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Fruit & Veg City: Michael And Brian Coppin

Fruit & Veg City has grown from a single store to a household name with a huge national footprint. Brothers Brian and Michael Coppin share their growth challenges and new plans for the international market.

Juliet Pitman

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Brian and Michael Coppin of Fruit and Veg City

I meet with Fruit & Veg City founders,Brian and Michael Coppin, just a few hours before they’re set to open a newstore in Lenasia. These days, it’s a process that runs without a hitch andLenasia allows them to mark off the 98th store on their target list of 200stores by 2010. But for all their casual relaxed attitude, there can be nodenying the hard work that the Coppin brothers have put into making Fruit & Veg City what it is today.

Their story starts in 1993, when the firstFruit & Veg City opened in Cape Town; but to understand what’s made themsuch a success, one needs to go further back. The Coppin family has a longhistory in retail. Coppin
senior was a director of OK Bazaars for around 40 years and the brothersfollowed in his footsteps, working their way through the ranks to traineemanagers and then managers within the group.

But experience in an industry doesn’talways equip you to run your own business, as Brian and Michael discovered in1983. “We knew a lot about running retail stores and in ’83 we left to open twoof our own supermarkets. But we were trying to take on big retailers with whatwas essentially a small café. We were young, probably had more balls thanbrains, and the venture didn’t work,” explains Brian.

The brothers were sufficiently undeterredby this early failure to pluck up the gumption to approach a creditor who hadlost money in their previous business, and convince him to reinvest in theirlatest venture – a pre-packed fruit and vegetable business. “Somehow weconvinced him it was a great way to make his money back, and he took a share inthe business,” says Michael.

The company started out small, supplying asingle retail outlet, before building up some capital which allowed the Coppinsto open their own retail outlet. “That was the first Fruit & Veg City,which was created when we bought an existing business called The Carrot King,and converted it,” says Brian.

The business was successful from the wordgo. At the time, their vision was to have one store only that provided fruitand vegetables exclusively. “We recognised the importance of remaining focusedon one thing at that time,” says Brian, adding that they had identified a gapin the market for such a store.

Michael adds: “At the time the supermarketshad the bulk of the fruit and veg business and there were no really big playerswho were only doing fruit and veg, so that’s where we concentrated. Back then,we didn’t have bakeries, nuts, meat – anything other than fresh fruit andvegetables. That was our focus.”

But in spite of the absence of other bigplayers in the fruit and veg market, the large retail chains representedcompetition enough, and the Coppins needed a strategy to establish a footholdin the market.

Drawing on relationships they had built upwith suppliers, they sourced their stock directly from the farmers and frommunicipal markets. “We were very aggressively priced from the start, whilestill focusing on quality and range. We bought the best we could get but wesold it at the best possible price and this meant we were able to price ourgoods between 20% to 25% below the supermarket prices,” explains Brian.

Their pricing structure was made possibleby the fact that Fruit & Veg City has no rebate system and runs very lowcost distribution centres. “They’re run at about 4, 5% margins,” says Brian,“and we continually focus on cost containment.” Typically, distribution centresmake the profit, with a mark-up of around 25% but with their own centre from theirpre-packed business, the company was able to cut out the middle man.

The Coppins ran the Access Park store for18 months before going on to open three more stores in the Cape. Michaelexplains some of the challenges this growth spurt precipitated: “In those earlydays we were running everything ourselves and it took time to get the modelright. Running one store is very different to running a business with four orfive stores. It means training up managers and making sure that controls are inplace that ensure things are run according to your system.”

Brian adds: “I think the biggest challengewas controlling wastage and culling. We wanted to have big, colourful displaysof fruit and veg but if you couldn’t turn the product fast enough, you’d end uphaving to throw away.” He adds that culling and wastage typically accounted fora 5% loss of product, already below industry average.

If the company was not able to keep stockwastage levels down, its pricing would be adversely affected and it would loseits competitive edge. Taking the bull by the horns Brian and Michaelimplemented a system that other industry players believed to be practicallyimpossible. “We did stock take once a week, instead of once a month or onceevery three months,” says Brian.

Although franchising was not a route they’doriginally planned on, the company’s reputation was growing and its nextdevelopment phase steered it towards these unchartered waters. Brian explains:“Someone from Port Elizabeth approached us in 1995, wanting to open a Fruit& Veg City there. At that time we were only in Cape Town and we only hadcompany-owned stores. But we felt that the model was right and the distributioncentre was running smoothly by that time. We’d overcome the teething problems –so we went for it.”

On the back of its successful PortElizabeth franchise venture, Fruit & Veg City opened franchises in EastLondon, Durban, Bloemfontein and Pretoria. “Initially we took it slowly, onlyopening two or three a year for the first five years and then we really startedpushing it.”

Franchising brought with it a whole new setof challenges. “The biggest challenge in franchising is to get a franchisee tolisten. Any franchisor will tell you the same thing,” jokes Michael, addingthat they needed a system of controls to ensure that standards were met byfranchisees.

Unusually, Fruit & Veg franchisedstores are not treated any differently to company-owned stores. They are allvisited once a week by the regional manager, who scores store managers and franchiseeson a number of performance indicators like quality, freshness and cleanliness.“These scores are amalgamated by head office weekly and sent out, and thosestores that are at the bottom of the scale for their region will get morevisits from the regional manager until things are up to par,” explains Brian.

In spite of the challenges it posed, hefeels that going the franchising route was worthwhile. “It got us to the pointwe are now where we have 100 stores, something we wouldn’t have been able to achieveif we were financing the growth ourselves,” he says.

But while the brothers were happy tofranchise stores in the country’s smaller centres, they had other plans
for Johannesburg.

“From the start we decided that if we weregoing to open in Johannesburg, all the stores would be company-owned like theyare in Cape Town, and we’d build a second distribution centre, specifically forthe Johannesburg market,” says Michael, who moved to Gauteng for five years tosee the project properly implemented.

The first Johannesburg-based store – andtheir most ambitious venture to date – was opened at Bruma Lake in 1999. “Weinvested a great deal of money in that store and took a big risk. It was by farthe biggest store we’d ever attempted,” says Brian. But the returns were morethan pleasing. In the first four days, the store’s turnover hit the R1 millionmark.

What followed was a huge growth spurt.Today, the company has 20 corporate stores, 78 franchises, a turnover of R2, 1billion and 6 500 employees. In spite of the growth, the company structure hasremained remarkably flat.
Brian is the MD, Michael handles the roll-out of new stores and they areassisted by an operations director, a financial director, an admin team andseven regional managers. Many franchisees own more than one store and some siton the company’s board. Although its growth has meant more controls need to beput in place, Fruit & Veg City has been careful not to lose its competitiveedge in price. “We are still the biggest buyers on the municipal markets wherewe get between 40% to 60% of our goods, while our competitors get around 90% to95% of their supply direct from the farmers. The markets are still the biggestdetermining factor of price so keeping our finger on the pulse there means wecan anticipate price changes – and react to them – far more quickly than ourcompetitors,” explains Brian.

“Because all the store managers andfranchisees are at the markets every day, and integrally involved in thebuying, the entire company is able to read where the market is going as ithappens. And we don’t have to wait to put the new prices into the system andthen notify everyone of the change – our reaction times are immediate.”

Over time, Fruit & Veg City hasexpanded its product range, shifting its focus from fruit and vegetables to allthings fresh. “We have never wanted to be – and don’t believe we are now – justanother supermarket, but over time we started to evolve beyond fruit and veginto other fresh produce, things like fresh fruit juice, meat, deli, cheese andbaked products. These are known as our Fresher Food Stores and they form thecore of our business,” explains Brain.

This led to a new vision – to be a firstclass destination for all fresh produce. “But while we were experts at fruitand veg, we knew we had to do some homework on the other segments, so weconducted extensive research overseas, sourcing the best ideas and people wecould find.”

Inspired by what they saw, the brothersreturned home to open the first Fruit & Veg City Food Lovers Market inHillfox, a milestone store that boasts 3 600m2 of fresh food options. Threetimes the size of a normal store, the Food Lovers Markets opened up a whole newsegment for the company, complete with bakery, butchery, cheese, deli counter,pizza, pasta, fresh fish, sushi and chocolateries. “Some of these stores nowalso have a limited essential grocery range,” says Brian.

There are 12 Food Lovers Markets open todate, and the company draws on the expertise of specialists in each ‘fresh’department to ensure the smooth opening and roll-out of new stores.

FreshStop Stores followed, addingfree-standing counters that focus on fresh, healthy takeaways and smoothies tothe company’s mix. Situated mainly in the Western Cape at the moment, plans areafoot to roll out these stores elsewhere in the country. “It’s a great summerbrand but it has its challenges in winter, which is something we’re workingon,” says Brian.

The company’s buying power, particularly inimporting products from overseas, led directly to the formation of itsinternational import/export arm in 2005. “We’ve also become quite a bigexporter as well, to countries like Spain and Russia. And if anything affectscash flow and forces you up a learning curve, it’s exporting!” says Brian. Butthe venture is worthwhile and this year will do a R200 million turnover, withexporting making up 80% of that amount. In May this year, the company openedits first overseas store in Sydney, Australia. “We have partners there and weown 50% of the business, so we go over there once a month and the plan is toroll out more stores once this one has found its feet. It’s a very similarmarket to ours,” says Brian.

Fruit & Veg City is still rolling outten stores a year and the Coppins are adamant that there are opportunities tobe found in the current economic conditions. “We’re a value-driven business sowe expect to see more customers – not less – when times get tough. We startedduring difficult times so this is not new territory,” says Brian, concluding,“This year we’re trading 23% up on last year.”

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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appanna-ganapathy

Vital Stats

Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

appanna-ganapathy-art-technologies

The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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