Pinetown-based Verigreen Packaging Pty Ltd is a thriving small business and managing director Gareth Elcox says it represents a textbook example of how big businesses can partner with smaller ones for everyone’s benefit.
Founded in 2016, Verigreen Packaging now employs 20 people and produces millions of lubricants’ packs every year.
The key catalyst in its development was entering into an Enterprise Supplier Development (ESD) programme with local fuel refiner and retailer Astron Energy,which holds the Caltex license in South Africa and Botswana. Astron Energy’s, Lubricants Laboratory Lead, Meshach Soonpall says that, in 2014, they were looking for a new supplier for lubricants’ packaging: “The market needed a niche player who could produce small packs and kick up levels of innovation and delivery in an industry dominated by the big players.”
Elcox and his partners, with decades of experience between them, had identifiedoil lubricants as possible base for starting a new 51% black-owned packaging enterprise. He says start-ups were almost unheard of in the industry because of the massive capital investment required in machinery and moulds that can cost more that R10m each. They approached Astron Energy (then trading as Chevron)and received a guaranteed contract and preferential funding which enabled them to begin operations in July 2016. Their equipment is state-of-the-art and uses sustainable technology.
Soonpall describes the relationship with Verigreen Packaging as a true partnership which delivers 200ml, 500ml, one-litre and five-litre extrusion blow-moulded containers for Caltex lubricants and private labels: “They have added massive value and are our ‘go to’ people for any specialised requirements or for problem solving on other product lines”.
Elcox says that smaller businesses like Verigreen Packaging cannot gain significant traction and growth solely on a tender basis because the bigger and more established operators will always have lower costs: “This kind of programme is essential to enable SMEs to get guaranteed work which allows for capital investment.” He describes the Astron Energy procurement process and team as one of the most sophisticated and mature in the country.
Astron Energy CEO Jonathan Molapo believes it is an obligation on every big enterprise to make building up smaller suppliers a core part of their business model. He says the Enterprise Supplier Development programme has provided more than R100m in interest-free loans and credit lines since its inception in 2015: “It’s a genuine win-win; the small enterprise gets a foundation on which to invest and develop, and we get a sustainable, transformed local partner.”