
THIS ISSUE: 09 Jan - 15 Jan
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Shoprite When danger reared its ugly head, he bravely turned his tail and fled
Tanzania, let’s face it, has never been a piece of cake, but it still surprises us to learn that Shoprite is selling its stores there (one in Arusha, two in Dar es Salaam) to Nakumatt Holdings for around R26million. Nakumatt, you will recall, has 45 stores in East Africa, including Rwanda and Uganda, but has pretensions on markets as far flung as Burundi, Zambia, South Sudan (where plans have been understandably suspended at the mo), DRC, Nigeria, Botswana and Malawi, flogging groceries to an emerging middle class with increased spending power. Nakumatt was hit by significant losses in the Nairobi mall attacks, but has been handsomely paid out by insurance, and is expecting significant foreign investment in the next few months to fuel its expansion drive.
Comment: For Shoprite to be bailing, Tanzania must indeed be as challenging as its reputation suggests.
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Choppies We're only happy when we're shopping
Emboldened by its success back home in Botswana (where it opened eight stores last year for a total of 63) and its first steps into South Africa (where it opened two stores and a DC for a total of 13), Choppies has launched to great acclaim in Zimbabwe. In the neglected and under-traded southern city of Bulawayo, Choppies took over and rebranded the operations of various stores operated by a Mr Modi, and the plan (according to the Zimbabwean press) is to open 100 Zimbabwean stores this year, 20 of them in Bulawayo, having its headquarters there and listing on the Zimbabwean stock exchange at some unspecified point. For now, however, the people of Bulawayo are gratified to have access to a retailer with well-stocked shelves, while Choppies are planning further expansion, into Zambia and Mozambique.
Comment: Competition is heating up for retailers in our neck of the woods. Those with their own plans to expand into neighbouring markets should dust those plans off before the year gets much older.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Of the genus felis horribilis
White maize hit R2999 a ton on the South African Futures Exchange last week, climbing 19% in the month of December alone, and impelled thither by poor rains last year resulting in the worst harvest since 2007. And Tiger Brands, with others no doubt to follow, has regretfully informed us that it will be passing at least some of this cost on to the consumer. Yellow maize is similarly hit, with warnings no doubt to come fro the beef and chicken boys, who use the stuff as feed. The Northwest, our biggest growing region, saw its proportion of national output decline from 31% to 21% last growing season. It seems unavoidable – the weak rand notwithstanding – that businesses like Tiger will be forced to import.
Comment: Hard times on the farm and no doubt at the till, with South Africans poorest, who depend on white maize as a staple, to be affected worst.
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Poultry Bleedin’ seabird bleedin’ flavour!
The Department of Agriculture, Forestry and Fisheries has upped the maximum level of brining permitted in poultry from 8% to 10% for whole birds and 15% for individual portions if we’re reading the fine print correctly, but the poultry industry remains unhappy, pushing for a 25% minimum. Brine is a saltwater solution added to frozen poultry products that tenderises and preserves the meat and adds flavor, but also has the welcome spin-off, if that’s the correct term here, of adding mass which can be sold as chicken to the consumer. Of the big three chicken producers, Astral is likely to be hit worst, deriving as it does much of its income – R 3.8billion at the last reckoning – from frozen birds, with Sovereign and Rainbow affected less severely. The industry has been given a year to adjust its levels.
Comment: A tough one for the industry to swallow. Much like us, when all that delicious, tenderising brine is leached from our favourite white meat.
TRADE ENVIRONMENT
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Food Prices Come and see the violence inherent in the system
Food inflation could be one of the more unwelcome features of the landscape this year. One of those perfect storm combos of high maize prices, a weak rand and rampant fuel costs is likely to make itself felt all over the basket, after a period in which food inflation has been kept in line with overall inflation, at more affordable levels. The effect of this triple-whammy, say economists, will be experienced almost immediately by consumers, with the effects of the high maize price in particular coming through in the second quarter. About 50% of the cost of a chicken to the consumer is derived from the yellow maize upon which it feeds, and here, as noted above, we are already in trouble.
Comment: The last time food prices spiked, hardship for South Africa’s poor was expressed in some places through outbreaks of xenophobic violence. Now might not be the best time for our government to let the markets run their Darwinian course.

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