The founders of Food Lover’s Market Group, Brian and Mike Coppin have done extremely well and are making big moves in “silence”.
The business was founded in 1993 as Fruit & Veg City and has since rebranded into Food Lover’s Market Group, with an estimated annual turnover of +- R12 billion.
Food Lover’s Market is one of the last few independent food retailers of scale on the African continent.
It has added categories such as bakery grocery, butchery and deli foods to complement its market leading position in fresh produce.
The Food Lover’s Group now includes several retail brands like Seattle Coffee, Food Lover’s Eateries, two liquor store brands and FVC International.
Food Lover’s Market biggest bet was when they partnered and subsequently acquired a 51% stake in Seattle Coffee Company from Pete Howie and Barry Parker in 2015.
Seattle Coffee Company has gain popularity over the years
Seattle Coffee Company
Seattle Coffee Company was formed the same year (1993) as Food Lover’s Market in London, UK by husband and wife, Alley and Scott Svenson.
In 1996, Barry Parker and Peter Howie brought Seattle Coffee Company to Cape Town.
In 1998, Starbucks bought out Seattle UK and converted all 65 Seattle stores into Starbucks.
Starbucks acquired Seattle UK by exchange ~1.8 million Starbucks shares for 100% of Seattle in a deal worth ~$83 million.
When Peter Howie and Barry Parker brought Seattle Coffee Company to Cape Town in 1996, they also acquired the Southern Africa naming rights.
So, when Starbucks bought out Alley and Scott Svenson in 1998, the Cape Town store owned by Peter and Barry was the only Seattle left.
Enter Taste Holdings and Starbucks
Taste Holdings bought the South African master licence agreement for Starbucks for R226m in 2015 for 25 years and caught serious hands.
Taste was required to pay yearly royalties to Starbucks US of R2.5m.
Taste planned on establishing 12 to 15 outlets within first 24 months.
Capital expenditure and pre-opening expenses for the first 12 to 15 stores were estimated at R108m.
Market opportunity was estimated at 150-200 outlets, at an estimated capital expenditure per store of R3m-R10m.
We all know they never got to that 150-200 outlets.
Taste Holdings later disposed of 13 Starbucks stores for a mere lousy R7m, which was ~R538k a store as well as the franchise master to Rand Capital Coffee.
The estimated cost of opening a Starbucks store in South Africa was around R3m-R10m at the time.
Back to Food Lover’s Market Group
Food Lover’s Market FreshStop convenience stores located in Caltex stations is a hit as well.
There are +-330 FreshStop at Caltex outlets in South Africa which are open 24 hours.
The early bird catches the worm
In 2016, Actis, through its private equity arm invested R760 million for a minority stake in Food Lover’s Market.
Food Lover’s Market used the proceeds to boost its local growth potential.
Actis has positioned itself well here.
Actis said that they are backing the founders.
Actis private equity portfolio focuses on consumer, financial services and healthcare.
It has ~$15bn funds under management and has raised US$24bn since inception.
Actis PE has invested US$5.7bn in 150 transactions and exited 100.
In 2016 when Actis invested R760m, FLM had;
- ~120 Food Lover’s Market stores in 11 countries,
- 200 FreshStop convenience stores in Caltex stations.
2021;
- 130 Food Lover’s Market stores in 22 countries, including 5 in Namibia.
- 330 FreshStop stores
- 14 eateries.
- 240 Seattle Coffee.
- 46 Market Liquors outlets.
Should Food Lover’s Market go public one day, Actis and the founders (Mike and Brian Coppin) will be rewarded handsomely.
The owners of Food Lover’s Market Group said that for year ended 28 Feb 2021, Food Lover’s Market turnover, excluding Seattle and FreshStop was R11bn-R12bn.
With the R760m investment from Actis and the strength of Food Lover’s Market balance sheet, the group has the following expansions in the pipeline;
1) Continue opening 20 to 30 FreshStop convenience stores a year
2) Open 2-3 Food Lover’s Market stores a year + refurb 5-6 stores.
Food Lover’s Market franchise requirements
Food Lover’s Market offers opportunities to own a store via a franchise agreement:
- Average setup cost is R8m-12m, with an owner contribution of 50%.
- Franchise/Royalty fee is 2% and marketing contribution is 0.5%of turnover.
- Initial franchise agreement term is set at 10 years.
*By Maano Madima
