21 June 2016

InVenfin takes stake in South African chocolatier DV Chocolate

InVenfin, a venture capital arm of Remgro Group, has acquired a stake in De Villiers Artisan Chocolate (DV Chocolate), a South African bean-to-bar artisan chocolate maker.

Stuart Gast, Executive Director at InVenfin, said: “We have bought an approximately 30% stake, mostly for new shares issued in the company.”

He said that the food & beverages space is an “exciting one from an investment perspective, with significant returns possible (in SA and globally), either through growth or through acquisition, as with major food companies (like any large companies) facing challenges to innovate, access to innovation is often obtained through acquisition of emerging brands in due course”.

“Globally the significant innovation in the foods space is in small companies which were started to focus on food and beverages that align with the latest trends, including aspects such as no artificial ingredients, clarity of provenance, natural production methods, organic or GMO-free ingredients, sustainably farmed sources, minimal list of ingredients, ‘clean’ ingredients including no preservatives, etc. Consumers are also quite keen to know the people behind the brands, and learn about how authentic and sincere they are,” he said.

Gast added that in chocolate specifically, the trend is towards extremely high quality indulgence with the chocolate maker sourcing his/ her own beans directly, to ‘control’ the supply chain and be able to source the right beans with the right flavours for the products he is making.

“The African bean-to-bar story is a rare one, and with most of the world’s cocoa produced in African but almost none of its chocolate, this is a quite unique opportunity. DV Artisan Chocolate and its owner & proprietor Pieter de Villiers met all those objectives from a product and category perspective, as well as impressing us from the aspects of ‘the person himself’ and entrepreneur,” he told Africa Global Funds.

Africa produces more than 70% of the world’s cocoa beans but makes less than 1% of the world’s chocolate.

With most of this 1% being low quality milk chocolate, DV Chocolate is one of only a handful of chocolate companies producing high premium, quality artisan chocolate on the continent.

DV Chocolate sources its cocoa beans directly from African farmers.

The bean-to-bar trend sees chocolate manufacturers produce organic, certified, single-origin chocolate bars made from whole beans they have personally sourced directly from the cocoa farmer.

The business, which was founded in 2009 has since grown into a recognised brand.

Today DV Artisan Chocolate is listed in Woolworths stores and has a retail presence at the popular Spice Route wine farm in Paarl.

Pieter de Villiers, owner and CEO De Villiers Artisan Chocolate, said: “I wanted the right partner that saw the potential of the business, shared our values and could allow us to add scale throughout the operation, which is the major challenge.”

“InVenfin brings important skills to the table to support me – their strong governance coupled with extensive knowledge of business strategy, product development, marketing and sales means that I can keep focused on the quality of the product,” he said.

Gast said that the funds are all to be applied to scaling the business.

“DV Artisan Chocolate is a small company which is still very early in its development cycle. There are significant growth opportunities within Woolworths, within the broader South African context, and then outside of South Africa, as the product is of extremely high quality and has a great back story,” he said.

“The funds will be applied to all aspects of the business, including growing operating capacity, building production capacity, brand building, adding further own retail, and some to working capital,” he added.

InVenfin invests off their own balance sheet and are therefore not constrained by a limited time horizon and stringent exit objectives.
The venture capitalist’s priority sectors are technology and food & beverages. Source: Asoko Insight