THIS ISSUE: 15 Aug - 22 Aug
YOUR NUMBERS THIS WEEK
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SPAR Spar for your car
The Jolly Green One has joined Pick n Pay, Woolworths and Fruit & Veg City with the opening of its first forecourt store in the motor-obsessed conurbation of Germiston, whose denizens will be regaled with a 24-hour retail offering which includes much of what you’d expect from a KWIKSPAR, but on a smaller scale. Interestingly, SPAR has gone into forecourts as a JV with fellow Dutch giant Shell, which may or may not mean something more than windmill jokes in the old stockroom and clogs on the checkout staff, and reflects an arrangement the two have had in other geographies, ahem. The Gautengoise can expect another three or four of their water-testing endeavours to roll out over nine months, then it’s open season.
Comment: The analysts are of a mind that the move will contribute pleasingly to revenue but will not be a game changer.
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Kaap Agri Oor die ver verlaate vlakte
Known by some wags among the analysts as the “Boere Massmart” for its rapidly diversifying retail portfolio, Kaap Agri is turning in a performance which many a larger retailer, including its namesake, might envy. The share has increased in value to the tune of 60% this year, and now trades briskly at R16 a pop. In recent years, Kaap Agri has sjoesjed up its flagship Agrimark stores to differentiate them from your average small town co-op, gone into liquor, building materials, convenience and petrol, which must get right up the noses of mainstream retailers, as well as extending its sales of the grocery basket. Accordingly, fuel sales were up 12% this year, with building materials up 19% and cash sales up 25%. And yet, with all this fizz and pizzazz, no plans yet to list on the stock exchange in Johannesburg, that den of city slickers and scallywags.
Comment: Although they have invested in a new khaki short pant.
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Massmart Massing it in the Mara
Last week we glossed over, broadly hinted at and subtly alluded to Massmart’s interest in the Kenyan market, sparing you the details. In hindsight, we could have been a little less obtuse, something of which we have on occasion been accused. Turns out Massmart have been having words with Naivas, a family-owned outfit with 28 East African stores, about the acquisition of either 50% plus one of its shares, or 67% of them, depending on whom you talk to, as a bridgehead into the burgeoning market in that neck of the bundu. While a feud in the family has as we reported stalled things a bit, there seems to be a fairly good chance of things going ahead, although young Mr Pattison isn’t saying one way or the other.
Comment: Burgeon, you will no doubt be as gratified to learn as we were, comes from the Latin noun burra, a shaggy cloth no doubt used to wipe down the old mensa. And you thought we were obtuse.
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Aspen That other expensive white powder…
Remember those Aspen shares you were flirting with ten years ago or so? Or perhaps you'd prefer not to? anyway, taking advantage of further troubles Nestle's having with the competition authorities after their acquisition of Pfizer's baby food business, Aspen have gone and snapped up their infant milk factory in Mexico and some of their trademarks in Latin America, for an undisclosed sum although we are reliably informed that Mr Saad drives a stiffish bargain. This after buying some of their Southern African and Australian infant nutrition interests in April for a handsome $215million. Part of the appeal is the high margins and the high barriers to entry of the category, baby food being something you apparently don't mess around with, unless you're the end user as it were. Aspen now sells product of one sort or another in over 150 countries, operating out of a head office in the underrated commercial hub of Durban.
Comment: Where you don't have to go on holiday to get to the beach for a swim. In water you can actually swim in. Just saying.
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IMPERIAL Logistics Wheels within wheels
Have the ancients not written that China-Africa trade could grow to $385 billion by 2015? No. But this does not prevent it from being the truth, and something of which IMPERIAL Logistics no doubt took due cognizance when entering into a joint venture with international advisory and procurement firm, The Beijing Axis. The idea is to smooth the flow of goods between the low-cost manufacturers of Asia and the growing African market (and one day – who knows? – vice versa), with The Beijing Axis beefing up IMPERIAL’s offering in the areas of procurement and strategy. Historically, the Axis has focused on the mining and resources, industrial, infrastructure and engineering sectors.
Comment: As Clem Sunter once said to us, China views Africa as the continent of opportunity. Expect more where this one came from.
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Fruit and Veg You’ll not get any pudding until you’ve eaten your vegetables
The demand for the fresh and the crunchy is growing at a world beating 6.8% per annum, according to the apple-cheeked, wholesome and currently extremely cheerful folk over at the Produce Marketing Association conference. Half of the apples grown in South Africa now find their way north of the Limpopo, up from 10% a mere decade ago, and African markets now account for 10% of turnover in that happy sector. And there’s more to come, apparently – Africa’s growing middle class likes to spend 20-30% of its income on foods, and there is a growing appreciation (apparently) for the nutritional benefits of going fresh. On the downside, South African retailers heading north find it easier to source from local farmers, who are swiftly stepping up to the plate.
Comment: Fruit and veg, eh. They said it would never catch on.
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Retail Sales Economists 0 – Reality 17,897,328,496,754,320,005
OK, so June’s numbers weren’t all that, coming in at a shrimpfish 1.9% increase year-on-year for June after 6% in May, with the economists all calling it at around 2.8% and once again going unpunished for their incompetence. Some of them, who still have their jobs, predicted it would be as much as four times higher than it actually turned out to be. Apply this margin of error to your own job and – you get the picture. Be this as it may, the real number to look at apparently is growth for the quarter, which all things considered was not too bad at 3.3% year-on-year, with the clothing gang contributing the biggest slice of that and our own dear industry coming in second and contributing 0.8 of a percentage point. On the downside, no one’s expecting much of a recovery anytime soon, with Joe and Mrs Punter still afflicted by high food and fuel costs and poor employment prospects.
Comment: Although the numbers all show that the consumer is better off than a year ago, and real economic decline has stalled.
IN BRIEF
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OMO Advertising standards, military intelligence…
Unilever has fought off complaints to the ASA of the inappropriate lasciviousness of an ad depicting a boy child whose shirt is stained because the crush he has on a girl renders him incapable of keeping the sauce inside his hamburger. It’s an advertisement, people, for goodness sake. It’s not intended to bear any relation to reality or increased sales.
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Woolworths Under the sea
Woolworths is thinking of joining Food Lover’s Market and discontinuing the stocking of crayfish as poaching and general over-use threatens the sustainable supply of this maritime resource. A commendable example which other retailers would do well to follow.
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