
THIS ISSUE: 06 Oct - 09 Oct
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Shoprite What’s in a name? No, seriously, what, the heck, is in that name?
Sorry ad guys, but we’ve sold a couple of dodgy names ourselves over the years. So we know how you did it: “Ku is isiZulu for it’s, dough is slang, almost completely unused in South Africa, for money. And kudos are congratulations or something. That’ll be 60 grand.” Kudough Credit Solutions, however, is Shoprite’s new financial product, an instant credit check you can get at any Money Market counter. Banking insofar as it is permitted by law is a big deal for the Big Red One – in the last results, 90% of profit growth came from revenue streams other than retail, in which the Money Market basket features large.
Comment: We usually just time the laughing when we approach our bank manager for an extension on our overdraft. Take the square of that, and you get, in tens of thousands, exactly what we’re already in the hole for.
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Massmart A-wimoweh!
Nakumatt, Tuskys, Uchumi, Naivas, Ukwala, and Chandarana. That’s Massmart’s reception committee of hardened local retailers when they open shop in Garden City Mall in Nairobi in 2014. But there should be enough to go around: Kenya’s GDP is expected to continue growing at around 5.1% through 2014, and seven malls – always an indicator of rude good health – are due to open by then as well. And while the big six turn over somewhere between R10–20billion a year, they make up only 20% of the market, with the rest going the way of independents and spazas. And the World Bank, who should know, reckon that 40% of Kenyans pass regionally at least for middle class, surviving on $2–$10 per day.
Comment: A picture as rosy as the freshly-tailored shirt on an eager young Game manager’s back.
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Pick n Pay Someone get the new guy a spade
Tough times over at The Big Blue, which on Friday issued a shocker of a profit warning, saying that headline earnings for the first half will likely drop between 10–20%. This on turnover growth of just 5.9% and like-store growth trundling along at 3.2%, which they attribute to tougher competition, poor stock availability and economic pressure on their core shopper. They confessed that their store opening programme lagged competitors’ in the first half, but said that they would open more in the second, and that operational and cost improvements would start to kick in at Longmeadow, which had got off to a shaky start. The centralising of category buying has also been something of a drag on the business, particularly vis-à-vis availability.
Comment: So. If not a poisoned chalice for Mr Brasher, perhaps not the most illustrious vintage at the table either.
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Rhodes Food Group A jammy deal
“Who”, you will ask forgetting that much of what we find on the shelves in our supermarkets is brought there by sizeable businesses you might never have heard of. Rhodes, which has an annual turnover of around R2billion, describes itself as the “leading domestic producer of high quality prepared meal solutions‚ dairy products‚ pies and premium canned foods.” The brands it brings to market from its Franschhoek lair include Rhodes fruit, veggies and jam, Magpie pies and pastries‚ Portobello cheese‚ and Hazeldene jam. Now, a majority interest in Rhodes is being acquired by asset management crowd Capitalworks, which has a reputation of working with management to grow the acquired business. And speaking of management, they have also acquired a significant shareholding in terms of the deal.
Comment: Let’s check back in with them in a year or six months hence. We’re sure there’ll be something to report.
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Astral Sheer pluck
It’s not just our retailers who are boldly going up north, oh no. The sugar boys have been at it for years, and Tiger Brands as we know have been buying into West Africa hand over fist. Now Astral has laid its footprint in the rich red earth of the mother continent, first in Zambia and now with its Mozpintos plant outside of Maputo, which will supply 158,000 broilers per week to a hungry market. In fairness, Astral has also been in the country for some years, opening a feed mill business there in 2000. Next up is the launch of the Festiva brand of processed chicken products there, and next, perhaps, an abattoir. This rollout is very much in keeping with their strategy for the rest of the continent.
Comment: Heady times for South African businesses as they scramble for the biggest untapped market on the planet.
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Transport Truckin’ on down
Look, things could certainly be better in the dear old South African economy. Flattish growth. Uninspiring retail sales. Add 20,000 angry truckers to the mix, and things take a distinctly southward turn. Fuel shortages. Cash shortages at ATMs. And looming shortages on the shelves of our supermarkets, too. The CGCSA has weighed in on the subject, with CEO Gwarega Mangozhe issuing a statement to the effect that most member organisations have implemented contingency plans to ensure the supply of groceries on shelf. Reading between the lines, however, he seems far from completely sanguine: acknowledging that some lines are beginning to run short in some locations, and invoking the ghost of Christmas future in hoping for a speedy resolution.
Comment: With 12% demanded and 9% currently on the table, it seems that a certain intransigence has slipped into labour negotiations post-Marikana.
IN BRIEF
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Shopritish A cool customer
OK it’s not a Shoprite story, but something we neglected to mention in March was that Brait, the private equity business which numbers Chriso Wiese among its owners, bought a 19% stake in the Iceland Group, which owns value food retailer Iceland Foods, discount frozen food retailer Cooltrade and frozen food exporter Itex. A stake paid for, we assume in crisp bills we just happened to find in the old hand luggage.
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Shoprite Tubes of tender tastiness
After months of pensive finger licking and skyward gazing by the panel of judges, the 2012 winner of the annual Shoprite Boerie contest has been announced. It is no less a personage than Piet Nkambule of Newcastle. No stranger, he, to contests of taste, texture and the correct thickness of intestinal wall, he has entered the competition 19 times out of a possible 20.

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