
THIS ISSUE: 09 Jun - 15 Jun
RETAILERS AND WHOLESALERS
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Shoprite Where’s the Beef? (What does that even mean? Ed)
Get into bed with Shoprite, is the key takeout (what does that even mean? Ed) this week. Especially if you’re a sizeable Zambian (and London-listed) beef (and pork, egg and chicken) distributor called, well, Zambeef. Since signing the concession agreement with Shoprite in 1995 for in-store Meat Market butcheries in Zambia, the business has gone from strength to strength, with operating profit up 200% in kwacha, assisted thither by Shoprite’s rapid expansion, with seven new stores in those geographies in the intervening years, and seven more to come by the end of this one.
Comment: A fascinating business model, no mistake – supplier-run stores within stores. There have to be seven or eight different ways of making money out of an arrangement like that.
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Clicks Us neither
Medical staff union Hospersa was startled (and not a little displeased) to discover that hospital giant Netcare is to outsource 37 pharmacies in its Medicross clinics, and the retail outlets in 51 hospitals, to Clicks, which quite frankly came as something of a surprise to us, too. The deal, which becomes active on October 1, has also got under the skin of the Independent Community Pharmacy Association, which sees it as a threat to small business and a further example of creeping corporatization. Currently, as you know, Clicks has 384 in-store pharmacies, with a 19% share of the market, so this arrangement will give the Group a significant bump, although neither Netcare nor Clicks are expecting a material impact on their bottom lines just yet. Clicks will absorb all Medicross and Netcare-branded pharmacy staff, but Hospersa remain miffed at the lack, as they see it, of advance notice.
Comment: Whatever else the impact, Clicks branding in the foyer of every Netcare hospital in the Beloved Country, is going to send a powerful and positive positioning message.
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Woolworths Ag please daddy
Slow news week, so here’s an item from the fascinating world of herpetology: it turns out that Africa’s most dangerous snake is not the Black Mamba, but the checkout aisle, which winds its sinuous way from the gondola-ends to the tillpoints down at your local Woolies, tempting you and the littlun’s alike with an irresistible assortment of chocolate, sweets, crisps and Hello magazines. Or it used to, anyway. Woolies has met its ambitious target of replacing these temptations with a more wholesome mix of dried fruit, nuts and biltong at 166 of its stores, and the rest will follow through to the end of 2017.
Comment: Thus building on their commendable tradition of combining the commendable with the profitable, to the envy and confusion of their competitors.
MANUFACTURERS AND SERVICE PROVIDERS
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Tiger Brands Burning bright. Well, brightish.
Having wrapped up its Nigerian operations with an audible sigh of relief and a firmly-expressed intention to move on, Tiger Brands are now also shutting shop in Ethiopia, as part of their ongoing process of strategic realignment. Selling its 51% stake in East African Tiger Brands Industries (Eatbi) after reviewing the business with local partner EAG. Eatbi, it turns out, is heavily represented in laundry detergents, a category Tiger Brands is not otherwise crazy about, at a time when the business is focusing on its core categories like bread, cereals, energy drinks and tinned goods. While some analysts have cast doubt on the Striped One’s commitment to the Dark Continent, Tiger Brands still has five plants beyond our borders, and exports to 21 African countries.
Comment: A fascinating (and perhaps anxious) time in the history of a great business with much to offer, both at home and at points North.
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Clover Just the milkman, Ma’am…
As the clinking of two bottles on the front step at dawn, one filled with milk, purest white under a thin layer of cream, the other filled with freshly-squeezed orange juice precedes a wholesome breakfast, Clover’s reputation precedes, um, it. To the extent, in fact, that the Reputation Institute has awarded the business top spot in its annual study of the most reputable companies in South Africa in 2016. Until the Institute provides us with a more catchy acronym, we shall name these awards “The Williams”, as in our experience this is the sort of name which attaches itself to persons of unimpeachable character and reputation. Clover won its William, suggests CEO Johann Vorster, because of its trademarked “Way Better” approach to quality, governance and innovation. The great industry we call home totally cleaned up in the awards, with the next four slots going to Coca-Cola, Woolworths, SPAR and Massmart.
Comment: Nice one, that industry. Done us proud.
TRADE ENVIRONMENT
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GDP Slip slidin’ away…
The good news from the ratings agencies last week was tempered somewhat by the tidings that our Gross Domestic Product shrank by 1.2% in the first quarter of 2016, placing us just three months way from a recession. Economists, bless their adorable little beards, had predicted that we might be down 0.1%, and are suitably chagrined. As if. For the first time, StatsSA published data compiled from both the production and the expenditure sides of the economy, not that it helped the picture. The expectation now is that while the first quarter may prove to have been the worst growth for 2016, it will average around just 0.3%. The primary sector of the economy, which includes mining and agriculture, has been in recession for four quarters and is currently shrinking at 15.5% per annum, while the secondary sector, comprising manufacturing, construction and the like, is growing at a waifish 0.2%.
Comment: On the upside, this might render the Reserve Bank more reluctant to hike the repo rate again this year.
IN BRIEF
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Nestlé Crouching Nido, Hidden Damak
Meanwhile, in the Middle Kingdom, Regent Nestlé has increased his stranglehold on trade, selling such products as Nido milk powder and Damak chocolates online through such channels as Alibaba’s Tmall.com and Taobao.com to Chinese consumers unwilling to venture out into the miasmic smog, and growing sales 6% to $7.3bn in so doing. With us? Good.
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Poultry Playing Chicken, Part XCVIII
The Association of Meat Importers and Exporters has given notice that it will do battle with the South African Poultry Association over the latter’s demand for a safeguard tariff of 37% to be imposed on frozen chicken imports entering the country from the EU. So far, it’s taken the fight, on billboards, to stretches of highway into all of our major cities, posing the deliberatively provocative question: “Why are chicken prices going up?” Stay posted for more on this next week.

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