
THIS ISSUE: 05 Dec - 11 Dec
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Choppies This is how we do
Plucky Botswanan outfit Choppies has just opened its first store in Harare. “Ah,” we hear you thinking, “Sensible. If you’re going to get a first tentative toehold in the potentially lucrative Zimbabwean market, Harare would be the place to start.” And you’d be wrong. You see, the first Hararean emporium is also their sixteenth in-country, after just a year’s trading in that sometime basket case. And their goal is to open a total of forty stores after their first five years, targeting turnover of $350milion US, and 60 stores in the longer-term. In Zim, Choppies is a JV between parent company Choppies Enterprises and the Mphoko family, presumably in keeping with the stringent foreign direct investment rules up there. The retailer is already creating headwinds for TM Supermarkets and OK Zimbabwe, who also have prominent foreign partners…
Comment: Can Choppies be the fabled Seventh Retailer, of whom the poets have sung? Time will tell.
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Shoprite Slicing up the market
Last year, Debonairs Pizza set up shop in a Shoprite in Eldorado Park. This year, Debonairs’ parent Famous Brands and the Big Red One are going a little bolder, with a JV of sorts (they’re calling it a tie-up, but hey) across the continent, where quality fast foods are as rare as gleaming aisles of groceries. Debonairs stores will be set up alongside Shoprite’s Hungry Lion chicken shops in Africa, with the first one opening in Angola in Jan. Debonairs has just opened its 500th outlet, and is Africa’s leading pizza brand, although it faces stiff completion from Dominos and Pizza Hut, also making inroads. Among the other chains operated by Famous are Wimpy, Steers, Milky Lane and tashas, as you are well aware.
Comment: And with Shoprite Chair Mr Wiese in a transactive frame of mind, well, who knows?
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Massmart Well they were right about the cold showers, anyway…
Is disingenuous a word? We think it is, meaning something like “deliberately and knowingly talking out of the top of your hat, while affecting an air of innocence.” And this, it would seem is what Massmart have been doing when they say that they genuinely thought, that having gone into food, they would be competing in a spirit of good-natured fun with the other retailers, who would scrub the exclusivity deals they had with cringing mall owners just in order to give the new chap a chance and level the old playing field a bit. Don't take it from us though, here’s Massmart’s senior counsel, the Hon. Michael Spivey: “WalMart did not see these lease exclusivities coming. We believed that once the merger was complete we would compete fairly, openly and aggressively.” And that matron would be round to tuck you in every night, no doubt. In the interests of fair and open competition, Massmart haven’t cornered the market on disingenuousness, oh no. Mr James Wellwood Basson (Shoprite), take it away, sir: “There’s a reason for that exclusivity, because otherwise we won’t go into some of the shopping centers with developers and the centers won’t take off. Somebody has to take the risk.”
Comment: We’re feeling a little queasy. Must be all the choccies Mummy put in our tuck box.
MANUFACTURERS AND SERVICE PROVIDERS
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Coca-Cola The Apple of their eye
Whoah there! Whohohohoooah! Eeasy! In what must surely be regarded as something of a Big Freakin’ Deal, Coca-Cola has decided to acquire from SABMiller that other beloved fizzy, amber liquid which makes you feel good when you drink it, namely viz and to whit, Appletiser, along with 19 other soft drink brands, for the surprisingly modest number of $260milion. Coke are pretty psyched about the acquisition, as Appletiser grows in the African and Eurasian markets it currently reaches. As you may be aware, but probably aren’t, Appletiser is already distributed by Coke through a franchise model under which third parties bottle and distribute the wholesome stuff.
Comment: Presumably, with SABMiller out of the way, the process will become that much more efficient, and will lead one of SA’s best inventions to the fame and sales it so richly deserves.
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Illovo Sweet and sour
Not the blockbuster interims you may have been hoping for from Illovo then: revenue down a dispiriting 5% to R5.9billion for the six months through September, and operating profit down a worrying 14% to R1.4billion. Sugar production was down 9% as a result of bad weather and an industry strike, and the sugar price globally was down, at $0.16 per pound, compared with its high of $0.35 in 2011. This saw operating profit from sugar production decline 18% to R692million. On the upside, operating profits from the sale of by-products (like alcohol and electricity) more than doubled, to R130million.
Comment: Unlike rival Tongaat Hulett, Illovo hasn't got onto the business of turning canefields into gold estates and industrial developments, sometimes in very close proximity to one another.
TRADE ENVIRONMENT
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Retail Sales Deck the malls
We didn’t see this one coming, and no mistake! After a year of dismal sales, disappointing results and dire predictions, it turns out that retail is undergoing something of a mini boom these days, and this augurs even better for the festive season. Preliminary findings for a BER survey indicate that the growth in retail sales volumes are slightly higher in the fourth quarter of this year than they were last year. But while volume growth is modest, prices have risen quicker than they did last year – driven thither in no small part by a rapid increase in food prices – and this has increased the confidence of retailers to a pleasing degree. And finally, the hoary sages over at Statistics South Africa have let it be known that the growth in sales volumes, which bottomed out at 5.9% during the last quarter of 2013, had improved to 8.2% by the third quarter of 2014.
Comment: Ding dong merrily, isn’t it, eh? And all that.
IN BRIEF
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Clover Done deal.
In the spirit of magnanimity under which it seems currently to operate, the Competition Commission has agreed to Clover’s merger with DairyBelle's yoghurt and UHT milk business – on condition that they continue to supply Danone Southern Africa with secondary distribution services until June 2015. And no retrenchments until three years after the deal, which is nice.

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