There’s been a bitter ping-pong match between food juggernaut Woolworths and chocolatier Beyers over what tipped the confectionery company into liquidation. But court papers lodged by Absa – to which Beyers owed R235m at the time of its collapse – have shed new light on the confluence of crises that brought down the 39-year-old enterprise.
“You can see the empathy that would go to a family business pitched against this big Woolies, but the reason why Beyers is going into liquidation isn’t because of us,” Woolies CEO Roy Bagattini said in an interview last week.
Yet Kees Beyers, who founded the chocolatier at the age of 20 in 1987, is equally convinced that the catalyst was Woolies’ decision to torpedo a R320m contract because he refused to stop supplying its rivals, Checkers and Pick n Pay.
Now, all may be fair in war and commerce, but ascertaining the real reason for Beyers’ demise is important – not just to determine whether this does indeed expose hypocrisy in Woolies’ commercial ethics of being a “responsible” retailer, as Beyers argues, but also for what it reveals about the fragility of small business in South Africa.
The court papers lodged in the high court in Joburg for Beyers’ liquidation, revealed here for the first time, are illuminating. In a 40-page affidavit, Absa’s investment banker, Ofentse Mareka, provides a far more nuanced take on how things went badly for Beyers with Woolies – and then, disastrously, spiralled into something far worse.
Mareka traces the problem to 2023, when “Woolworths terminated its relationship with [Beyers, which,] coupled with various other factors such as an increase in the price of cocoa and an investment in a new manufacturing plant, had a significant financial impact on the business”.
Since Beyers bought 80% of its raw material from overseas – mostly Europe – the frail rand was no help as cocoa prices rocketed more than 300% over three years from $2,400/t to $10,700/t, before tumbling back to $4,000/t now.
Mareka says that as a result, Beyers couldn’t repay its loans, and asked for a “moratorium” on its debt. Absa, to its credit, stepped up, providing another R40m overdraft and a new R10m working capital facility, hoping this would allow the chocolatier to trade its way out of trouble.
While this might sound like the triumph of hope over experience, there was reason for optimism: even though the Woolworths contract had left a jumbo-sized hole in its cash flow, Checkers, by then, had stepped up, awarding Beyers “primary chocolate manufacturer” status.
Delivering on this new mandate wasn’t easy. By September last year, Absa said Beyers was already in “financial distress”, which meant that some of its suppliers halted deliveries – a big problem, since chocolate companies typically start producing eggs for Easter at the end of the year.
But then, the final nail in the coffin arrived: “quality failures” emerged in its deliveries to Checkers, when coconut was detected in the mallow eggs it had provided. In December, Checkers told Beyers that it had supplied “defective products”. The next month, it “recalled its order” for marshmallow Easter eggs. Letters between the two companies, contained in the court files, speak of “poor quality and manufacturing defects”.
On January 23 this year, Checkers inspected some samples and then pulled the stock from the shelves “pending investigation”. A week later, Checkers placed its account with Beyers “on hold”, which meant it wasn’t paying for products that had already been supplied.
The bottom line was that sweets worth R16m were sent back to Beyers, with the cost of replacing them estimated at about R9.8m.
“The supply of defective products to Checkers, and the implications of this for [Beyers] are of extreme concern,” Absa’s Mareka says in his affidavit. “Beyers will have to reproduce products worth millions of rands to replace the defective order without the necessary funding to do so.”
Absa, believing that Beyers’ problems were “structural rather than temporary” because of the loss of the Woolworths contract, the high costs and “significant debt”, said liquidation was the only reasonable outcome.
‘Blatant lies’
Beyers, who was born in Belgium and trained as a pastry chef before emigrating to South Africa in 1985, believes none of this later drama with Checkers would have sunk it.
Instead, he lays the blame firmly at Woolworths’ door. “The real underlying reason for the liquidation is that we had invested R200m in new equipment and facilities with the full knowledge of Woolworths, and they pulled the rug from underneath us – that’s what caused the collapse,” he tells Currency.
Before the fallout with Woolworths, about R320m of its R650m annual revenue came from its contract with Woolworths, which entailed making a range of chocolates, including Sweetie Pie, Amarula, and certain variations of the retailer’s blockbuster Chuckles range.
By contrast, he says, Checkers accounted for just R30m in business. “The problems with the mallow would never have sunk us, but for what happened before. You don’t just replace a partner of 34 years overnight.”
Beyers concedes that Woolworths had helped build his business during that period, but he says that in recent years the tone of the partnership shifted.
“They started throwing their weight around – not agreeing to increases, and becoming incredibly demanding to the point of being unreasonable – so we needed to diversify,” he says.
This required some fancy footwork. Five years ago, Beyers bought a factory specifically to make chocolates for Checkers and Pick n Pay – but it was limited from providing any of the products it had developed exclusively for Woolworths to its competitors.
This is at the heart of the bad blood between the two.
Bagattini says Woolworths terminated the contract after discovering that Beyers was supplying products developed with its own “intellectual property” to rivals. He said his company tried for two years to find a compromise, but Kees Beyers wasn’t interested. “Those are trade secrets, and when this is used without your permission, that’s harmful to your business,” Bagattini says.
He adds that Woolworths developed specific formulas with Beyers, which were used to manufacture differentiated chocolates. “This may come across like a David versus Goliath issue, but it really isn’t, because even a smaller business, if their trust was breached, would have probably ended up with the same decision.”
Beyers, however, rejects this version of events as a “blatant lie”.
First, he says, there is no valid signed exclusivity contract in place. Nonetheless, he says, his chocolate company did not provide any of the products developed with Woolworths to rivals.
“Bagattini could not name any product we supposedly supplied to the competition, as there is none. We always protected their exclusivity 100%,” he says. “He claims Woolworths aren’t bothered by us supplying other retailers, as long as it’s not with their intellectual property. If so, there should be no issue, as we never did.”
‘Massive egos’
Despite Bagattini’s protestations, Beyers sketches a picture of a retailer that became increasingly muscular with its suppliers, abused its bargaining power, and couldn’t stand being challenged.
He pinpoints Chan Pillay, the head of Woolworths’ commercial food business, as the man responsible for this fallout.
“This boils down to one man and his massive ego,” he says. “He wanted to show what a big man he is, and how much power he had – and he obviously does have power; he cost us an enormous amount of money, but he also cost Woolworths an enormous amount of money because their chocolate division is a shadow of what it was.”
Beyers says Pillay wanted to use his company as an example to “send a message to other suppliers”. While Bagattini is adamant that this never happened, Beyers says he hasn’t been told the truth.
“He is being lied to by his staff, and they will trip over their own lies.”
This is pretty much the opposite story to that told by Woolworths.
When contacted, Pillay tells Currency that “while it’s true that the relationship was strained towards the end, the retelling of those conversations is not accurate”.
In contrast to Beyers’ claims of threats, Pillay says that discussions between the companies were always “professional and respectful, if tense at times”.
Equally, he says Beyers’ claims that Woolworths’ chocolate business is suffering is also entirely incorrect. While the global chocolate market is indeed battling due to higher cocoa costs, Woolworths chocolate sales have grown by 10% since 2023.
“We had a 30-plus year partnership,” he says. “Over that time, Beyers and Woolies had established a really good relationship and it’s only normal that if either of us were going to make fundamental shifts in our ways of working, we would let the other know. My team, discovering that Beyers was supplying our direct competitors with near-identical products, was a serious breach of trust.”
Pillay says the process of terminating the partnership was a last resort – but the way it was done was “consistent with Woolworths’ values”.
Starting from scratch
In one sense, this is the sort of he-said, she-said you might expect when a deal falls apart. But actually, this story extends far beyond Beyers, shining a light on the sort of supply chain fissures in a country barely able to muster 1% GDP growth.
For instance, when the chocolate company was placed in liquidation, Beyers owed plenty of money to a slew of suppliers, including Aluminium Foil Converters, Art Flexible Packaging, Chipkins Bakery Solutions, and CTP Cartons and Labels. It even owed money to another company in business rescue, Tongaat Hulett, for the sugar used in the sweets.
Beyers says the sums owed to these suppliers today exceed R50m.
For Woolworths, this clash has done serious damage to its reputation, particularly among its community of 500 suppliers, many of whom will now be wary.
Bagattini admits the accusations of it being a bully have hurt. But he says his company hasn’t deviated from its ethical principles of treating suppliers properly. The allegations, he says, simply aren’t true.
“The risk, to me, of not being truthful is significant. So, I’m betting on my company and the people in my company and how they work with our suppliers. And I have no doubt that we are consistent with our values,” he says.
At least one former partner – Tiger Brands’ former CEO Noel Doyle – supports him. Doyle’s former company supplied everything to Woolies, from All Gold Tomato Sauce to Black Cat peanut butter, Energade and Purity baby food.
“I think Woolies is being tarred unfairly,” Doyle says. “They were always the most respectful towards us. They treated it as a real partnership – so that’s why I don’t recognise Woolies in these accusations.”
Still, the way a massive supplier like Tiger Brands was treated is likely different to the reception given to a smaller firm like Beyers.
Beyers, for his part, says his focus has to be on putting this all behind him. A big part of this will be figuring out what to do, now that he wakes up every morning without a job to go to.
“I’m weighing up what to do,” he says. “I’m not rich enough to stop working – I poured all my money into the business, this was my pension. So I’ve got to find something to do. Whatever I do, though, it will probably be a bit different, and a bit smaller.”
This collapse stings more since Beyers says that from the age of seven, he “already knew that one day he would own a chocolate factory”. Like Charlie in Roald Dahl’s famous children’s book, he became fabulously successful – until it all went south.
Psychologically, he says this would be a blow for any entrepreneur, let alone one who had done pretty well for almost four decades.
“Look, I’d rather be where I am – out of money and healthy – than have R100m in the bank and have cancer,” Beyers says. “Actually, the hardest part of this was telling my children, who are 19, 20 and 23, who always saw me as quite successful, that the business is finished.”
In a window into his thinking, Beyers now has an upbeat message on his WhatsApp that reads simply: “What a privilege it is to be able to wake up and try again.”
A commercial bust-up might have been the final blow to Beyers, but had South Africa’s economy been more robust, and had shoppers not been battling to keep their heads above water, the chocolatier might still have survived. Kees Beyers can console himself, however, that his is not the only much-loved brand that has ended up in the graveyard.
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Top image: Rawpixel; Currency.
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Well I hope he goes on to open a chain of Beyers chocolate stores because we need those Chuckles, especially the dark chocolate ones. May his recovery be swift and fabulous 👌
Beyers will be great again, especially with such a positive outlook on life. They should partner with Checkers and have an exclusive Checkers chocolate range!
Please yes
No thank you. Beyers chocolate is absolute garbage.
In these times I feel disheartened that Woollies didn’t think of the Beyers employees who lost their jobs. Why can’t we all have our chocolate (cake) and eat it?
Pure greed, nothing else. And they’re also quick to point blame to debt, and shrug off any responsibility.
I have heard too many stories of how Woolworths has screwed smaller companies. It doesn’t make it difficult to believe that Woolworths is part of the problem. My cousin made a revolutionary sandal in the 90:s that was copied by WW forcing him to revisit his shoe design. Beware Woolworths! We know who you are 😡
Yup, plenty examples of corporate bullying and outright theft of intellectual property. But NOW we supposed to believe them? From reading both sides, it’s pretty obvious what’s at the root of the issue; Corporate greed
Absolutely true, Tiger Brands is the only company stepping up for Woolworths purely because they also have a lit of power. That in itself support the statement of the Woolworths so called ethics that actually translates into a David and Goliath attitude by Woolworths.
Why would you risk R320 million for R30 million?
This is a case of greed and disloyalty. Immediately after going into business with Checkers, they put your contract on hold. You risked it all on smoke and mirrors. When a contract expires, in good faith, the terms move to month to month. He thought he could be clever and beat the system with a technicality but the system that built you left.
Now he is bitter.
That’s quite the L take, but it’s your right.
Blame WW 100%
Woolworths will not see me again. Not only is their decision extremely devistating, but customer care is non existent, and their prices are too expensive, but, I did not mind spending the money on my favourite chocolate, Beyers, especially the chuckles and harmony, symphony and sweetie pies.
Open a Chuckles outlet… There will be endless queues. Just call it Giggles… Please
Or Last Laugh
How about Laffels hahaha 😆
The thing is that Beyers never invented Chuckles. Mister Sweet first made those product for Woolies. Same as Speckled Eggs. When I worked at Mister Sweet in 2010 they made those products for Woolies and more other products
Ok Woolworths did a similar exercise to a cutlery supplier, they dropped us with the lousiest excuses and then out of the blue our designs appeared on their shelves imported from China. China has more human rights issues than South Africa ever can have. However Woolworths adopted this type of modus operandi in many cases.
Beyers made mistakes but Woolies is at fault. There is an established pattern here. Grey Marine and the other family owned businesses Woolies capsized are evidence of this. Woolies should have realised their customers care about them having very high ethical values and I for one am extremely disappointed in them. They make out they are better than the rest but it turns out they are not. If I were them I would approach Beyers and see if together they can start over. We want Beyers to succeed (they are SA’s best chocolate maker) we all want to help him to rebuild. ABSA and the other creditors are likely to lose big time. That’s a pity and it need not have worked out this way. For my part, until I see evidence of a different set of values my money is going elsewhere. It is all too easy to blame Beyers. Woolies should have sat down and found a better way with him. Now they have a moral obligation to fix this.
Very little concern expressed in any of the above for the fate of the 700 suddenly-unemployed employees, or for the unpaid suppliers. Were Beyers’s UIF obligations up to date?
Good luck Kees Beyers. Going through the mill has made you a better businessman. You will bounce back quickly.
Now I am sad that I didn’t buy more often because Beyers is best, now I have to console myself with having bought what was left on the shelf at pick n pay.
It Is heart breaking i work at kees beyers chocolate for more than 15 years now im not working. Woolworth don’t think for south africa economy they want profit only.
This reminds me of a ryme that went something like this, “How many Woolies could a good Chuckle chuck if a good Chuckle could chuck Woolies”.
I have supported Beyers for years but happily not woolworths. We happily drove to their factory shop monthly in Kempton even having Woolworths at every corner. I stopped supporting Woolworths when they became politically motivated.
Roy Bagattini is either a deceitful liar or the most ignorant and disconnected CEO of a retail operation in South Africa. I have spoken to one the Woolworths suppliers and they explained exactly how Woolworths uses it’s position to abuse their suppliers. They know that the suppliers think they have struck gold when they are appointed as suppliers but do not realise that they have been handed a poisoned chalice. I was told that buyers are not allowed to stay on a supplier’s account for more than 6 months as they do not want a relationship to form between the buyer and the supplier. When a new buyer is appointed then they can decide on a whim to change the supply arrangement and the supplier must either comply or they threaten to terminate the contract. I almost fell off my chair when you wrote “Bagattini admits the accusations of it being a bully have hurt. But he says his company hasn’t deviated from its ethical principles of treating suppliers properly. The allegations, he says, simply aren’t true.”. He is either lying or has no understanding of how the company he is running operates. Why does Woolworths not provide us with a list of those items that they are claiming are their IP that were being sold to their competitors so that the consumer can decide if what he is claiming is true? And he is now claiming “Those are trade secrets, and when this is used without your permission, that’s harmful to your business,” when we all can remember how Woolworths stole the Frankies idea, https://www.dailymaverick.co.za/article/2012-02-01-frankies-vs-woolworths-good-old-fashioned-david-and-goliath-battle/ and Ubuntu Baba and The Hummingbird and others that can be googled. Then let us also remember the “mistruths” about their labelling of Ayeshire milk when it was not, splashing the fact that they only use free range eggs in their products and then having to retract that and their claims about “ethical husbandry” when they continued to use sow cages when all the other retailers had stopped using them. When you claim to be an ethical and honest retailer and get caught multiple times being the exact opposite then you should expect that consumers take anything you say with a pinch of salt.
Well stated. These greed mongers deserve their comeuppance.
I honestly do not know what Woolworths are on about. I love chocolates and there were never any similar chocolates in Checkers to those in Woolworths or I would have bought stacks at the more reasonable prices. Without all the facts on the table Mr Beyers story does seem plausible that Woolworths just had sour grapes.
What a well penned article. I have not seen such great journalism in a long while.
All things considered. I feel that no matter how well they dress this, it has absolutely changed my view of the Woolworths brand. It seems very petty to me that WW would make such a big deal.of a blatant lie. I live KB Chocolates and have been delighting clients with this brand for over three decades. Now all 700 people must join millions of SASSA beneficiaries instead of such gigantic brand to take find a better way forward. With such finicky brands, who needs politicians to erode the economy?
Kees Beyers is not the first supplier that Woolworths has treated badly and will not be the last, that is their modus operandi.
As far as I understand it and in discussions with suppliers, the other retailers are just as brutal when it comes to dealing with suppliers but the problem Woolworths has is that they were claiming to not be like the other retailers and were supposedly “ethical” and following good husbandry practises.
When shopping at the other retailers you understood that the pricing was good because they negotiated a hard deal with the suppliers and paying extra at Woolworths for the same or inferior products came with the understanding that they were treating people fairly so your conscience was assuaged.
Most of their current suppliers will not talk about the Woolworths way of doing business because they know that doing so will result in financial ruin.
Many have fallen before Kees Beyers but fortunately he has stood up and shone a light on their lack of ethics and morals.
Maybe the CEO should stop listening to his marketing team as they appear quite detached from reality.
I walked exactly the same story with Woolworths when they did the same thing when I was commercial director of another business
Step for step the story is the same – they claimed exclusivity but did not in reality have it then got sore when the product was supplied elsewhere to other customers
Bullies
I think Woolies are bullies ! I shop there and love the quality but think they are bullies
Go talk to Checkers and Absa and change the brand name
I think the comparison re Tiger Brands is not suitable – who are the rivals of Tiger Brands ….? In addition they have several products, unlike Beyer’s who specialise in chocolates/sweets, and Tiger Brands do not only supply Woolworths. I think what Woolworths have done us heinous.. Maybe Woolworths are struggling to keep afloat in this very harsh economic climate and chose to cut ‘the little guy’ due to its own cashflow.. But I am not an economist and I have not researched the financials of Woolworths. But it sounds terribly unjust and I dont know the parameters of the Competition Commission but…I do think this type of conduct and the consequences re the futures of SMEs are threatened by this bullying and to my mind, irresponsible business practice by Woolworths. Maybe they should demand Tiger Brands supply ONLY Woolworths…..? Then the tables might turn…
Woolworths has lost touch with their customers. They can learn from Checkers. My prediction is that Checkers is going to kill Woolworths. Checkers get the Chuckles!
Very disappointed in Woolworhs’ stance on this matter and believe that Chan Pillays ego played a role. My family has gone back so many years with woolies from the princess ages. Pillay wanted to show Bagatini how the negotiations are done, all its done is open the can of worms as to the Woolworths ethics and lack there of. There contract expired with Beyers years ago yet Beyers maintained the code of ethics and still only supplied Woolworths. What does that tell you about Kees Beyers? Woolworths will remain bullies and yes their stores are above the average just remains to be seen if the public supports bullying or ethics. I know I’m following chuckles.
I was wondering why I could not get my favourite chocolates from Woolworths for some time now. The chocolate coated ginger, the cherry liqueurs, chuckles, chocolate coated mixed nuts just to name a few.
I remember a couple of years ago when a Chuckles-like product was introduced to and sold super well in Checkers and then it suddenly vanished. Interesting… Whatever the case may be, someone in the story could benefit from a reading of Who moved my Cheese.
[…] Currency News has reported, while the financial problems for Beyers did start when Woolworths ended their […]