The days of when poor people could afford Bakers or Baumann’s biscuits are long gone. With those business rapidly approaching R20 a packet, there has opened a market for the distribution and selling of affordable biscuits wholesale to township shops. I am talking biscuits that fall into the R5 to R10 (retail) price bracket.
At the moment the R10 to R20 market is saturated, from R10 to R15 you usually have the house brands (Shoprite Ritebrand and Pick ‘n Pay no name), then you have R15 to R20 bracket which is usually the brands mentioned above (Bakers and Baumann’s). Essentially what the house brands does is make cheaper versions of the Bakers and Baumann’s biscuits, even though its cheaper most South Africans can’t afford it. There are manufacturers that make even cheaper versions, this is the ideal brands to market to local income consumers.
The business model of this business is wholesale and distribution. You buy in biscuits in bulk from manufactures and importers (or import when you are big enough) and sell them to township shops. The biscuits that you should focus on reselling should not retail for more than R10, which means you need to procure biscuits at a wholesale price in the region of R2.50 to R5 a packet. R5 at most as the shop still need to add their markup. This is a simple retail model: buy > add markup > resell. The goal is to try to specialize in cheap biscuits, beating your competitors with variety. Yes, sweet biscuits are most popular, but don’t rule out a savoury range (depending on where you are).
You should also print a catalogue of biscuits that you sell and give to shop owners, because you sepcailise in biscuits you should be try to undercut wholesalers as well as offer delivery as a service.
The obvious thing you need is transport, a bakkie being preferable. But a car should also do the job. You should familiarise yourself with all the spaza, container and house shops both within your target area and outside. You will need capital for initial order, but you also need to first get feedback as to what shop owners are currently playing and try to beat that.
Brands to look out for
One of the most popular budget brands in this segment is Casa-Mia Biscuits, they sell cheaper brands of almost every major brand, Nations Choice Biscuits does this as well. Masscash Private label is another manufacturer, I have seen their Econo brand in local stores. And their coconut “Tea Treats” is an excellent equivalent to Tennis biscuits – at a fraction of the price.
Everybody loves a biscuit now and then, from children to old ladies but not everyone can afford this luxury in South Africa anymore. Bring cheap biscuits to the masses.