Massmart gives Lethabo Milling a leg up with maize meal contract
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LETHABO super maize meal, a product of a new player in the milling industry, will compete for shelf space with established brands such as Ace, White Star, Iwisa and Inyala. The maize meal product, owned by Lethabo Milling, will be sold through Makro stores and Masscash stores, as part of the Massmart supplier development fund programme.
The black-owned company will initially deliver about 10 000 tons of maize meal to Massmart, of which some would be sold at Makro stores as Lethabo super maize meal and the rest would be sold as Econo-maize meal, Massmart’s private label brand, through Jumbo Cash and Carry and Shield stores. Speaking to Business Report on Friday, Massmart supplier development executive Mncane Mthunzi said that Lethabo Milling would be supplying maize meal through the group’s stores.
Mthunzi said the product would be at Makro stores by the end of July “The nature of the partnership that we have with Lethabo is that with our business alone they will be afloat. From then on they must get other customers to grow their business further. We’re giving them a softer landing,” Mthunzi said. The partnership has helped Lethabo raise R9.8 million. This is made up of an R8.2m loan provided by Absa Enterprise Development. Massmart has acted as guarantor for 50 percent of the loan and has in addition issued a R1.6m grant to Lethabo Milling. Mthunzi said Makro did not have an exclusive agreement with suppliers under the supplier development fund. “We hope to be the priority in their business and for them to fulfil agreements that are placed with them but that should not stop them from growing their business beyond Massmart,” he said.
Massmart’s grant will be used to refurbish a milling plant. Lethabo Milling chief executive Xolani Ndzaba said he and his partners saw the milling industry as an opportunity as maize meal was a highly consumed staple food in South Africa. He said the maize meal would be produced from an existing mill in Ventersburg, Free State, which he and his partners owned. The business currently employs seven people. This number is expected to increase to 40 people in the next six months. “Massmart wants about 10 000 tons from us per annum, but we produce about 20 000 tons for our other customers.”
Lethabo Milling will also supply United National Breweries with some maize meal. The head of business banking at Absa parent Barclays Africa, Roy Ross said, the bank recognised the importance of the small and medium enterprise sector as an engine to drive economic growth. Mthunzi said since its inception in 2011, the supplier development fund had supported about 184 small suppliers. The fund, worth R242m, was set up as a condition of Walmart’s purchase of a majority stake in Massmart and is now a division within the retailer. It focuses on areas such as farming, manufacturing and services. Mthunzi added that some of the beneficiaries of the fund, like Angela Pitsi who owns Xchem Chemicals, a company that makes adhesives and sealants, had been able to grow and now had their products available nationally through Massmart stores. Lethabo’s maize meal product will be sold through Makro stores and Masscash stores countrywide.
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