Lands of potential opportunity

Southern Africa, the southernmost region of Africa, which includes such states as Angola, Botswana, the Comoros, Eswatini, South Africa, Zambia, Zimbabwe and others may provide serious opportunities for growth for global laundry and drycleaning operators in years to come, thanks to ever-rising living standards and the growing demand for quality laundry and drycleaning services.

Despite the fact that the region has never been among the fastest growing in Africa (with Eastern African nations being at the forefront of economic growth on the continent in recent years) its development has been mostly driven by the Republic of South Africa - the biggest economy of the region, which accounts for more than 20% of the entire African GDP.

In recent years, the Republic of South Africa has become one of the most attractive destinations in the region for global industry players looking for an opportunity to gain a foothold there and to make it a hub for their expansion deeper into the continent.

Some companies already have rich experience working in the African region, believing in its potential and big opportunities for further growth. One such company is Jensen-Group which, in recent years, has significantly expanded its presence in the African region, with particular focus on its development in the South African Republic.

Ian Stubbs, head of Jensen-Group Large Projects, confirms the importance of the Government healthcare sector for the company’s growth in South Africa – and other countries of the region.

According to Stubbs: “The government healthcare sector is the largest market place and we have been very successful with our Mediline tunnel washer systems in 2023, further growth potential will come from adoption of linen rental rather than current COG market.

In general, according to Stubbs, although the laundry sector is fragmented and mostly COG with very little linen rental, this will change over the next 10 to 15 years to roughly 50% linen rental which will mean the larger laundries can centralise and invest in better process equipment to reduce their costs.”

Stubbs continues: “As for drycleaning services there is currently little legislation for the use of solvents or chemicals which might change in future and would have an impact on drycleaning services.”

In the meantime, the South African region has long been within the sphere of interest of another major global player, Kannegiesser, which has been operating in the region through its local partners and has been granted some important contracts in the region.

Derrick Rothwell, a spokesman for Amlazi Equipment Services, Kannegiesser’s official agent in South African Republic and other countries of the region, comments: “In 2021 and 2022 we, Amlazi Equipment Services, as the agents for Kannegiesser in Southern Africa, were awarded tenders to upgrade the Tygerberg Hospital laundry in three phases. This laundry is a government owned laundry near Cape Town. Kannegiesser achieved success in 2023 with the supply of the third phase for the modernisation of laundry equipment at Tygerberg. The scope involved three tunnel washer lanes, each with seven x120 kg batch driers, four complete ironing lines with feeders and folders, two complete garment processing lines with automatic folding robots, two blanket folding machines and two towel folding machines.”

The tender included a five-year service contract which will ensure an efficient operation and became the largest of such tenders in South Africa Republic and the whole region. For Kannegiesser and its partner the biggest hopes in the region will be primarily related with the South African government laundry market and the few large independent laundries operating in this country.

Rothwell continues: “There are no large industrial laundries operating in our neighbouring countries, where to our knowledge smaller laundries operate with washer extractors, driers and electrically heated return-feed ironers to process the work.”

As for future prospects for growth, Kannegiesser does not see and expect sizeable growth in the larger industrial laundry market in the foreseeable future. Rothwell says: “Although governmentowned hospital laundries are regularly upgrading their old equipment with new equipment, the majority of the larger laundries in the private sector have been purchasing secondhand equipment from Europe. They have been able to secure very good deals on good secondhand hand Kannegiesser equipment. The South African Rand has depreciated substantially against most world currencies over the past few years, including the Euro, which now makes it expensive to import new equipment from Europe. In April 2022 the Rand to Euro Exchange Rate was ZAR 15.60 = Euro 1.00 and today the rate is ZAR 20.34 = Euro 1.00 a depreciation of 30% in two years. If the Rand does strengthen, we could well see an increase in sales of new equipment in the next few years.”

Kannegiesser is not the only German major, which eyes a more active expansion in the South African region in years to come. Miele, in recent years has achieved some serious results in the region, planning further development this year, also through its numerous local partners and distributors. Morne Swanepoel, Miele’s sales manager export business unit professional in South Africa in an exclusive interview gtells LCNi that the company has achieved some positive results in sales and unit number growth for the African region, with the best dynamics being observed for West and Southern African regions.

In addition, the company is working on turning its local distributors on to its complete 360 degree solution as a partner to the industry in future, which it believes should contribute to the further strenghthening of the company’s positions in the region.

However, Miele does not expect a sharp growth of the market in the coming years. Swanepoel says: “Laundry and drycleaning will grow, in very small increments”. He adds that will be also due to the existing challenges for the company’s operations in the region.

According to Swanepoel, the biggest challenges include:

• Outsourcing of laundry, low barrier of entry into the market for self service machines
• Low entry barrier into specific selfservice markets
• Economic outlook due to external factors i.e.; Energy crisis in the country
• Tourism numbers still 17% below the pre Covid years.

The South African region has been traditionally a target for Alliance Laundry Systems. Tim Bacon, senior director sales – Middle East & India, says that despite a number of challenges, the industry remains robust across most sectors and 2023 numbers in volume and revenue were higher than pre pandemic levels.

“Hospitality continues to rebound on the back of increased travel and several new projects were completed. These ranged from smaller boutique locations right through to the larger multinational chains adding more properties to their portfolios. While growth was concentrated in South Africa, all of the neighbouring states also capitalised on the uptick in travel. Healthcare also performed strongly as governments concluded several large tenders and the major private groups pushed on with refurbishments and expansions. Out of all the main sectors, only mining lagged behind as pressures mount due to the unique challenges faced in this arena. Of particular interest was the strong growth in smaller machines destined for laundromats. This is due to the switch out from older technologies to more environmentally friendly models (less consumption, quicker results) and the reluctance of domestic users to purchase their own machines due to cost and unreliable power,” says Bacon.

According to Bacon, from a product perspective, a key result is that more than 40% of sales were for machines with new features and benefits. “These included models with better energy efficiency, faster cycle times, detailed performance data and more robust electronics with wider safety parameters to counter loadshedding.

Bacon believes that South Africa remains the dominant player in the region “but our growth focus is also targeted at Namibia, Botswana and Mozambique”. He also expects that regional markets will also continue to grow in the coming years.

“There are a number of factors at play in the region but the overwhelming consensus is yes, the market will continue to grow. Laundry is a fundamental need and as our population grows, so will the need. We expect to see shifts in the actual methodology as the industry evolves and this will likely lead to changes in each sectors size and offering. An example being the prevalence of Airbnb’s leading to the increase of local laundromats.

“Aside from the macro-economic challenges such as exchange rates and geo political risks, we see local rising costs to the service provider and intermittent power supply as two of the more serious issues. Together with our partners we have a number of initiatives to tackle these, ranging from leasing options and payment plans through to more robust electronics and unattended machines with programmable start times,” says Bacon.