The 2020 year will go down as doom and gloom low for many businesses globally due to Covid-19, but for Ballito-based Glenart it will go down as a cracker.
Glenart successfully delivered its first-ever order of its unique Christmas crackers directly to US retail conglomerate Walmart.
Despite the global coronavirus pandemic wreaking havoc in global supply chains and forcing many small and medium enterprises (SMEs) out of business, the local manufacturer has managed to crack the mainstream US retail market.
This comes after it secured a lucrative direct supply deal with Walmart in January this year – the first South African company to sign such a deal.
“We are happy and relieved to have delivered. It has not been easy, with Covid-19 causing chaos for us too… But we delivered two shipping containers worth of Christmas crackers to Walmart,” Glenart CEO Miles Rasmussen tells Moneyweb.
The company shipped the order of its innovative confetti-popping crackers in September to Walmart and now its products are being sold in hundreds of the retail giant’s stores in the US.
Rasmussen says the Covid-19 pandemic and lockdown resulted in delays to raw material supplies as well as manufacturing disruptions to Glenart’s business, but his team of around 150 staff (mainly seasonal contractors) had pulled together deliver in time.
“It has been our most exciting, but also our most challenging year yet… Just a couple of months after securing the Walmart supply deal, South Africa and most countries globally went into Covid-19 lockdowns in March. We lost production time and only recommenced around June,” he points out.
“Besides these challenges, we also needed to make that sure we met all of Walmart’s stringent supply chain rules and strict supply window period. There were times that we thought we would not make it and were under huge stress, but I am proud to say that we did it,” he adds.
Rasmussen could not reveal the value of the supply deal and exactly how many boxes of crackers were sent to the US, due to confidentiality agreements. However, for a comparatively small manufacturer based on the KwaZulu-Natal North Coast, he says it is a big deal.
Glenart started in 1994 out of a house in Durban, but today has a 3000m² factory in Ballito and is the biggest local maker of Christmas crackers. It supplies most SA-based retailers including Walmart-owned Massmart (Game and Makro etc); as well as Pick n Pay, Woolworths and Shoprite Group, amongst others.
While the company has been exporting its products for years, largely to Europe, the Walmart US deal is its biggest single export contract to date.
On how sales are going in the US, he points out that Christmas crackers are generally a last-minute purchase and says he will have a clearer picture in early January.
“Most cracker sales take place in the last week before Christmas and in the run-up to New Year… Our patented confetti-popping crackers, which we call Crackertoa, are now being dual merchandised locally and globally for both Christmas and New Year,” Rasmussen explains.
He has told Moneyweb previously that the Christmas cracker tradition is not a big trend in the US as it is in countries like the UK and South Africa. However, Walmart’s keen interest in stocking Glenart’s Krakatoa product on its American shelves came out of its uniqueness and the retail group’s executives seeing the potential of introducing it to the mainstream market in the US.
Glenart makes a range of Christmas crackers and other festive and party items, but the Krakatoa range is its main export product.
Rasmussen is hoping it is a hit in the US market, where Walmart is initially stocking the product in around 800 of its stores. This could be extended to more stores and some of Walmart’s other global operations in future years, depending on sales.
In South Africa, Massmart was the first major retail group to stock Glenart’s products some 20 years ago. This was well before Walmart bought a majority stake in JSE-listed Massmart in 2010.
However, the cracker direct supply deal with Walmart in the US comes from the retail group’s interests in Massmart.
When Walmart acquired a controlling stake in Massmart, SA’s Economic Development Minister at the time, Ebrahim Patel, got the US group to introduce a R100 million SME supplier development agreement for the acquisition to be approved.
Glenart’s access to the US market, through Walmart, is a direct result of this. Other local suppliers, like Cape-based Rhodes Foods, are also now benefitting.
Patel – who is now Minister of the Department of Trade, Industry and Competition – has been continuing his drive to get foreign-owned companies invested in South Africa to open-up opportunities for locally-made products to access global markets.
During the World Economic Forum in Davos in early 2019, he met Walmart International CEO Judith McKenna. Patel persuaded McKenna to consider South African manufacturing companies as potential suppliers to Walmart’s global operations.
More local suppliers to Massmart are expected benefit from its parent, Walmart, which is a global retailer with a presence in several countries around the world. Between September last year and January 2020, Walmart executives have met more than a dozen of Massmart’s South African suppliers to consider stocking products in its international operations.
One of Walmart’s Global Sourcing Senior Directors Sean Reber, who was in the country in January before the global Covid-19 crisis hit, told Moneyweb at the time that he was impressed by the quality of some of the South African manufacturers and products that he had seen.
Revealing Walmart’s first direct supply deal with a local company back then, he described Glenart’s confetti-popping crackers as “ingenious”.