SCENARIO

The Riebeeck Wes Small Farmers’ Co-op CC produces sun-dried tomatoes. As the name of the enterprise suggests, the raw tomatoes are supplied by small local farmers, who at the moment are focusing on this crop as a source of cash income. The variety of tomato grown has been chosen because it is suitable for sun drying: it retains a good colour naturally and a full flavour.

The region is ideal for sun-drying vegetables/fruits; the soil is rich and there is relatively little industrial pollution. The smallholdings are owner-farmed and the crops are carefully nurtured and picked, ensuring high-grade fruit. The labour-intensive operation is commercially viable because most members of a farmer’s family form a willing seasonal work force.

The farmers deliver their tomatoes to the co-op buildings, where sun drying facilities and a simple packaging line have been installed. Here, too, operations are largely manual, thus providing further employment. The process does not require the addition of any artificial additives and, furthermore, complies with all South Africa’s health and food regulations. Being able to achieve this compliance was the major reason for centralising the drying and packaging operation.

At present, the co-op is supplying 500 g and 1 kg clear cellophane-type packets of sun-dried tomatoes to top restaurants and other catering enterprises throughout the Western Cape. The packets carry a simple typed label identifying the co-op as the supplier and giving the contact details. The co-op is operating in a niche market because the high quality of the produce appeals to discerning chefs; it is not competing in the mass retail market for sun-dried tomatoes. However, there is potential to greatly increase production. As no chemical fertilisers or pest controls have been used in the growing area, it is possible for the group to move towards organic certification; the farmers are certainly fair trade compliant, although not certified as such.

The local farmers are unwilling to increase production or apply for organic and/or fair trade certification unless they have a reasonable chance to sell their output in some form or another. They would like to develop export markets, but have been told that their produce, either as fresh tomatoes or as sun-dried tomatoes, almost falls into the category of a commodity.

TASKS

1. State why it is important for the sun-dried tomatoes not to be perceived as a commodity.

2. Discuss the possibilities for product differentiation and niche market development. In your discussion you should describe the link between niche markets and product differentiation. You should suggest possible market niches that the farmers and co-op could target. In discussing possibilities for product differentiation, you should take into account all aspects of the product itself as well as the other components of the marketing mix (price, distribution and promotion).