THIS ISSUE: 26 Nov - 02 Dec
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Boxer Packing a punch
A great one-two combo this last week from Boxer – not only has it opened its 200th store, but the brand new Boxer Nonkqubela, in Khayelitsha, represents Boxer’s very first store in the Fairest Cape. Now the Pugilistic One can justly lay claim to the title of National Retailer, in keeping with parent company Pick n Pay’s strategy of turning the chain into a fully-fledged national brand. Boxer Nonkqubela has a sharp and snappy layout making it easier for customers and their families to stock up on everything from fresh fruit & veg to household essentials in what they themselves have called “(South) Africa’s favourite discount supermarket”. And rounding off the one-stop shopping experience, it will provide Capetonians with the opportunity to make third-party payments, buy electricity or airtime, withdraw money at the ATM or at the tills etc. etc. etc.
Comment: Congratulations, and we’re looking forward to see where Boxer will bob and weave its way to next.
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Woolworths What are they smoking?
The Dapper One, we are pleased to announce, is putting tilapia on the menu with characteristic aplomb, introducing two lines: lightly smoked with coriander & sriracha lime butter and lightly smoked with pink peppercorn rub & coriander butter. This robust treatment, flavour-wise, is perhaps the best way to wring interest out of an otherwise bland if delicately-textured fish, which nevertheless has the inestimable virtue of being farmed rather than pulled willy-nilly out of Mother Ocean. And indeed, the lines are certified by the Aquaculture Stewardship Council (ASC) as originating from a responsibly-managed ASC-certified farm. And speaking of responsible, Woolies are proud to announce that they have completed phase one of what is apparently a protracted and complex operation on getting sweets and chocolates out of the checkout lines, with 104 stores now compliant.
Comment: A feature of the Woolies Good Business Journey is doing the right thing without being nagged about it. Nice one, that tastefully attired retailer.
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Massmart The Bakkie Brigade are here
Cementing, if you will, their position in Zambia is Massmart, which launched its first Builders Warehouse in Lusaka this week. And word on the street is it was a pretty canny move, with Zambia poised for commodities-fuelled growth and buildings going up all over town. The good news for Zambia is (a) more materials with which to build, and (b) another engine for economic growth, which relies perhaps a little too heavily on those aforementioned commodities, and which could do with a little more retail to keep it chugging healthily along through the downtimes. The downside for Massmart is the relative weakness of the kwacha, which has recently lost 50% against the dollar. This notwithstanding, another Builders is planned in the next 18 months elsewhere, joining the one just opened and the Game Massmart already have in place in Lusaka
Comment: The march of SA businesses into Africa is a book whose prologue has barely been written.
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Sales I see a Friday and I want to paint it black
So how was your Black Friday … what? You hadn’t… ah, well, gather round and listen closely, then. Black Friday is one of those bacchanalia imported from the US and then imperfectly executed by locals, like Hallowe’en, Celebrity Roasts and capitalism. It goes a little something like this: the day after Thanksgiving (due to hit these shores in 2017), American retailers mark down big screen televisions and the like to prices at which it becomes basically unaffordable not to buy them, everyone queues up at 3am in the blistering cold to get the really good deals, sacrificial babies get trampled in the ensuing rush and everyone goes home dissatisfied and broke. Except the retailers, who get the benefit of a sort of mini-Christmas a month before the real deal. Then two days later, on Cyber Monday, it all happens again, except on the internet. The consensus (our mum, the girls in the office, and a mate) is that Black Friday sales in the Beloved Country could have gone a little deeper on the discounts and a little wider on the merch available.
Comment: Give it time, though, eh. Christmas was only invented in 1932 or something, and look at it now.
MANUFACTURERS AND SERVICE PROVIDERS
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Kaap Agri Grim harvest
My goodness, Kaap Agri, but where have you been? And look how you’ve grown! Turnover up 8.5% for the year to R7billion, and bottom-line profit up 16% to R183million for the year through September, which is good going under the constrained economic conditions we’ve been experiencing the past couple of year. But don’t expect the good fortune to last, warns MD Sean Walsh: the drought in the Swartland drags on, with only 33% of the normal rainfall recorded for the year, and a wheat crop of 40% below average expected. This will have a predictable impact on the business’s grain storage and handling revenues, although it will impel them to up their efforts in seeking growth opportunities both at home and abroad.
Comment: Having exceeded its 15% growth target four years in a row, it seems fair to assume that they have things well in hand. Nice one, boytjies.
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Pioneer Foods Dams half empty
Joining the line of South African businesses achieving respectable numbers while warning of dire times ahead is Pioneer, which grew operating profit 28% to R2.15billion, off more modest revenue growth of 6% to R18.7billion for the year through September. Pioneer, as you know, makes 60% of its cash from its essential foods category, which depends heavily on wheat and maize, which in turn depend heavily on rainfall, which … you get the increasingly grim and all too familiar picture. Pioneer plan to counter the anticipated leanness of times to come with improved efficiencies in procurement, logistics and manufacturing.
Comment: A strategy born of necessity, which will pay handsomely when water starts falling once more from the skies.
TRADE ENVIRONMENT
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Food Prices A hungry man is an angry man
By this time next year, we could be looking at food price inflation of 10%, or double its current rate. This as the worst drought in two decades continues to ravage the heartland, and the dollar continues its devastation of the rand, to the tune of 18% this year. This according to forecasts from Stanlib and the Macquarie Group, who warn that the food crunch will inevitably hit poorest households hardest, as they spend a third of their income on food – three times more, proportionately, than richer families. And with unemployment running chronically high, the economy skating on the edge of recession, maize prices surging 50% and the Reserve Bank starting to pre-empt inflation with interest rate increases, anger will follow.
Comment: We are stuck in a twisted and broken paradigm, where economic pressures lead to austerity measures that lead to social discord, with government raising the interest rate and businesses raising prices to keep shareholders happy like there’s nothing else they can do. We can do better than this.
IN BRIEF
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Bounty Brands A whole new ball game
Bounty Brands have made their first international acquisition in the form of Sonko, a Polish producer of rice and dry bread products. This after their purchase of Liberty Foods, supplier to the local food service industry, which it adds to a portfolio that includes Vans, Cosmetix and Chappers Sports Direct. Bounty, we are told, is soon to list on the Johannesburg Securities Exchange (JSE). But the really cool thing about it is that it’s headed up by Mr Nick Badminton, ex of Pick n Pay, and last seen pedalling a meditative bicycle along an undulating Boland road.
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Nampak Packing them in
Let’s squeeze just one more set of results in before closing time, shall we? Nampak, then, with sales up 13% to R17.3billion and trading profit up 10% to R1.8billion, on the back of good performances by subsidiaries in Angola and Nigeria, where apparently it is possible to make a buck without getting your lunch totally handed to you.
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