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Fresh Earth rising

Johannesburg - Catering to a tiny segment of the food market may not, at first glance, appear to have the makings of a successful business plan. However, Fresh Earth Bake House has proved that a business can create value and profitability by selling products that appeal to a discerning market.

Owner Matthew Ballenden has found a niche of consumers who care about the quality of the product they buy and have the spending power to disregard price.

As the economy continues to bite chunks out of South Africans’ spending power, the local food retail market is experiencing stagnant growth. Going against the tide, Ballenden established Fresh Earth Bake House in 2011 in Booysens, southern Johannesburg.

Six years later, his business is now considered a pioneer of gluten- and wheat-free products in South Africa. In fact, the bakery currently rates as the only independent gluten-free factory in South Africa to be compliant with global food safety standards.

“Achieving ISO 22000 Food Safety System Certification compliant status was not easy, considering how far we have come,” says Ballenden.

“It is the strength of this grading and the quality of our products that have placed us on a remarkable growth curve.”

None of the bakery’s products contain fillers, trans fats, gluten, preservatives, or artificial colourants or sweeteners. This is the crux of the unique selling point he presents to his target market, which he describes as being the middle- to high-end health-conscious consumer.

“Strategy is everything for a start-up because if you have a solid plan, you can knock down any possible barriers to entry, be it funding or a hostile market that is less receptive to your products,” says Ballenden.

He adds that he knew from the outset that the concept of gluten- or wheat-free products would be new to South African consumers, but he hedged his bets against the strength of the country’s burgeoning middle class, who had the spending power to buy luxury goods and services.

“Many consumers, especially in the middle- to high-end market, and across the racial spectrum, prefer to use health products which – in the case of foods such as bread and biscuits – are gluten- or wheat-free.”

In addition, Ballenden says some consumers’ digestive systems are intolerant to wheat or gluten products, making his offerings their preferred choice.

With new entrants, backed by cash-flush multinationals, penetrating the local market, the landscape is fast becoming competitive. This has been a factor in prompting Ballenden to become more innovative and expand on his product offering.

The company has since added a host of gluten-free items to its product range, which includes breads, rusks, muffins, granolas, pizza bases, wraps and cookies.

“We had little choice but to scale up our production capacity, and this required us to buy new machinery. It is in times like this where our partnership with the Industrial Development Corporation (IDC) has helped to put us on a firm growth path.”

While he describes the initial process of obtaining IDC support as painstaking, Ballenden is quick to add that the funding and business support supplied by the IDC has been critical to the establishment – and growth – of his business.

“As entrepreneurs operating in different sectors of the economy, I am sure we all have different experiences.

“The team which the IDC had assigned to prove the viability of our concept was thorough and meticulous. They kept asking for documents, some of which I didn’t have. But six months later, the IDC decided to take a risk with my concept.”

A notable feature of the bakery’s business model is that it ticks all the boxes when it comes to import replacement – because consumers can easily source locally made products, which otherwise would have to have been imported to meet demand.

The company currently employs 49 staff, who, through a BEE transaction, have bought a 30% equity in the business. Ballenden is looking to grow his staff complement in the next two years. After repeated but failed attempts to break into markets in the rest of Africa, the company has set its sights on export opportunities in the lucrative US, European and Asian markets.

Lamenting the poor intra-African trade which currently exists, he says it is one of the factors hindering the growth of small, medium and micro enterprises (SMMEs) across the continent. “For SMMEs to grow and become sustainable, they require access to new markets, yet that isn’t happening as much and as fast as it should be.”

A project in partnership with the IDC

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