Entrepreneurship Zone: 14 August 2024: South African CEO competing in multi-billion dollar pet food industry

Wed Aug 14 07:58:08 CAT 2024

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Entrepreneurship Zone: 14 August 2024:  South African CEO competing in multi-billion dollar pet food industry

The global pet food industry is estimated to be worth over $125 billion. Tapping into this vast opportunity is South African-born Nhlanhla Dlamini, the founder and CEO of Maneli Pets. From its factory in Johannesburg, the company produces a range of innovative pet treats – including from unique protein sources such as ostrich, venison, crocodile, and fish – for both the domestic and international markets.

How we made it in Africa’s editor-in-chief Jaco Maritz spoke to Dlamini about his business journey.

Highlights from the interview include:

·         Dlamini’s take on whether an MBA is worth the money

·         His decision to leave McKinsey and venture into entrepreneurship

·         Why buyers in America and beyond are interested in pet treats from South Africa

·         The strategic choice to focus on pet treats rather than general pet food

·         Choosing to establish a factory from the outset rather than starting small

·         Reflections on what he would have done differently if starting the company again

While many entrepreneurs begin their ventures on a modest scale, crafting products in kitchens or backyards, Nhlanhla Dlamini, founder and CEO of a South African pet treats company Maneli Pets, took a bold approach. Once he saw a viable market for his products, he decided to go big from the outset by setting up a factory.

“Some advice that I got from a more experienced entrepreneur back when I was starting was: The problems [for] a small business are very much like the problems for a big business … I’m kind of glad that I’ve gone big early, even though it has come with a lot of stress,” he says.

Raising money to build the factory was anything but easy, and Dlamini faced a lot of rejection. “My hit rate for getting funding is about 2% to 5%.”

Investors were hesitant to back his business for various reasons. The most common concern was that the venture was in its early stages and carried significant risks. Additionally, Dlamini’s lack of experience in operating a factory raised doubts. At the time, exporting pet treats from South Africa was also unprecedented, making it challenging for investors to justify backing the venture.

“I think South African investors are pretty risk averse in comparison to what I’ve seen in Europe and in the US. They’d rather keep their money where there’s a safer and shorter time horizon to them getting a return, versus what I’ve seen in the US – investors are willing to take big bets on really risky projects because they know that the pay off could be really handsome,” he explains.

Maneli Pets eventually succeeded in securing funding from South Africa’s Industrial Development Corporation and the Department of Trade, Industry and Competition’s Black Industrialist Scheme. The factory was commissioned in 2017.

Employees at Maneli Pets’ factory in Johannesburg.

Maneli Pets’ first customer was a buyer in the United States. According to Dlamini, the company’s unique proteins – like ostrich and venison – allow international brands to stand out from competitors. “It is ultimately a game of competing for consumer eyeballs and anywhere that you can stand out to be a little bit different to everyone else on the market, that gives you an edge.” The cost advantage of sourcing from South Africa was another benefit.

Dlamini deliberately focused on pet treats rather than general pet food because customers tend to have less brand loyalty when it comes to treats. “It’s similar to a chocolate aisle … when you’re about to check out at a store. If you see a new chocolate there or a new brand of nuts, you’re likely to try it if the price is right and if it’s something that you like. But when it comes to food, you probably would buy the same type bread or the same type of meat for a very long time. And if you saw a wildly new entrant in that category, you’d more reluctant to experiment with something new. The same is true for treats. It’s an impulse purchase, it’s a reward for pets. And so a lot of pet owners are willing to experiment and try out new treats, which is important for us as a new entrant in a market that’s been around for over 50 years,” Dlamini explains.

“And once you’ve established the customer base … using your treats, then after time you can then introduce pet food because they know your quality, they know your products … So that was definitely the two-step plan that we had: Start off with treats … and then we launched pet food in 2019 but then we had to pause on the pet food side because of load shedding (scheduled power cuts in South Africa) and we still haven’t reintroduced it just yet. But we will be introducing our pet food probably next year,” he says.

Nhlanhla Dlamini

Interview with Nhlanhla Dlamini
CEO AND FOUNDER, MANELI PETS

Lives in: Johannesburg, South Africa

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