Executive Summary

Jump to section

• Overview & contents
• 1. Executive Summary
• 2. Investment Thesis
• 3. Company and Business Overview
• 4. Problem, Customer Need and Value Proposition
• 5. Products and Services
• 6. Industry Analysis
• 7. Market Analysis
• 8. Customer Analysis
• 9. Market and Competitive Landscape
• 10. Business Model
• 11. Go-to-Market Strategy
• 12. Operating Model
• 13. Management and Organisation
• 14. Strategic Plan
• 15. SWOT Analysis and Strategic Implications
• 16. Risk Analysis
• 17. ESG and Sustainability
• 18. Implementation Roadmap
• 19. Financial Model and Revenue Build
• 20. Projected Income Statement
• 21. Projected Balance Sheet
• 22. Projected Cash Flow
• 23. Capital Expenditure and Working Capital
• 24. Funding Requirement and Structure
• 25. Break-Even Analysis
• 26. Investment Case and Returns
• 27. Debt Serviceability
• 28. Sensitivity and Scenario Analysis
• 29. Key Performance Indicators and Management Dashboard
• 30. Conclusion
• A. Appendix A: Assumption Register
• B. Appendix B: Conditions Precedent to the Seed Subscription
• C. Appendix C: Glossary

A capital-light, two-season garlic producer can displace imports at programme scale, reaching R52.8m revenue and a 34% EBITDA margin by FY2031 — but the margin lives inside a tariff wall and the market has a visible ceiling.

1.1 Business overview and investment opportunity

Two Seasons Garlic (Pty) Ltd is a South African garlic producer and packer supplying national retail programmes, food-service customers and regional export markets. It grows across two blocks with complementary seasons: the Polokwane Plateau in Limpopo, harvesting from September, and the Northern Cape Karoo, harvesting from December. That pairing is the commercial idea. It extends the local supply window to roughly eight months of the year, which is what a national retailer needs before it will list a domestic grower in place of imported product.

The company builds from 12 hectares in its first season to 92 hectares by FY2031, producing 1,086 tonnes and selling 910 tonnes after retaining seed. Revenue reaches R52.8m with EBITDA of R18.0m and net profit of R11.3m. The business turns EBITDA-positive in FY2029, its third season, and is cash-generative from FY2030.

1.2 The problem and the solution

The problem. South Africa consumes more garlic than it grows and has done for decades. Roughly 3,000 tonnes of imports fill the gap each year, principally from China, Spain, India and Argentina. Retailers would prefer local provenance, shorter cold chains and fresher product, but no domestic grower can supply at programme scale for long enough in the year to justify delisting an import. Single-region growers offer eight to ten weeks of supply; retailers need eight months.

The solution. By pairing an early-season Limpopo block with a late-season Karoo block, and by owning curing, grading, packing and peeling capacity, the company offers a retailer what it cannot get from any other local source: a programmable supply window, audited food-safety standards and a peeled food-service line where imported product competes least effectively.

1.3 Market, competition and business model

Apparent domestic consumption is about 5,200 tonnes (roughly R260m at blended realised prices), growing 3% a year; SADC neighbours add a reachable export pool. The serviceable market — retail, food service and SADC export — is approximately 4,100 tonnes. At 910 saleable tonnes in FY2031 the company holds a 15% share of domestic consumption and 22% of its serviceable market. The relevant competitors are import supply chains competing on landed cost and year-round availability, not other farms. The company cannot beat Chinese garlic on cost and does not try; it competes on supply window, freshness, provenance and value-added format.

The business model converts capital into a seed bank, irrigated land under lease and post-harvest infrastructure; converts those into cured, graded and peeled garlic; sells through four channels at blended realisations rising from R44/kg to R58/kg as mix migrates toward retail and peeled product; and generates EBITDA margins above 30% at scale because field cost per hectare (R139,000) is a quarter of revenue per hectare (R574,000).

1.4 The two mechanics that govern this business

Garlic pays for its own expansion in kind, not in cash. Garlic is propagated from its own cloves at roughly 1.6 tonnes of planting stock per hectare. Next season’s area is therefore limited by the seed held back from this season’s crop. In FY2027, 39% of the harvest goes back into the ground rather than to a customer, falling to 16% by FY2031 as the base widens. Saleable volume lags planted area by a full season, and the first two years show losses that are a function of arithmetic rather than of mismanagement.

The national market is small enough to be the binding constraint. South Africa imported about 2,995 tonnes of fresh garlic in 2023 against exports of 773 tonnes, on local production near 3,000 tonnes. At 92 hectares the company already supplies about 15% of apparent consumption. A grower planting 300 hectares would out-produce the entire country and would move the price against itself long before reaching that scale.

1.5 What the model shows that a reader should not skip

The business is substantially a position on a trade remedy. Fresh or chilled garlic of Chinese origin entering South Africa carries an anti-dumping duty of 1,925 cents per kilogram (R19.25), maintained following sunset review. That measure is the principal reason local garlic sells at R58–R63/kg rather than at import parity. A full lapse with the price effect passing through would reduce FY2031 EBITDA from R18.0m to R1.9m. Half that erosion still removes R8.0m.

Price and yield each matter about four times as much as cost control. A 10% fall in realised price costs R5.3m of FY2031 EBITDA; a 10% fall in yield costs R5.4m; a 10% rise in every input cost costs R2.2m. Management attention should follow that ratio.

Each successive funding round earns less than the one before it. At a mid-case exit the seed round returns 3.2x, Series A 1.9x and Series B 1.4x. This is structural: the company cannot grow into a larger market by spending more, so later rounds buy a share of a business whose ceiling is already visible.

1.6 Financial summary

Table 2. Five-year financial summary (R million unless stated).

1.7 Funding requirement, use of funds and returns

The company seeks R9.0m of seed equity now at a post-money valuation of R20.0m, followed by R15.0m at Series A in month 14 (R48.0m post-money) and R11.0m at Series B in month 33 (R76.0m post-money). A R14.0m agricultural term facility with a 24-month capital grace period funds irrigation, land development and part of the packhouse. Total equity of R35.0m and debt of R14.0m fund R40.7m of capital expenditure, R5.9m of early trading losses, working capital of R7.0m and interest during the build, while maintaining a positive cash balance in every month.

Table 3. Investor returns by round across exit multiples (fully diluted, after a 10% employee share trust).

1.8 Key risks and investment rationale

The three risks that matter are the trade-remedy position, agronomic execution across two blocks on leased land, and the market ceiling. Each is quantified in Section 17 and each has a defined management response: a cost position and channel mix that survives a 34% fall in realised price; geographically separated blocks with certified seed protocols and crop insurance; and an expansion plan that stops at the point the market signals saturation, which is cheap to do because land is leased and most costs are variable.