Capespan has been in denial for too long. This is the main reason why, 11 years after its founding, the company is still in a state of transition and has not quite adapted to the post-regulation environment.

This is the forthright view of Johan Dique, new managing director of the Capespan Group, who spoke to FPJ soon after assuming his new responsibilities in January this year.

Dique admits that he does not know the fruit business very well. However, he says the position in which the company finds itself is not unique in the agri-world, where companies have to transform and re-position themselves. “I have seen it all before and because certain universal truths apply to all companies, I am sure I can turn it around.

“I have perhaps a crude way of putting it. I say we all expected the process of deregulation and we all saw it coming. But we stayed in denial too long and we were too slow to react because we did not respond to the problem.”

This he calls disintermediation, a process in which intermediate players find themselves sidelined because from both sides - from the market and the supply side - people start to deal directly with each other as their requirements and expectations are not being addressed by the middle men. “We have seen this happen elsewhere and companies who successfully dealt with this are now more successful and more profitable than in their previous environment,” says Dique.

He says it depends on what the dynamics in the organisation were, in terms of its decision-makers and the culture inside the organisation. “Did they protect the producer interests or did they try to protect the dominant position it enjoyed in the regulated environment?” he asks. “The longer they try to defend this position, the more fragmentation eroded their market share.”

Dique suggests Capespan has implemented many strategies to counter the process of disintermediation, but he intends looking at things from a new angle. “I want to look rather at the reasons why Capespan lost market share and once we answer that and can put our finger on the pulse of what exactly went wrong, we can mend the business,” he says.

Dique says many strategies of a long-term nature, such as backward integration to buy farms in order to produce more of its own fruit, are strategies to counter short-term dynamics in the market. “The reason why Capespan lost market share is not because it did not produce its own fruit,” he says. “The company did not service the producers and the client base in the way they expected to be serviced. It did not comply with those competitive dynamics.

“This is where my focus will be, namely on the producer or origin of the fruit. We must service him better than his expectations and we have to be highly competitive. At the same time, we need to meet the expectations of clients in the market. If we cannot win there, we must rather give up.”

After the most recent restructure, barely two months ago, is Capespan now finally ready for this new environment?

Dique dismisses the views of those who are critical of his experience in the fruit business. “It does not put me into a difficult position to answer that,” he says. “People always overemphasise the fact that you are coming from outside the industry. There are a few truths that are relevant for all organisations.”

He explains that Capespan has transformed itself significantly. The new strategy that is now being implemented after the restructure will bring much more focus into the business. “We will have two divisions, namely the fruit division to focus on what it has to do and its core business - and the logistics division, which will focus on its core business. That is not fruit, it is logistics.”

He says the logistics division will be involved in any commodity that makes sense, but the focus will be mainly on fruit. “It will have to service what Capespan’s fruit division requires from it. I think the structure is now more streamlined and cost has been addressed to a large degree. We have the platform to at least improve the financial performance of the company. There will have to be a strong focus on client service on both spectrums of the scale in order for us to win that business back.”

It appeared from announcements recently on the restructure that logistics and marketing have been brought together under one roof, but Dique says this has not been in its full context - what has been brought together in the fruit division has always existed there. “There is logistics planning in the fruit division and that will continue to exist,” he says. “It is near the client and near the demand for service and it can do this function.”

An important part of the strategy is that it is opening the business up. “We are not forcing the one division onto the other,” says Dique. “Because we have a logistics division that exports fruit, we do not force the fruit division to make use of their services. And vice versa.”

He adds that forced inclusivity keeps entrepreneurship out of the business because people are in a comfort zone. The logistics division must win the fruit business in the market, it must compete against the service providers.

“With a lower cost basis and with a growth strategy, I can see that Capespan will in three to five years exceed the financial highs of the past,” he says. “It must catch up what it lost and will have to grow exponentially on top of that.”

Dique also believes Capespan’s investments in ports and infrastructure is an aggressive part of its logistics division strategy. “This is being transformed and will be built upon. It is a very profitable business and is on the right way.”

He says there are two phases in the transformation of the company’s logistics assets. The fruit industry, which is the main client of this logistics division, has moved from traditional shipping to container shipping, while in the past these assets have been focused on traditional business.

The port facilities are being transformed to handle more containers, but Dique says there are statutory problems because Capespan’s competitor is Transnet and it has a monopoly in the ports. “We are looking to see what can be done to review the present agreements so we can transform these facilities,” he explains.

“They will firstly have to handle containers in their full consequence and secondly, when there are cooling facilities involved, we need to handle all commodities on a year-round basis. In doing this, the logistics division can be a fully fledged logistics business but still service the uniqueness of the handling of fruit containers.

Dique is critical of those who view Capespan as only a fruit company. “It does not describe Capespan,” he insists. “The fruit side of Capespan is actually a non-profit business today. Capespan’s prosperity is created in the logistics department. If we must get something right, then it is the fruit division in order for it to make on an equal basis a contribution to the prosperity of the company.”