
THIS ISSUE: 07 May - 14 May
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Pick n Pay The following
First those numbers: Pick n Pay says it has more than 8million members enrolled in Smart Shopper, and that these worthies swipe their cards 20 times per second at tills across the Big Blue universe. They account for 65% of sales and 43% of baskets, and they’ve received R1billion back in points since the programme kicked off in 2011. We’re not sure what the figure is today, but two years back, they said they’d already invested R140million in the programme, which was aimed at halting the decline of PnP’s market share. And here’s where it gets a bit sticky, with certain curmudgeonly analysts claiming that while market share has indeed not declined further, it hasn’t actually grown, either. But Smart Shopper is, you’ll be pleased to know, adding another 25,000 members per week.
Comment: And the real upside for Pick n Pay might be in the area of efficiency, with 8million shining points of data helping them with stock planning, forecasting and replenishing – weaknesses in which area might have had much to do with the decline in market share in the first place.
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Woolworths Eggcellent work … oh, shut up.
Woolies have just become the first African retailer to win a Good Egg award from Compassion in World Farming (CWF), the leading global farm welfare charity. While in the EU battery farming has been outlawed for its cruelty, replaced by a system of “enriched cages” which allows chickens some freedom of movement, the barbaric system of raising birds is still alive and well in SA. Woolies committed ten years ago to sourcing all of its carton eggs from free-range suppliers, something no other retailers has yet done, but this accounts for only 50% of the 120million eggs they purchase annually. Of the eggs that are used as ingredients in its other food products, Woolies is sourcing 75% ethically right now, but aims to bring that up to 100% by 2018.
Comment: Woolworths have consistently showed that ethical decisions, while tricky to implement, are at a bare minimum consistent with good business.
MANUFACTURERS AND SERVICE PROVIDERS
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Clover The milk of human kindness
Here’s a biggie: Clover have just bought the yoghurt and long-life milk units of long-time rival Dairybelle for the handsome sum of 200meeelion ront, “in line with the company's strategy to expand its portfolio of value-added and branded consumer products,” according to the press release. It’s also planning to enter the lucrative market for ready-made custard – a direct challenge one assumes to Danone, who helped Clover enter the yoghurt market but with whom things terminated last year, and who won Ultramel, the granddaddy of custard products. The Dairybelle production facilities are located in the verdant farmland of the Western Cape, whence Clover sources much of its milk, so efficiencies and cost savings could well ensue. Dairybelle, in the meantime, will be freed up to focus with great intensity on its core cheese and butter business.
Comment: This news by way of softening the blow to Clover’s shareholders, who were informed in the same breath of an expected YOY decline in June of headline earnings per share.
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Unilever Good Lord Stanley – a SKU!
Unilever has spent $150million over the past couple of years upping its game in Nigeria, dropping this cash on modernising its plants and “building its capacity”. Now, with more than a nod to the importance of that monstrous market on anyone interested in making a buck in Africa, Le Grand Bleu is looking to spend even more, although quite how much is a subject on which Yaw Nsakorh, CEO of Unilever Nigeria, is not willing to be drawn. He does however mention that Nigeria is a “global priority” in the order of an India, a China or a Brazil, and that some of the new investment is likely to be on distribution infrastructure in Ogun state. What’s more, this year’s Global Investment Forum, to which Unilever invites suppliers keen to contribute strategically to the grocery giant's growth will be held in, you guessed it, Nigeria.
Comment: Don’t know about you, but we’re starting to feel a little left out here…
TRADE ENVIRONMENT
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Unemployment Oh, did we say there would be jobs?
Just a couple days shy of last week’s election, StatSA released the employment figures for the first quarter of the year, and the numbers revealed (rather unsportingly for the ANC) that unemployment had kicked up 1.1 percentage points to 25.2%, with unemployment by the expanded definition that includes those who desire employment whether they are actively seeking it or not, up to 35.1% from 34% in the last quarter of 2013. Getting a little more specific, 122,000 jobs were lost during the period, while the ranks of the unemployed swelled by 237,000, the largest decrease since 2011. The biggest loss, surprisingly, came in the informal sector, traditionally a bulwark of the economy, but which this time around lost 110,000 jobs.
Comment: Which is OK, because there was an election, and jobs were promised…
IN BRIEF
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Woolworths Tell you what, throw in the locker and it’s a deal.
The Australian foreign investment review body has approved Woolies’ US$2billion takeover of retailer David Jones, this removing a significant hurdle to acquisition, and the ultimate creation of a Southern Hemisphere retail leviathan. And perhaps, ultimate Super Rugby victory for the Sharks.
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SABMiller Above and beyond
Over in the US, SABMiller and their poorly-punctuated cohort MillerCoors have announced that they grew something called “underlying net income” by 7.4% for the first quarter, which is not what they were hoping for if they are to properly assail Anheuser-Busch InBev’s 48% share of that sizeable market. SABMiller, as you know, is in distant second with 28%. But don’t worry: they have a plan, which involves a new category known as “Above Premium”, to be replaced next year no doubt by “Over and Above Above Premium”. Still, we wish them well, whatever our views on market consolidation.

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