The South African Association of Biscuit Manufacturers

As each of the biscuit makers developed, he tended to serve the town in which he was established and then gradually in later years extended his trade further afield.  As these territories were extended manufacturers began to overlap and biscuit manufacturers found themselves in competition with one another.

Initially all manufacturers operated quite independently and had very little personal contact with one another.

Generally speaking, not much attention was paid to production efficiency or delivery service.  The main thrust was to send out travelers to the various storekeepers to take orders for biscuits, to watch competitors’ activities,  to combat competitors’ prices and to try induce more business by way of discounts.

Ranges of Biscuits

Most of the biscuits were at first based on types being imported from overseas by the wholesalers along the coast.  Popular lines were Marie Biscuits, Cream Crackers, Ginger Nuts and, probably, Lemon Creams.  All biscuit manufacturers therefore copied these and of course produced other lines based on their own ideas.

If any manufacturer introduced or invented a new biscuit this was soon copied by his competitors, more particularly when the sales areas started to overlap one another.  This was an accepted practice.  As an example, Bakers Ltd ‘invented’ the biscuit Royal Creams which had three ridges along the biscuit. Pyotts immediately followed with a similar biscuit with four ridges and also called it Royal Creams.  There was nothing to stop biscuit manufacturers imitating nor using each other’s biscuit names.   There was no feeling of rancour but it was irritating.

Quite often traders would try to play off one manufacturer against another by saying they were obtaining their biscuits more cheaply or claiming that they were receiving bigger discounts.   There was no collaboration amongst biscuit manufacturers neither did they challenge one another for   imitating.

Start of trade unions

In 1927 there was an event that caused a change in the situation.   The South African government was conforming to an international agreement that trade unionism should be encouraged and as a result the Industrial Conciliation Act was published.  The aim of this Act was that groups of employers and groups of employees should be able to meet together to discuss working conditions, wages and any other related matters.  The Act provided for structures to be set up and for methods of settling disputes that might arise.

There was a man in Cape Town - Harold Laite.   He was a very well respected professional businessman and to some extent involved in parliamentary matters, and I suspect too that he was perhaps connected with the Chamber of Industry in Cape Town.   He wrote to all the biscuit manufacturers advising that there was a need now to get together under this new Act.   A Scotsman, Mr Stewart, represented the employees;  and became the Secretary of “The National Union of Operatives of Biscuit Makers and Packers of South Africa”.  He was a very able and fair man in his deliberations in the Industrial Council.    The employers formed “The National Organisation of Biscuit Employers of South Africa” and agreed to do what they could to assist in the formation of trade unions.   The two groups met once a year in Cape Town to work out wage agreements, rates of pay, hours worked overtime and so on.    

Start of the Biscuit Manfacturers Association

At the same time Mr Laite suggested that the same biscuit manufacturers could well form a second association which was called the National Association of Biscuit Manufacturers of South Africa -  loosely referred always as the Biscuit Association.   It was envisaged that the purpose of this association would be for members to get to know each other and to arrange agreements on prices and other trading conditions.

Other entrants - the smaller players - were asked from time to time to join -  they declined - but it was this group of companies that, as an association, constructed agreements concerning their biscuit activities and acted as a body to approach government officials on various matters such as weights and measures, metrication, health aspects, tax aspects, the Monopolies Act, sales tax and so on.

Early meetings

In those early days transport was difficult - there were no aeroplanes, motor cars were still very slow and there were no tarred roads It was only natural that meetings should only be held once a year, usually in Cape Town.  Fortunately there was a weekly mail boat shipping service which travelled between Durban and Cape Town on a regular basis and there was a fairly good rail service.  

The general habit was that Hay from Maritzburg, the Pyotts’ Durban representative, Mr Nothard, and my uncle Albert Baumann would board the mail boat in Durban on a Thursday.   The ship called at Port Elizabeth (where it picked up another Pyotts’ representative) arriving in Cape Town on Monday morning.  They would join up with the Pyotts’ Cape Town representative and William Baumann of Selected Products (Baumanns Biscuits).  The Premier Biscuit Company would travel down from Johannesburg probably by train, and was represented by Mr McFarlane and after his death by Mr Posner.

As can well be imagined there were many infringements of the agreement by manufacturers which led to polite confrontations at the Biscuit Conferences - all done in a gentlemanly manner.  There were no outright arguments and I believe that these regular meetings, although spaced well apart, gradually developed a better understanding.   It was also customary for the manufacturers to break for lunch and to dine together on one or more days of the conference, and this also helped in promoting a better understanding amongst members.

Association meetings from 1950

I first became involved in Assocation meetings in about 1950.  By that time Mr Harold Laite (Senior) had died and his son, also named Harold Laite, continued as Chairman of the Association and kept all the records and dealt with all the correspondence.  

The costs of the Association were paid for by all the members contributing an annual subscription.

As the years went by transport became easier, I became more involved and I endeavoured to encourage more meetings per year.  The Association meetings were quite pleasant affairs.

When Mr Harold Laite Junior died we agreed amongst ourselves that we would appoint one of our own number as Chairman.  Mr Randal Thomson who was then Managing Director of Pyotts was elected to this position, which he occupied until the time of his retirement.  We then suggested that Mr Alec Shirras, who was the succeeding Managing Director of Pyotts, should become Chairman which he accepted.

The Biscuit Conference and Employers Organisation Meetings

The Biscuit Conference and employers’ organisation meetings usually lasted over a period of three days.   A lengthy trading agreement had been agreed (about eighteen pages) and I presume that Mr Laite, because of his strong personality, would have had a great deal of influence in its structure.  The preamble to the agreement carried clauses stating that it was the intention of the Biscuit Manufacturers to have an agreement whereby they could all operate freely and in an honourable manner observing ethical trading practices and so on.

The rules in the agreement included the following:

  1. There would be an agreed minimum biscuit price for each type of biscuit. 
  2. It was accepted that biscuits in the Transvaal would sell at 1½ pence per lb (¾ pence per packet) higher than at the coast.  This arrangement arose from the fair volume of biscuits that were imported at the coast by wholesale merchants.   They were sold at landed cost at the coast but cartage was added to biscuits for sale in the Transvaal. 
  3. A range of discounts was set down.   All traders would get at least 5%, wholesalers would receive 10% trade discount and very large wholesalers would receive 12½%.
  4. Copying of each others’ new biscuits was permitted provided there was a distinguishable difference between them.   (This may have been why Pyotts had four lines along the top of their biscuits for Royal Creams against Bakers’ three lines). 
  5. Manufacturers, if imitating a competitor’s new line, would honour the price of the originator and use a different name.
  6. Manufacturers would respect each others’ packaging and avoid close imitation.
  7. Special conditions were laid down for deliveries to customers in the country districts because of the railage cost factor.  The aim was that a trader should be able to buy from any manufacturer in any town at the same ultimate cost based on the nearest manufacturer.   An example would be that a trader in Kroonstad, for example, would be charged by the Johannesburg manufacturer for railage from Johannesburg to his shop.   The Durban manufacturer, although the railage was much higher would charge exactly the same figure on his invoice.  
  8. Biscuits sent into the country were always packed in the usual tins and were placed in crates.  All traders had to pay a deposit on tins and on crates which was refunded to them when the tin or crate was returned to the manufacturer.  The deposit figure for each size of tin and each size of crate was set out and manufacturers adhered to these.   Unfortunately this did leave some room for discrete manoeuvring.  Conferences often had to face discussion on suspected possible infringements.
  9. Biscuits are known for the fact that they go soft quickly.  At that time they were packed into tins.  All manufacturers supplied stands to larger traders in which the biscuit tins could be placed with the lids removed.   It must be remembered that biscuits at that time were packed loose in the tins - there were no packets.  A glass hinged lid covered the tins to keep the moisture out but at the same time customers could see the biscuits.  These stands were charged for and agreements were made on the values to be charged to customers for the  different sizes. 

Meetings and communication between manufacturers

In later years we were meeting quite frequently, about every two months.   We usually completed the discussions by lunchtime and then we all adjourned for a very pleasurable lunch together at a local hotel or restaurant, at which there was much banter and good camaraderie.

It soon became obvious that frequent meetings with manufacturers created better understanding.  Members could communicate with each other more freely and there was a greater openness and sense of trust.  At my suggestion, we converted the meetings to a monthly basis and decided always to hold them in Johannesburg because this would provide easy access for everyone.

The Premier Milling Company very kindly made available to us a boardroom in one of their companies at Isando, quite near the airport.  This was most convenient and their gesture was most appreciated.

Association Subscriptions

More frequent meetings meant that more costs were incurred, particularly as the association paid for the luncheons.  We noticed that the representatives of the two smaller companies, Weston’s and 3-Rings, had difficulty in getting increased subscriptions authorised by the executives higher up who controlled their companies and that this was something that had to be considered.

I felt it was most important that these frequent meetings should continue and so wrote to the Association suggesting that there was a need to rearrange the subscriptions, which were based on some archaic formula.  We offered a new basis, which involved Bakers and Baumanns contributing about 75% of the total requirement, whilst Pyotts, 3-Rings and Westons took care of the other 25% and after that there were no problems.

Association deals with metrication, health regulations and other problems

Throughout the years the Association was able to act as a united organisation representing biscuit manufacturers in dealings with the authorities when matters of difficulty arose and we were able to establish good relationships with the various government and other bodies.  In fact, the Association was very highly regarded in the regulatory circles.

Some of the problems we had to deal with were metrication which involved us all making simultaneous changes as we went along, dealings with the health authorities and the framing of new health regulations, opposition to the biscuit sales tax which ran for a few years, consultations on import duties on imported biscuits, the problem of a flour shortage leading to rationing, investigation of the biscuit industry under the new Monopolies Act, and appeals to the price controller when increases in the price of biscuits were necessary.

In 1978 Mr Shirras retired from business and automatically resigned as Chairman of the Biscuit Association.  I was asked to take this position which I held until 1984 at which time I retired from business.

I had arranged that our Marketing Manager and our Johannesburg Managing Director should attend the meetings, and sometimes one or other of the other manufacturers would bring along a second representative, all of which gave more body to the meeting and somehow increased the fellowship.  It really was a rewarding business relationship.

Monopolies Act and the biscuit industry

When the Monopolies Act was promulgated, one of the first organisations to be investigated was the biscuit industry.  As a result of this a prohibition was issued that manufacturers were not permitted to collude on biscuit prices or on discounts.  The legal penalties for a breach were very heavy.  There was, however, one relaxation that if we approached the Price Controller as a body we could ask his agreement to a suggested price and once this consent was given the new prices could be implemented by all.  We found this was a lengthy and unwieldy process.  Bakers advised the members that if a company needed an increase it could implement one unilaterally and without advice to the others, but merely advise the trade.  It was usually not long before the other manufacturers followed suit because they were also acting under similar cost pressures.  They probably had the advantage that they were able to sell at the lower price for a month or two, but somehow this did not seem to affect market shares.

Market share

One of the things which was always worrying to our competitors was that they might be losing market share.  This usually arose because a manufacturer would be told by his travellers or representatives – sometimes embellished stories – that others were giving underhand competitive advantages.  This could incline them to want to cut prices or give extra discounts or even undertake other secret arrangements.  The problem was that Pyotts, Three Rings Biscuits and Westons were no longer run by the original families, but were now owned by public companies.  The Managing Directors of these companies were always under pressure from their senior executives to perform.  On one occasion when Westons complained they were losing their market to competitors we all agreed that they would be permitted to charge a lower price or give extra discounts whenever they felt it necessary.   But after a few months Westons said that they did not require this facility because it was only eating into their profit margin if they gave away more discounts.

In order to give everybody peace of mind I made a suggestion that the market share of each manufacturer should be tabled at our monthly meetings.   By law all manufacturers had to report their flour usage to the Wheat Industry Control Board and it was arranged that this Board would in turn supply these figures to the Association’s secretary (Mrs P Coates) who would then pass them on to all the manufacturers.   I made this a permanent item on the Agenda.  It was interesting that whenever we came to this item and I asked if there were any comments, everybody said they were satisfied and had no complaints.   Generally speaking, the meetings and the friendship continued in a harmonious manner for the rest of the time.  

The end of the Association

The Association continued to function until October 1983, when the Premier Group closed down their 3-Rings and Weston’s biscuit factories and sold Pyotts to the Bakers Group.  This meant that the Bakers Group now held about 90 – 95% of the trade and there was obviously no-longer a need for a Biscuit Association, which fell away.  I understand that the Employer’s Organisation continued in order to discuss labour items at Industrial Council meetings with the trade unions.