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Elzea Snacks products. " The most important thing we have to understand is why people want to buy our product, and we've also got to understand why they might not want to buy our product. So we do what we call road shows," Bishop explained. Company staff are sent out to put on displays outside the shops that sell to the hawkers. " Our people will then talk to the hawkers, ask them questions, do product tastings, and then make reports for our R& D department. So when we fi nally launch a new product we know it's what they want and they'll buy it." The nature of the informal market also adds another constraint to the product development equation. " Margins are very tight and low in our fi eld, so the hawkers need to know how much profi t they can make from a bale of chips, for example. The more profi t they can make the more they want the product. The less profi t, the less they'll want it." Supplying at the right price is therefore vital, and to do this costs have to be controlled in every aspect of the business- an ethos that is engrained into company culture from the top down. " It was my father who drilled into me that if you can't control a business you might as well not start it in the fi rst place. So we don't waste anything." Stringent controls are placed on the quality and cost of supplies, from packaging and cooking oil, through to the moisture levels in the maize. Bishop has built some strong and effective relationships with his suppliers and believes wherever possible in supporting the local economy. " Sometimes you can buy cheaper elsewhere, but if there is a quality problem, then sorting it out with a person overseas can become problematic," he said. " A lot of our suppliers have been with us for a long time and I don't like changing. It's a question of loyalty, a question of trust and a question of reliability. In the FMCG ( fast moving consumer goods) market you want a supplier who, if you suddenly run June 09 www. bus- ex. com 55 H ow often have we heard the truism that businesses must be nimble and constantly evolve in order to survive and thrive? It's a challenging business strategy to manage day- in day-out, but Elzea Snacks, based in East London in the Eastern Cape Province of South Africa, has developed an innovative methodology for engaging with its customers to identify changing tastes and spot new gaps in the market. Owned and managed by Bruce Bishop, Elzea Snacks was originally launched in 1973 by two German businessmen to manufacture a traditional African non-alcoholic maize- based drink called Mageu. Bishop purchased the business in 1990, quickly spotted an opportunity in the market, introduced a range of snack products and, as the saying goes, the rest is history. Today, the focus of the business is producing a wide range of baked and fried maize- based snacks in fl avours as diverse as cheese, beef, cream cheese and chives and tomato and chilli. And these are sold into the huge South African informal market. It is the nature of this informal market that dictates the way the company operates. South Africa, in common with many developing nations, has a high rate of unemployment and many of the unemployed earn a living buying goods and selling them on the streets. This army of hawkers makes up what is termed the informal market, and they sell largely into the poorest sectors of the community. Market research and new product development lie at the heart of Elzea's success. Bishop travels widely looking for new ideas, but the company reaches out directly to its customers to fi nd out what they are looking for and what they think of new Bruce Bishop, owner and manager of South African maize- snack maker, Elzea Snacks, talks to Gay Sutton about the challenges of supplying into South Africa's informal market, and the value of organising market research road shows

56 www. bus- ex. com June 09 low on a product that is selling well, can react quickly. And that's where Plastic Wrap, our packaging supplier, has been fantastic. They do go that extra mile." Health has also become an issue in recent years, particularly with concerns over obesity, and quality controls play a part in producing a healthy product. " So we're monitoring things like free fatty acid levels in the cooking oil, and we're consistently trying to reduce the amount of oil in the product without compromising quality." Looking to the future, Elzea is moving into the cereals market, with products such as Coco Pops, Fruit Loops and Cornflakes. " We've also started a product which we call Pillows, and that is being produced as a cereal and a snack. But cereals are quite expensive, so we're working on making them affordable, otherwise they won't sell," Bishop said. Exporting as a means of growth is not yet an option. Snack products are expensive to transport, and therefore have a maximum viable distribution distance of around 700 km, so while products from the main plant in East London, and from a joint venture facility in Harding, Natal, can supply into most areas of the country they are not positioned to export across the border. However, Bishop is keen to explore the possibility of manufacturing in countries such as Nigeria, Tanzania and Kenya where he perceives possible markets. " My son will finish university at the end of this year and those are some of the things I want him to look at." The Bishop family is already heavily involved in the business. His wife and his daughter Jenna play a big part in product development, and the family ethos spreads down through the workforce. " I have a fantastic production manager- a guy