Popcorn is a popular snack in South Africa. Here is how to get into the buying and selling of wholesale popcorn kernels.
Popcorn farmers and their distributors sell popcorn kernels by the ton in South Africa where they are usually packed into 25kg bags (forty bags per ton). There are two types of popcorn available the standard “butterfly” type and the “mushroom” kind.
Butterfly is the popcorn most are familiar with, the ones you buy off the shelf (Lion, Imbo etc.), which is also the kind you get in the movies.
Mushroom popcorn is the kernels often used in coated popcorn, such as caramel popcorn.
While there are markets for both, butterfly kernels is easier to sell, but mushroom kernels has its market as well, and is less widely available and may be easier to get into as there is less competition.
You are going to be wholesaling popcorn. The retail (500g bag) market is saturated with big local players (and cheap Argentinean imports). Let’s analyze…
The business (and competition)
The price per ton (1000kg) of popcorn kernels in SA is currently around R9000 for butterfly and R10 000 for mushroom (so around R9 – R10 per kg). The (butterfly) bags currently sold on shop shelves is 500g (half a kg) and they retail at R12-R13 a bag, which works out to R24 – R26 per kg. Note: this is retail, not wholesale. I have no idea what the large retailers (Shoprite, PnP) are currently paying wholesale.
But to get an idea what the spaza shops are paying, let’s look at Makro’s bulk prices on the popular large brands (Imbo is owned by Pioneer Foods):
Imbo 10x500g: R112.95 (R11.30 per half kilo, R22.60 per kg)
Lion 10x 500g: R125.95 (R12.60 per half kilo, R25.20 per kg)
Interesting mention (as I’m getting to a similar idea below)
STERKINEKOR Popz, 700g plastic bottle, 12x700g: R224.95 (R18.75 per 700g, R26.79 per kg)
The above competition analysis on the 500g packet is largely semantics as I have mentioned already it is saturated and that you should look in other directions.
In my opinion there are three, maybe four different directions to look at.
25kg bag wholesale (butterfly): selling 25kg bags of kernels to resellers, whether it be popcorn machine operators or cash and carry shops wanting to create a house brand.
25kg bag wholesale (mushroom): To sell mushroom type wholesale you need to find people making and selling their own coated popcorn. There are a few small “artisanal” or “gourmet” popcorn coated makers that sell at various markets.
Approximately 1kg retail butterfly “bottle”: Similar to what is mentioned above, sell 1kg of popcorn in a plastic bottle, that people can screw close after each use. Bottles are more popular overseas:
500g mushroom packet in retail: This is a bit of a risk, as it is not done in South Africa’s large retailers (I assume the big guys have done their research as to why mushroom kernels has not been commercialized in the consumer retail market in South Africa), but you are not some multinational so you can try selling mushroom kernels off the shelf and see how it goes. Make some novel looking packaging and include a delicious caramel coating recipe. Mushroom kernels are more expensive than butterfly (last time I checked it was around R1000 more per ton), but there is a novel nature to it and you will have less costs than the multinationals so you could price your mushroom kernel packets closer to that of that of the widely available butterfly.
You have decide what strategy to use. But as for profit margin: the larger the quantity the lower the margin. In other words a 25kg bag will have a lesser margin than a 1kg bottle.
Like most businesses to start. Do your research. If you have a lot of capital, you can hire out popcorn machines and supply the machines with your cheap bulk popcorn kernels, which will give you even better margins. You can also branch into popcorn seasoning such as butter salt. Spices usually has excellent margins.
Image credits: Bill Ebbesen, popcornopolis, Orville Redenbacher
A buying and selling business is one of the easiest businesses to get into; it requires little skill (besides basic mathematics) and can be started with very little capital. There are two underlying components to a successful buying and selling business: 1.