Clover eyes the soft drinks market

Dairy giant Clover plans to introduce carbonated soft drinks to its stable. CEO Johann Vorster says it’s part of Clover’s plans to grow its beverages business to reduce the group’s dependence on its cyclical dairy products. [This news was announced some weeks ago but missed by FSA – and worth reporting here]

“We want to have stable and predictable earnings,” said Vorster when delivering Clover’s first interim results as a listed company in late March. “Beverage is a non-cyclical and a high margin business. We want to make it a bigger part of our business.”

Clover’s beverages portfolio holds juice brands Tropika and Krush, among others. It also has brands in the fast-growing iced tea sector and flavoured water. Vorster says its beverages segment has grown steadily from 16% to 23% in volume over the past three years. It contributed R594m to Clover’s R3,3bn first half 2011 revenue.

Vorster says the soft drink Clover is researching will be “unique but different” from normal soft drinks, such as Coke or Fanta.

Clover is also taking its beverages business into Africa. In December last year it launched a Tropika operation in Nigeria in a joint venture with a local partner. There are several other African countries the group is looking at, including Zambia.

Clover is a former agricultural co-operative strongly rooted in dairy products. It listed on the JSE in December last year. Finance director Jacques Botha says 6,8% of the group’s 10,8% growth in its top line over the interim period was mainly due to improvements to its product mix, following its exiting bulk markets during its 2010 financial year.

The group continues to invest in its infrastructural programme. Vorster says having raised R575m for its listing last year, Clover has adequate funding in place to roll out Project Cielo Blu (a major capital project partly aimed at expanding the business) and lift margins over the medium term.

Source: Fin24