Montic Dairy and Sonnendal Dairies, two major South African private label dairy processors, have recently finalized their much-awaited merger.
The merger, facilitated by Novitas Capital Advisors, creates the Sontic Group with R 1 billion in turnover, 800 staff, state-of-the art processing facilities in Gauteng and the Western Cape, as well as six distribution centres across the coastal and inland regions.
With the merger now complete, the group has embarked on a programme to streamline operations and roll out higher value added products nationally. This initiative is key to meeting the price, quality and availability criteria of its customers, while delivering higher farm gate prices to its farmers. The first stage of the programme is a R 70 million capital expansion programme to increase processing capacity and efficiency in order to bring down the unit cost of production.
According to Martin Swanepoel, CEO of the Sontic Group, “These are exciting times. Sontic can now provide a full range of high quality dairy products to our customers on a nationwide basis. Our strategy is to continue partnering with our customers and our farmers to provide South African consumers with better selection, value and savings in the dairy cabinet.”
The Sontic Group produces private label and name brand fresh and long-life (UHT) dairy products including milk, yogurt, maas, cream, juice and drinking yogurt. More than 70% of sales comprise private label products that are produced under contract for retail supermarket chains who sell them under their own “store brand.”
With store brand purchases surging in Europe and North America, South African supermarket chains are understandably eager to increase the market share of their own store brand product lines. However, this puts them in direct competition with large national name-brands. Prior to the Sontic merger, South African supermarket chains were often forced to source private label dairy products from a mixed bag of regional processors. As such, any national store brand dairy strategy was severely limited by inconsistent quality, volumes and availability across the different regions.
Novitas Founding Partner, Dana Gordon-Davis says, “The merger is a game changer for the South African dairy sector and opens the way for Sontic’s customers to double their store brands’ market share in the dairy cabinet. ”
About Sontic:Sontic is a R 1 billion turnover business resulting from the merger between Montic and Sonnendal. The company combines processing facilities, cold chain distribution and 30 years of experience in the industry to provide private label and name brand fresh and long-life (UHT) dairy products including milk, yogurt, maas, cream, juice and drinking yogurt.
About Novitas Capital Advisors:Novitas is a full service corporate finance firm with a 10-year track record. It provides solutions that are tailored to mid-market businesses seeking to raise capital, merge, sell, acquire or restructure. In addition, Novitas provides strategic advisory services for those businesses to prepare for corporate finance transactions, grooming them to optimise value and positioning them to ensure a successful outcome.
Further published articles on the Sonnendal Montic merger:
For further information on the transaction, please contact Dana Gordon-Davis.