth into a larger scale commercial farming supplier to the broader fresh food market.
In Asia, our businesses have a longstanding reputation for community support, leveraging enduring partnerships to help those in need. Angliss continues its long-term support of SAHK, an association that assists 15 000 families with physically and mentally challenged family members.
2017: 2 110
2017: 3 936
2017: 6 046
Employees training spend
fatality for the
past three years
Payroll spend (Rbn)
Social and relationship capital
CSI Spend (Rm)
Note: Human and Social and Relationship Capital 2018 information presented above does not include Chipkins Puratos due to it being equity accounted from April 1 2017.
|1.||Bidfood SA “myBidfood” online team||5.||Aktaes truck and depot, Turkey|
|2.||Angliss Asia van and depot, Singapore||6.||Warehouse employee, Angliss Beijing|
|3.||Crown Production site, Cape Town||7.||Bidfood Chile, Viña del Mar branch|
|4.||Horeca Middle East team and trucks|