You are on page 1of 36

Are we missing what we are holding?

LOOK AROUND YOURSELF


February 2013
Strictly private and confidential

Agenda
Who is Calico Capital?
Food Waste Facts
Sad realities of Situation
Case Study
Alternative Opportunity Discussion

Strictly private and confidential

WHO IS CALICO CAPITAL?


ADVISORY

Calico Capital is a corporate advisor that prides itself in oering a unique,


personal service to a wide range of clients across a broad spectrum of
industries.
Calico ventures beyond tradi<onal advisory and corporate nance services
to oer advice as well as implementa<on on many aspects of business
strategy, opera<ons, business architecture and business processes in order
to create, unlock and enhance value.

INVESTMENTS

Calico Capitals investment focus is primarily on the agricultural and agro-


processing sectors

Calico Capital has dis<nguished itself as an innova<ve, value-maximiza<on
investor valuing produc<ve, long-term rela<onships with our investments
and clients.

Strictly private and confidential

Calicos Investment Strategy


Agriculture contributes just less that 4% to the South African GDP.
However, when one considers the full agricultural value chain through from the soil to
the shelf where agricultural goods, products and services are consumed and /or used
then its true contribution raises to closer that 14 15% which makes the agricultural
sector a critical contributor to the South African economy.
Is the core activity of the rural poor who are mainly African, but more importantly are
the core group of persons faced by severe poverty, food insecurity, joblessness and
disease. Over the past decade, the agriculture sector which contributes significantly
and disproportionately to employment since the cost of creating a job opportunity is so
much lower for the sector compared to mining, manufacturing, services and most other
industries, has unfortunately shed well over 500,000 jobs. The sector has seen a
decline in the number of commercial farmers from over 45,000 to under 38,000 in less
than 10 years with dramatic drops in such sectors such as dairy, sugar cane farming
and in the cotton value chain.
Calico Capitals Investment Strategy is to originate investment opportunities in
the South African Agricultural Sector which would not only generate
respectable returns on investment but will also act as catalysts for further
investment and expansion of an industry segment within the sector.
Strictly private and confidential

FOOD WASTE FACTS

Strictly private and confidential

FOOD WASTE FACTS


Food Production in SA

CIRCA 28,8 million tonnes/annum

Food Waste

CIRCA 9,04 million tonnes/annum

Estimated Waste

31,4% of Food Production

Wasted per person

177kg per Capita

Total Value

R61,5billion / annum

Value Chain
food distribution
processing and packaging
agricultural production
Food Group
fruit and vegetables
meat
fish and seafood

R19.6 billion
R15.6 billion
R12.5 billion
R22.4 billion
R17.3 billion
R7.8 billion

Equivalent to 2.1% of South Africas GDP


Strictly private and confidential

FOOD WASTE FACTS


Cost of food waste in each stage of the value chain for each commodity group
(2012 R billions)

Strictly private and confidential

FOOD WASTE FACTS


Contribution of each Commodity Group

Strictly private and confidential

FOOD WASTE FACTS


Contribution through the Value Chain

Strictly private and confidential

SAD REALITIES

CHILDREN without Breakfast 19% (2,66million meals)


CHILDREN without Lunch

51% (7,14million meals)

Number of Pupils at School

14 million

Food Waste

CIRCA 9,04m tonnes / annum

Total No of Meals Required

9,8million meals/day

Total Meals per annum

3,58 billion

Food Waste per meal

2,53 kgs

Food production uses 70% of the world's fresh water, with the South
African figure standing at around 65% of fresh water. As the 30th
driest country in the world, this means any food that is wasted also
wastes water.
Strictly private and confidential

CASE STUDY

EASTER CAPE PINEAPPLE INDUSTRY


Strictly private and confidential

Where?

Processing

Turnaround Strategy
Key Thesis

Convert a primary agriculture to agro-processing business into a


primary agriculture to agro-processing to nutra-pharmaceuGcal
business by value addi<on to what were previously considered waste
streams

AcGon Plan

1.
2.
3.
4.
5.

Merge Processing Assets


Recapitalise (Processing and Agricultural Industries)
Transform (BBBEE)
Ra<onalise and Stabilise Core Business
Innova<on Strategy Value addi<on to what were previously considered
waste products.

Innovation Strategy Value Add to Waste

Waste Streams

a. Process Waste fruit & peel pulp remaining aWer PJC process.
b. Agricultural Waste pineapple plant biomass remaining aWer fruit
picked.
Previous Use

a. Process Waste sold to dairy farmers for minimal value (R5/mt)
b. Agricultural Waste burnt or ploughed into ground. Cost to farmer.
Value Add

a. Process Waste conversion to pineapple dietary bre.
b. Agricultural Waste
i. Leaf Fibre converted to Micro-Crystalline Cellulose.
ii. Bromelain extracted from Leaf and Stump Juice.

Pineapple Dietary Fibre World First

Project Start March 2009, based on:



a.
b.
c.

Internet research indicated pineapple may be an excellent source of dietary bre.


Worldwide focus on health in diet.
Waste stream volume 15,000 to 20,000mt/annum genera<ng R75,000-R150,000
annum as low cost animal feed.
d. Dietary bre projected volume 1,800-2,400mt annum.
e. Financial modelling (now proven) indicated R40-R70,000,000 in revenue at full
capacity.
f. Funded by NNIP and ECDC.
g. Scale-Up to 20% capacity complete
h. Investment to date circa R24m
i. Next phase scale-up to full capacity circa R40m.

Project Timelines
Laboratory Phase

Mar-09

Build Mini-Production
Line
Sep-09

First Commercial Order

Feb-10

Fund Raising for 20%


Scale-Up

Feb-11

Dec-11

Factory Build

Commissioning

Oct-12

Aug-13

Pineapple Dietary Fibre World First

Progress to Date
a.
b.
c.
d.
e.
f.
g.
h.
i.

Dicul<es in plant commissioning are being overcome scale-up from mini-produc<on


to fully automated industrial scale not linear.
Huge economic advantage to baker has been shown in bread manufacturing.
Bread manufacture is marke<ng focus, but also used in boerewors, cheese, snack bars.
Du Pont currently doing R&D work on bread good results to date.
Star Bakery o-take begins September 2013 @ R26.20/kg. Fibre addi<on at 1.2%.
Acquisi<on of Star Bakery by Premier Group.
SA Bread Market = 1.3bn loaves/annum = 910m metric tons/annum = 10,920mt of
dietary bre @ 1.2% addi<on rate. 20% market share = 100% DF capacity.
DF in retail > R700/kg.
Target Sales Price with Market Mix = R40.00/kg

Pineapple Fruit Waste

Mini-Production Line

Fibre Plant Area Pre-Build

Fibre Plant Area Completed Unit

Wet Fibre Automated Process

Drying Facility

Dry Fibre Flakes

Pineapple Dietary Fibre

Dietary Fibre Functional Effect

Micro-Crystalline Cellulose and


Bromelain
Process Components
Pineapple Plant
Biomass

Leaves
41%

Fibre
2.2%

MCC
90%

Waste
10%

Stems
28%

Waste
97.8%

HGM
7.5%

Waste
92.5%

Juice
30%

Bromelain
2.16%

Dry Waste
31%

Waste
70%

BioCoal

Organic Fer<liser

Micro-Crystalline Cellulose
Micro- Crystalline Cellulose is a ne white powder, rich in alpha
cellulose that has many uses in the pharmaceuGcal, nutraceuGcal
and food processing industries

PharmaceuGcal Industry:
a. MCC revolu<onised tablet produc<on in the pharmaceu<cal industry, being
u<lised as an ingredient carrier.
b. MCC compacts well under minimum compression pressures, has high binding
capability, and creates tablets that are extremely hard, stable, and yet
disintegrate rapidly.
c. Other advantages include low friability, inherent lubricity, and the highest dilu<on
poten<al of all binders.

Food Industry:
a. An<-caking agent and avour carrier in grated and shredded cheese.
b. Stabilizes foams.
c. Stabilizes emulsions.
d.
e.
f.

Replaces fats and oils, is used in low fat hot dogs, reduced fat ice cream.
Forms gels, improves adhesion(cling) of sauces, salad dressings.
Modies textures thickens with favourable mouth feel.

Bromelain

Bromelain is a protease enzyme that acts as a natural anG-


inammatory agent and is found only in the pineapple.

a.

b.

c.

Main uses are athle<c injuries, diges<ve problems, phlebi<s and


sinusi<s.
Also proposed in the use of arthri<s, chronic venous insuciency,
easy bruising, gout, auto-immune disorders and ulcera<ve coli<s.
Bromelain may also s<mulate the immune system, and is currently
under trial in the treatment of cancer (UK).

d.

Trials are underway in the USA in the treatment of asthma.

e.

Currently in use in post-opera<ve cura<ve <ssue-building


applica<ons for eye cataract opera<ons.

f.

Currently in use in the treatment of burns.

MCC & Bromelain Project


Project Start March 2011, based on:

a.
b.
c.
d.
e.
f.

Research (Stellenbosch University 2008/2009) indicated pineapple leaf bre


may be a source of extremely pure alpha-cellulose.
Alterna<ve/natural healing compounds such as Bromelain gathering
momentum in worldwide use.
Measurement and Projection of quantities of plant material available
indicated sucient volumes for viability (140,000mt/annum).
Business case development and rst phase nancial modelling indicated
viability at relatively low bre and bromelain yields.
MCC and Bromelain high value items.
Project funding from Cacadu District Municipality, ECDC and NNIP own
funds.

Project Timelines
Laboratory Phase

Feb-11

Build Mini-Production
Line (Bathurst)
Jun-12

First Commercial Order

Aug-12



Fund Raising for 20%
Scale-Up

Mar-15

Aug-15

Factory Build

Commissioning

Apr-16

Oct-16

MCC & Bromelain Project

Progress to Date

a. MCC produced at lab scale.

b. MCC mini process currently being rened.


c.

Bromelain juice produced and tested (results to date have been excellent)

g. Valida<on of business case assump<ons ongoing.


MCC & Bromelain Harvesting

MCC & Bromelain Process

FINANCIAL IMPACT
!250!000!!

!200!000!!

!150!000!!
Bromelain/!MCC!
Dietary!Fibre!
Juice!

!100!000!!

!50!000!!

!"!!!!
2014!

2015!

2016!

2017!

Projected EBITDA per Business Unit (R 000)

2018!

Conclusion
Summary

a. Great strides have been made since 2007, but the turnaround is
not yet complete.

b. Summerpride PJC business sustainable based on long term


averages, but subject to cyclicality.

c. Agricultural risk is the biggest risk to Summerpride and industry at


present.

d. DF may be used to mi<gate risk.


e. MCC and Bromelain will remove agricultural risk.

DISCUSSION
ALTERNATIVE OPPORTUNITIES
ZERO WASTE FARMING
Zero Waste farmers use bacteria, algae and fungi to convert plant
and animal waste into food, feed, fertilizer and fuel, generating over
R36,000 per ha/year
If less than 50% of our arable land was converted to Zero Waste
Agriculture it is possible that small family farmers can produce all of
South Africas energy needs in electricity and liquid fuel from
ethanol, biogas and biodiesel processed by local cooperatives.
ALTERNATIVE PROTEIN SOURCES
..

..
Strictly private and confidential

Design Quarter
Corner William Nicol Road and Leslie Ave.
Fourways
2128

P.O. Box 3845


Dainfern
2055

Tel: 046 624 2228


Fax: 086 696 4595

Email: info@calicocapital.co.za

You might also like