10 Feb 2015 Montic and Sonnendal dairies’ ‘game-changing merger’ creates new SA dairy group
Montic Dairy and Sonnendal Dairies, two major South African private-label dairy processors, recently finalised their much-awaited merger.
The merger, facilitated by Novitas Capital Advisors, creates the Sontic Group, a new national player in the South African dairy processing sector to compete with the likes of Clover and DairyBelle among others, with R1-billion in turnover, 800 staff, state-of-the art processing facilities in Gauteng and the Western Cape, as well as six distribution centres across the coastal and inland regions.
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| Sonnendal and Montic yoghurts (top); entrepreneur Kurt Kebert, founder of Montic Dairy and Starlite Aviation, the largest helicopter charter company in the southern hemisphere. |
Together the companies offer a complete basket of dairy products; they have complementary product ranges – Montic is strong in commodities such as fresh and long-life milk, while Sonnendal is particularly strong in by-products such as yoghurt, cream and fresh juice.
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According to Martin Swanepoel, CEO of the Sontic Group, “These are exciting times. Sontic can now provide a full range of high quality dairy products to our customers on a nationwide basis. Our strategy is to continue partnering with our customers and our farmers to provide South African consumers with better selection, value and savings in the dairy cabinet.”
The group’s chief financial officer, Adrian Labuschagne says the merger would be a game changer for the industry. “The industry has been very fragmented with lots of different players in different areas.”
He says the merger’s advantage was that it would be able for the two companies to consolidate and be growing a national footprint. It will also help grow the informal sector and reach the unserved markets and promote dairy usage and high quality products such as yoghurt to remote or informal regions.
Labuschagne says although Sontic was a primary retail manufacturer, it had spotted potential growth in the informal market. More than 70 percent of the group’s sales comprise of private label products produced for retail supermarkets who sell them under their own store brands.
“South African supermarket chains were often forced to source private label dairy products from a mixed bag of regional processors. As such, any national store brand dairy strategy was severely limited by inconsistent quality, volumes and availability across the different regions,” says Labuschagne, adding that the their priority would always be the private-label brands.
“We are committed to making those private brands offer the best value in the retail sector, however, there is a big informal sector that we plan to grow with our own brand,” he says.
With the merger now complete, the group has embarked on a programme to streamline operations and roll out higher value-added products nationally. This initiative is key to meeting the price, quality and availability criteria of its customers, while delivering higher farm gate prices to its farmers. The first stage of the programme is a R70-million capital expansion programme to increase processing capacity and efficiency in order to bring down the unit cost of production.
Related reading:
Montic Dairy launches ESL milk