CAPE TOWN: Lonrho Fresh, the South African fresh produce exporter, has gone into liquidation. A number of issues have plagued the company; such as South Africa experiencing its worst recorded drought, which made it difficult for Lonrho to provide quality produce, as well as the loss of its main customer. Lonrho’s executive chairman Christopher Chambers explained, “Despite considerable resources invested into Lonrho Fresh, the impact of recent events has resulted in the business becoming financially distressed, requiring a significant injection of capital.”
Former employee Donald Yates shed some light on the situation: ”The issue is that the profit margins on cut fruit and veg are so low, and the company’s overheads were too high. About a month ago we lost some big business from one of the biggest retailers, Pick n Pay. They chose to move their cut fruit business elsewhere and then the sales were just too small to maintain the overheads.”
The company was essentially reliant on Pick and Pay, which according to Yates accounted for about 70 percent of sales. Lonrho Fresh sourced, handled and delivered a wide variety of fruit and vegetables from across Africa. Yet, out of the whole Lonrho Group, Lonrho Fresh only made up 5 percent of total sales, and hence is said to have not played a role in the main strategic growth plans of the Group.
The rest of the group is in Yate’s opinion ”as strong as ever”, and it is only Lonrho Fresh which is being liquidated. Yates believes that the curator will be appointed Monday, ”We are currently waiting for the liquidator and the curator to be appointed, which will then reveal whether there is a business model that works there, in terms of the company being restarted, or parts of it being bought out.” According to Yates, a restart would be the most preferable outcome for the curator, as he says the company is ”ideal for reinvestment.”
The news of Lonrho Fresh’s liquidation comes on the back of the announcement that 49 percent of Lonrho Group’s share in Lonrho Fresh Exports Zimbabwe has been sold to local partner Edwin Moyo.