TRALAC - Trade Law Centre

Ripple effect for ice-cream

Friday, 05 July 2002

Source: Financial Mail

Port Elizabeth master ice cream maker Dave Vardy is cooling American palates by R20m/year.

Vardy and his partner Manie Maritz make exquisite, fruity ice creams, packed in fruit or coconut shells. With the advent of the Africa Growth & Opportunity Act (Agoa) his exports to the US are duty-free.

Their company, Dynamic Commodities, has teamed up with an ex-South African in the US to launch the product in restaurants, theme parks and supermarkets there.

Agoa extends preferential trade benefits to a specified range of products, including ice cream, stripping them of duty or lowering tariffs. Vardy's ice creams would previously have incurred duties of 20% or more.

"Agoa has been enormously helpful," says Vardy, whose company's rocketing export bill is a showpiece for the legislation, passed two years ago and in force for more than a year now.

But it's not the only secret to success in the difficult but lucrative US market. Vardy says it takes persistence and hard work to overcome the welter of manufacturing and safety regulations facing imports into the US. Red tape's acute. Developing a brand with rand (when costs are in dollars) is expensive.

"It's not as if doors open simply because one is South African. You have to fight." Vardy says his company is showing a profit, though it's ploughing most revenue back into building the market. "We [expect] we will grow significantly, provided we are prepared to invest."

Weight-conscious Americans are attracted to the low-fat ice cream, which is not a pure sorbet, but contains some cream to give it texture. The rest is fruit juice.

It's made in Port Elizabeth. The pulp is carefully scraped from lemons, oranges, pineapples, coconuts and apples to keep the "shells" perfect. The fruit shells are frozen through a method that maintains their colour and shape. And they're shipped in refrigerated containers to the US.

Vardy's success has had a ripple effect on his labour force - the business is highly labour-intensive. Until Agoa, the key markets for his cleaned and cut fruit were Japan and England. Employment was seasonal, but with the ice cream exports to the US bearing fruit, he has been able to put 200 workers on permanent staff.