Around the world – from the trendy east of London to the hipster capital of Montreal’s Mile End – the so-called ‘flat white economy’ continues to rise.
It comprises the thousands upon thousands of artisan entrepreneurs selling craft beers, ethically sourced coffee and organic, gourmet foods to consumers who crave healthy, sustainable and authentic eating experiences.
Artisan entrepreneurs started their rise after the 2008 recession. Just consider the fact that nearly one in five beers consumed in the US today is a craft brand, or that specialist coffee shops sales in the US have tripled to nearly $50 billion since 2002. And the trend has been picked up in South Africa, with more and more Small & Medium Businesses across the country serving customers with locally sourced ‘farm to table’ food and handcrafted products.
When we were evaluating the 702/CapeTalk Small Business Awards with Sage One this year, it was interesting to see how many artisan entrepreneurs there were among the nominees. Like their counterparts in North America and Europe, they are creating enormous economic opportunities for themselves while supporting local producers and giving consumers alternatives to big producers and retailers.
So how is this done?Just think about how The Neighbourgoods market has revitalised its surrounding area in Braamfontein. This is one reason why we should support the rise of such businesses: they position themselves at the heart of the community. They support other small businesses and are effective job creators because of their focus on making high-quality goods with human care and love rather than mass producing products with machines.
The 702 winner this year, The Munching Mongoose, is a great example. This company scours South Africa to find the best local produce from small scale farmers and producers. Having secured high-quality produce, it delivers farm fresh milk, eggs, cheese, bread and an assortment of fruit and vegetables directly to its customers.
Other artisans nominated include Baseline, whose owners believe that bad coffee should not happen to good people and Las Paletas artisan lollies, which are made in small batches with fresh fruit, herbs, nuts and real dairy. What these businesses have in common is that they are founded by people with a passion for good food, environmental sustainability and healthy living.
Will you face challenges?The Munching Mongoose has thrived, thanks to a receptive market, its exceptional customer service and the reach of the Internet. However, Brad Meiring, co-founder says that it hasn’t always been plain sailing. “Logistics has been a big challenge for us as we operate a delivery service and many of the small scale producers we work with do not have great business systems in place. This makes reliably sourcing goods and receiving them at an expected time difficult,” he adds.
For Kyle Dods from My Place Gourmet Group, the big challenge is switching to paying VAT: “We're now in a position where we have to add VAT, which in some cases adds an additional R10 to our product. These price increases in turn affects our customers.”
It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve-month period.
The artisan entrepreneurship space is challenging and having a passion for good food isn’t enough – you also need to be ready for long, hard hours spent pursuing your dream.
The most successful artisan businesses succeed by finding a niche, creating a personality for the business and building great customer relationships. They have a well thought out strategy about how to grow and scale a business that is based on the values of handcrafted care and the personal touch.
Healthy marginsWhat’s more, it’s important to look at how you will earn a healthy margin off goods that will be more expensive to make or source than the mass-produced alternatives. How do you balance quality and price to ensure profitability? How do you keep people coming back, even if you’re not the cheapest supplier on the block? Traditional business disciplines such as tight inventory management, market research, hard-hitting sales and good customer relationship management are all key to success.
Artisan entrepreneurs are thriving and delivering great service to their customers, but clearly, we could be doing more to help them grow. Like most small businesses, they would benefit from less tax and regulatory red tape, better access to finance and more support from bigger businesses. That said, advances such as online software and services, cheaper transportation and growing interest in locally produced goods all bode well for the future of South Africa’s artisan entrepreneurs.
Steven Cohen is the Head of Sage One International (Africa, Australia, Middle East and Asia).