de heus
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IndustrySA De Heus articleTRANSCRIPT
De Heus
COMPANY PROFILE
2013
Adding value to theagricultural industry
The agricultural industry is vitally important to the South African economy. It is a sector that creates employment, creates food and contributes to gross domestic product (GDP).
While it has been said that the economy is maturing and moving towards secondary and tertiary sectors, agriculture still remains essential with over eight million people directly or indirectly dependent on agriculture for their employment and income.
The industry includes a range of activities from farming and food production to aquaculture and agroprocessing and the government unit responsible for the whole sector is the Department of Agriculture, Forestry and Fisheries.
Because the department is so broad and far reaching, smaller sub sectors have emerged over the past two decades, one being feed milling. Feed milling involves the production of feed for farm animals through the blending of raw materials and other additives.
One of South Africa’s (and the world’s) leading feed milling companies is De Heus, a Dutch company with its South African headquarters in KwaZulu-Natal.
Internationally, De Heus is a serious player. Having been in business for over 100 years, the company
produces three million metric tons of animal feed in 30 feed mills located in eight countries on three continents annually.
The company operates in more than 45 countries across the world, including areas such as Latin America, Asia, the Middle East, Europe and Africa, with subsidiaries in Belgium, Poland, Russia, Czech Republic, Vietnam, Ethiopia, Egypt, South Africa and Brazil.
The company was awarded the royal warrant by the Queen of the Netherlands, an accolade only bestowed upon 150 commercial businesses.
De Heus entered the South African market as part of the company’s global strategy of prioritising strong local presence in areas with high agricultural potential.
A STRONG HISTORYDe Heus SA COO, Patrick Addis, recently spoke to IndustrySA about the history of the company and expansion plans for the future.
“Our CEO, Koos Kooy, was working for De Heus in the export division in the Netherlands. After discussions and the realisation that South Africa had opportunities for De Heus International he then came back to South Africa in 2006.
De Heus SA, the local arm of the international feed milling company, is looking for opportunities to expand. We speak to COO, Patrick Addis, to understand more about the company’s success and expansion plans.
COMPANY REPORt
Editorial – Roland DouglasProduction – Tonnie Geddes
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Adding value to the agricultural industry
“He started research, looking at trials and looking at things like macro-packs which are imported from the Netherlands and mixed on this side. In 2007, the first few employees came online and it then grew into the business that we have today.
“From there, it was a matter of acquiring feed mills, the first of which was acquired in KZN from a company called Nutrex,” says Mr Addis.
Building a customer base was the first priority for De Heus and the process began quickly as the company worked on increasing the existing customer base left by Nutrex.
“The starting point was in KZN with the mill here, it was an acquisition so there was already a customer base. That was soon expanded and then the business went on an acquisition trail, buying a couple of mills around the country from existing suppliers and, eventually, building a new mill in a town called Modi Molle, Limpopo,” says Mr Addis.
DE HEUS IS DIFFERENT Many businesses in the feed milling industry have taken steps towards vertical integration; owning farms, feed mills, distribution channels and retail outlets,
ultimately becoming agricultural power houses.“In the SA market there is a huge move towards
integration. The big players will own the whole supply chain and have control over each element,” says Mr Addis.
De Heus is not looking to integrate and Mr Addis says that their successful business model involves focussing specifically on feed milling.
“De Heus is different and does almost the opposite, this makes us unique. We are a truly independent feed company, we don’t own processing plants, farms or chick production units. We are feed millers. We see ourselves as specialists in the feed milling industry and our model is definitely not to integrate into agriculture.
“We supply the external, non-integrated feed market. We do supply some integrators but our model is not to integrate.”
This model has been fruitful for De Heus and has also proved popular in the market as customers seek a flexible, knowledgeable supplier.
“We are in a strong position as the external market, businesses that are not integrated, are looking for a partner who has their needs at heart and who is not involved as competition.
Adding value to the agricultural industry
DE HEus
MAY 13 PAGE 3
“We try and be as agile and flexible as possible. We are a family run business and we try not to be too corporate and cumbersome. A lot of customers in the external market have very flexible needs and we are able to meet them,” says Mr Addis.
SCIENTIFIC KNOWLEDGEBecause of its international connections and long his-tory, De Heus has expertise that is often unmatched by other companies in the industry. The research and de-velopment department in Europe constantly feeds back information and knowledge about products, a luxury that smaller companies cannot afford.
“We have extensive knowledge of nutrition and production and all the requirements of producing quality animal feed. We are very comfortable, we have a good business model,” says Mr Addis.
“There are a lot of smaller players in SA. They appeal to a certain market and have lower prices because of smaller overheads but what they don’t have is corporate back-up, nutritional knowledge, production knowledge or financial back-up. We have all of that because of the size of, and our link to, our international business.”
Currently, the company’s entire customer base is in South Africa but expansion is on the horizon, “we are definitely considering export opportunities in sub-Saharan Africa,” says Mr Addis.
Expansion into new markets would assist the company with its on-going growth, something which has continued strongly since De Heus’s first days in South Africa.
“In KZN, we only had a small dairy operation but we have grown into a serious player in the dairy market there.
“We are definitely looking to expand. We have a new feed mill near Mossel Bay which is being commissioned as we speak. We bought a facility from an existing feed company, a small, basic mill and we invested significant amounts of money to build it into a state-of-the-art feed mill.
“We are a business that is looking for opportunities, we want to expand, we want to increase our footprint. We came from nothing in 2006 and now we are probably the fourth largest feed company in the country,” says Mr Addis.
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COMPANY REPORt DE HEus
Durban 031 263 0000 Pietermaritzburg 033 345 4001 Nelspruit 013 752 4142 Welkom 057 355 1571 Kimberley 053 831 2525
PROUDLY SUPPLIES DE HEUS WITH A HEAD TO TOE WORKWEAR SOLUTION
PRESSURE?While the agricultural sector in South Africa has come under pressure from multiple directions, De Heus has a solid infrastructure and is constantly investing in its resources as Mr Addis explains:
“We have five mills in SA right now. We produce around 360,000 tons of feed per annum. We have over 400 employees and we invest heavily in our technical advisors – the guys who are out selling the feed and giving advice to our customers. Further investment also lies in our facilities and the guys who are producing and delivering the feed.”
The company has an ambitious vision (to build De Heus (South Africa) into the preferred supplier of animal feeds for the independent livestock farmers) and while major strides have been taken towards achieving this goal, Mr Addis tells us that the vision is not solely about output.
“Being preferred supplier is not about volume, it’s about people wanting to do business with us. We would rather be over than under subscribed; it will naturally aid our expansion.”
For the time being, De Heus is not looking to diversify and full focus will be directed to the company’s trademark service – providing high quality animal feed and adding maximum value.
“The SA feed market is fairly mature,” says Mr Addis. “We are always trying to offer new and exciting products but right now we are not diversifying or expanding into markets beyond feed milling.
“Agriculture in South Africa is under a lot of pressure. All industries are suffering because of imports. Raw
material prices have been high and incomes received have been lower. Because of this, farmers and producers are trying to save costs where they can and feed can make up 50-60% of their costs.
“Some customers who are under this sort of pressure may end up leaving us for a cheaper alternative but we do have a very good relationship with all our customers and we offer a good value-add.”
Obviously, quality is very important in any industry but especially in feed milling. All De Heus mills are AFMA compliant and all are in the process of gaining ISO 22000:2005 certification. The De Heus Umlaas Branch has successfully completed the ISO 22000:2005 certification process, one of the most prestigious quality certifications obtained by a company in the food chain.
With backing from its international parent company, good relationships with customers, a strong workforce and outstanding quality credentials, the future looks bright for De Heus in South Africa. As expansion continues, the potential movement into sub-Saharan export markets will undoubtedly help the company grow and become competitive on the continent, in markets which could bring handsome results if approached correctly..
“We are feed millers. We see ourselves as specialists in the feed milling industry and our model is definitely not to integrate into agriculture”
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COMPANY REPORt DE HEus
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