THIS ISSUE: 20 Oct - 26 Oct
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Woolworths Message in a bottle
Sending an SOS to the world this week is Woolworths, who have announced that – in another of their South African firsts – they will be packaging their entire fresh milk range in bottles consisting of 30% plant-based plastic. Technically known as a biopolymer, the material is produced by Brazilian outfit Braskem, and is chemically indistinguishable from the real, fake thing. This also means that the entire bottle will still be 100% recyclable. The idea for Woolies is partially to reduce the carbon footprint, but also to show support for a brave new industry intent on doing right by dear old Mother Nature. Plants, you will recall, capture carbon from the atmosphere rather than putting it up there, so turning them into recyclable plastic bottles is good on so many levels.
Comment: A small step for Woolies on its Good Business Journey of a thousand miles. Sometimes, though, the small steps are the ones that count. Or something.
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SPAR Quite a catch
The Verdant One (SPAR, for goodness sake) has taken major steps to ensure that the goodies it sells you for your seafood potjie, and also your other seafood needs, are sustainably procured. Among the Own Brand products it is now monitoring closely for sustainable practices are its canned tuna, Norwegian Salmon, Namibian Hake and Prawns. This means, for example, that SPAR private label canned tuna is traceable back to the exact boat that caught it. Sustainable seafood is defined – and this is important – as “seafood that originates from a fishery or farm that can continue to operate indefinitely without reducing a species’ ability to maintain a viable population.” Note the indefinitely. The proviso, here, or even the caveat, is that SPAR cannot insist that all of its member retailers buy seafood from similarly responsible sources.
Comment: Although the SPAR influence is not to be sneezed at. Excellent work.
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Pick n Pay Click click, ching ching!
Something we’re pretty sure you didn’t know (although, obviously, we did) is that Pick n Pay has a warehouse somewhere in the Cape dedicated to supplying online orders, and driving sales in that, to be honest, pampered geography. Now another is planned, in Isando outside Jo’burg. Some percentages to follow, stay alert. 50%+ of online shoppers make more than R20k a month, while 30% earn between R6k and R20k. It is this latter group that Pick n Pay want to target. In addition, 80% of South Africans do not own cars, but do 60% of all grocery shopping, and you can kind of see where this is going. An argument may be made that an opportunity exists for the Group to bring online to its middle-income shoppers, perhaps through the Boxer Superstores chain. What remains to be seen is whether delivering to these shoppers at a time convenient to them may be made profitable.
Comment: Point is Pick n Pay, an early adopter in online grocery retail, is trying. And when the profits do flow, they will be among the first to cash in.
MANUFACTURERS AND SERVICE PROVIDERS
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Unilever Yay, it’s Monday!
For the third year in a row, Unilever has been named Africa’s Top Employer at the Top Employers Institute Certification Awards. 164 organisations in 32 countries and across 23 sectors were recognised at the event, which was held in Sandton last week. Unilever was SA’s 5th top employer, joined in the top 10 by two other FMCG businesses – Nestlé at 6th and Coke at 10th. According to HR Vice President Mechell Chetty, Unilever’s success may be attributed to the latitude employees are given to make a direct impact in the business, and this is worth handing over to her for elucidation. Mechell? “Our employees are given significant scope for creativity in their role and we aim to create a culture where they have the freedom to act with speed and deliver on their objectives,” she says. “We also encourage innovation across the workforce, with different attitudes towards authority by developing strong line managers who are equipped to deal with the challenges of a multi-generational and multi-cultural workforce.”
Comment: We couldn’t have put it better ourselves.
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Nestlé Hell’s bells
Nestlé, being a business of a certain scale, with a massive global footprint and a portfolio which runs from basics through luxuries, is something of a bellwether for the global economy. All of which is a handy excuse for us to report on their results for the most recent nine months, a period of time in which we generally demonstrate no particular interest. Sales rose 3.3% for the first three quarters, you see, to $66.19billion, a deceptively unimpressive number which represents its weakest increase in a decade and which presages full-year growth of or around 3.5%, down from its earlier expectations of 4.2%. This as a result of price deflation in Europe, and difficult conditions in major markets like Russia and China. While competitors have increased prices to bump up the numbers, Nestlé has continued to prioritise volumes, they say.
Comment: It is not easy being a bellwether. It calls for a cool head and an unwavering eye for the strategy, both of which Nestlé seem to be in possession of right now.
TRADE ENVIRONMENT
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Things generally Trading down
After a surprising bump in July, retail trade sales in August grew more weakly than any months since the 0.9% contraction of June 2014, climbing just 0.2%, way below the market forecast of 0.8%. Our own great sector, lumped in as “sales in food, beverages and tobacco in specialised stores”, grew 2.6%. At the same time, say StatsSA, consumer inflation increased to 6.1% year-on-year in September from 5.9% in August, putting on ice any hope that the Reserve Bank in its mercy might cut the lending rate to get the lifeblood flowing once more through the economy. With retail sales flattening, GDP is at risk of stagnating too for the year. The Reserve Bank has already forecast 0.4% for the year, while the Treasury says it will revise its own forecast downward come Wednesday when the embattled Pravin Gordhan delivers his budget. One silver lining – two actually – is that the numbers of employed are slightly up, and that wage growth remains robust – pointing, one hopes, to an increase in retail sales in due course.
Comment: The retail sector bears a disproportionate burden of responsibility for the country’s economic wellbeing.
IN BRIEF
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British American Tobacco Sah-mokin’!
Because what the world needs are fewer and bigger businesses, British American Tobacco (BAT) is putting in a $47billion bid to buy out the minority shareholders in US tobacco group Reynolds, in which BAT already owns a 42.2% stake. This would make BAT the biggest listed tobacco outfit in the world. Just thought you’d want to know.
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Danone The White Stuff
Danone are foreseeing huge things for this great continent we call home, where they predict that their business will grow 10% every year through 2020, and double that in West Africa. This is twice the growth the business is doing elsewhere in the world. Revenues from Africa last year were €1.4billion. All of this it attributed to milk consumption in line with the economic growth of the continent. Currently Africans drink 37 litres of the white stuff every year, while their counterparts in the rest of the world drink 104 litres.
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