Libstar is accelerating its expansion into township and informal markets, adding new products to its Red Lion brand to build on growing beyond traditional retail as part of its strategy for the 2026 financial year.
The strategy, set out in the group’s recently published annual report, reflects a broader trend in how food producers are responding to consumer strain, which Libstar said is increasingly driven by affordability and value.
Libstar had earmarked the wholesale channel as a key opportunity, leading to the launch of Red Lion in June 2023 with an initial focus on 34 wholesalers in the Gauteng and Great North regions.
The initial rollout included core products ― such as chutney, sweet chilli sauce and tomato sauce ― and the brand has gained traction through in-store visibility, activations and direct engagement with informal traders.
Within a year, Red Lion expanded from 34 wholesalers to more than 400 and more than 450 spaza stores in all nine provinces, the group said.
Libstar has since broadened the product range, adding stock powders, jellies and Splasha drinks. Other products such as spices and curry powders are in the pipeline, it said.
The expansion marks a deepening of Libstar’s presence in township markets, where it already has indirect exposure through private label manufacturing for major retailers including Shoprite, Checkers and Pick n Pay.
Those retailers have an established footprint in township areas, where Libstar-produced goods are widely sold under store brands.
The township economy has become an increasingly important part of South Africa’s consumer landscape. The 2025 Township Customer Experience (CX) Report estimates the sector’s total value at close to R1-trillion annually.
The sector is supported by a network of 150,000 to 250,000 spaza shops and other small businesses, many of which operate informally but play a central role in the distribution of fast-moving consumer goods.
Libstar’s expansion into this market is part of a broader strategic reset of exiting underperforming operations and simplifying its portfolio.
Since 2023, the group has sold or exited several businesses, including its fresh mushroom operations and Umatie Foods, and it is continuing to review noncore assets.
“We are evaluating expressions of interest in Contactim, our remaining nonfood business. On conclusion of this disposal, the process of optimising the portfolio will be largely complete,” said CEO Charl de Villiers.
“The other element of our simplification pillar targets operational simplification by integrating businesses and production facilities where beneficial, creating shared-service structures and identifying opportunities to leverage group economies of scale.”
Libstar said it is focusing on operational efficiency and cost control to protect margins in a constrained environment, including procurement savings and consolidation of operations.
Even with these measures, the group flagged continued risks from global and local factors affecting supply chains and exports.
“Heightened geopolitical uncertainty, including recent developments in Iran and the broader region, continues to disrupt global markets and supply chains, underscoring that even well‑considered plans are exposed to external shocks,” De Villiers said.
“Against this backdrop, we remain focused on sustaining growth momentum through a combination of organic and inorganic initiatives, supported by disciplined cost control, efficiency improvements and prudent capital allocation.”
De Villiers said Libstar increased capital expenditure to R241.1m in 2025 from R194.2m the previous year, with the focus on efficiency, maintenance, quality and safety across its operations.
That accounted for 2% of net revenue, at the “lower end” of the group’s 2% to 3% target range.
Return on invested capital strengthened to 10.9% from 8.6% as the group tracks towards its 2027 target.
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