
THIS ISSUE: 17 Mar - 22 Mar
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Shoprite $@#$%! @#$#&, *&%$#@.
“Oh My Goodness!” is not an epithet which falls frequently from the lips of Gordon Ramsey, who famously prefers the stronger stuff. Nevertheless, that is the name of a range of healthy and reputedly delicious kids’ meals for Checkers, containing only locally grown veggies and free range meats. And while we’re talking marketing within the Shoprite group, the eponymous retailer has, a touch further north and to the left, launched a “Proudly Nigeria Product” campaign aimed at strengthening their ties with consumers, suppliers and the country generally. And sticking with the subject, that “Something Big is Coming” teaser you may have seen turns out to refer to a massive bus ticket giveaway – just in time for the Easter hols when everyone packs up and heads down to the seaside or the hills and home.
Comment: With all of its scale and supply chain sophistication, it’s sometimes easy to miss the fact that Shoprite’s greatest strength, perhaps, lies in its marketing and promotions, from the shelves on up.
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SPAR How these guns bru?
Cleverly capturing the hearts and minds, and of course wallets, of the increasing number of South Africans who hanker after toned abs and tight glutes is SPAR, which has just launched an exercise programme, My Home Gym. My Home Gym was designed by registered biokineticist Joe Xaba, and hosted on the videos (downloadable from the SPAR website) by the equally fetching Lelo. It’s an eight-week programme based on bodyweight exercises, and practiced, as the name suggests, in the comfort and privacy of your own home. SPAR have traditionally been active in the sport and fitness space, with sponsorships of a series of road races around the country with a particular focus on women’s running, and of South African Netball and AmaZulu.
Comment: It will be interesting to see whether SPAR ties other promotions – of functional foods and beverages perhaps – to this very cool initiative.
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Choppies Half full, half empty? We’ve got whole bottles across the border.
Putting a cheerful spin on things this week was ebullient Choppies CEO Ram Ottapathu, who delivering the interims spake thus: "My mandate is to grow the company and our revenue from Botswana has gone down below 50%. So we can't say that it's a Botswana-based company anymore; it's becoming an international company." Ahem, yes. While growth in SA and Kenya, bolstered by the acquisition of Jwayelani and Ukwala respectively, has indeed been pleasing, one cannot get away from the fact that Pula weakness against the rand and poor economic conditions have proven a drag on Botswana sales. But Choppies is becoming a regional force, also operating in Zimbabwe, Zambia and Tanzania, with a respectable haul of 202 outlets and floor space growing 37% for the six months in December. Revenue in SA grew 122% for the period, while EBITDA for the Botswana operations declined by 23%.
Comment: Having been on something of an acquisitive tear, perhaps this promising business should spend a bit of time bedding things down for a bit.
MANUFACTURERS AND SERVICE PROVIDERS
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British American Tobacco There’s gold in them tar lungs
British American Tobacco (BAT) has just taken one on the chin at the ASA from feisty veteran Leonard Dingler, a company, not a person and the manufacturer of the 95-year-old BOXER pipe tobacco brand. At issue was BAT’s newly-launched Africa Gold products on the grounds of similar branding (identical shades of orange, black and gold etc.) While BAT fought the bout all the way to its bitter end, it has moved on to other things, investing US$1 billion in the development and marketing of “next generation” products, which include “e-cigarettes” (named at a time when e-mail was about the coolest thing you could do on a computer) and Tobacco Heating Products (“Arr, me hearties! Fill yer pipes and I’ll tell ye a tale that will shiver yer eyebrows clean off of yer heads!”). They’re also buying the 57.8% of Reynolds American that they do not already own.
Comment: Or they could diversify into toilet paper and orange juice.
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Blinkwater Mills Ground up, spat out.
“Who?” you may ask? So too might Tiger Brands, Pioneer Foods, Foodcorp, Pride Milling and Progress Milling, walking rapidly in the opposite direction, sweating slightly and whistling a suspiciously jaunty tune. Blinkwater Mills, you see, was the business done by the Competition Tribunal for R10million for collusion with other milling firms for price fixing and arranging the dates when new prices would be implemented. Some firms have all either settled with the Competition Commission, or received conditional immunity under the Comish’s leniency policy, while ten – ten – other businesses have not. Admittedly, this is what passes for ancient history in our fast moving industry – the shenanigans in question happened in the years between 1999 and 2007.
Comment: Still, think of the implications of this: businesses in a supposedly free market system where the consumer has choice, defrauding the consumer of millions and millions of rand annually – in a market dominated by products which are the staple foods of South Africa’s poorest. It’s kind of despicable.
TRADE ENVIRONMENT
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Retail Sales Nothing to see here…
So retail trade sales for the anxious month of January were, let’s face it, not all that, contracting by -2.3% year on year, substantially below the 1% growth so confidently predicted by economists, and following after December’s dismal showing of -1%. This, explains an economist at FNB, can be attributed in part to high inflation, weak household credit extension and the last year’s interest rate hike. Sales are unlikely to improve much for the rest of the year: consumer sentiment is depressed, unemployment remains structurally high, and the embattled middle class is soon to feel the effects of Minister Gordhan’s tax increases. Amid the gloom, however, some glimmers: sales of pharmaceuticals and medical goods, cosmetics and toiletries rose 3.6%, a testament to the ongoing good health of that robust sector. And, for some reason, business morale is on the rise, albeit slightly.
Comment: No easy solutions in the offing, and tough months ahead.
IN BRIEF
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SB Brands Chew on this
Props to SB Brands a local manufacturer of enhanced soy products, which reputedly taste a lot more like the animal proteins they’re emulating than other brands do. But that’s not why we’re congratulating them, no: it’s because having started business making food in a cement mixer, owner Bonga Shabangu has succeeded in getting it listed in Pick n Pay.
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Fry’s Many happy returns
And speaking of props, some of these are also due to another manufacturer of meat replacement products, namely the legendary Fry’s, a family business which has been bringing veggie cutlets, hot dogs and burgers to South Africa’s non-carnivorous minority for 25 years this year. Happy Birthday, Fry’s.