So the Steinhoff deal is back on the table then, having been abandoned back in February. Heading back to the drawing board with a philosophical tug on his meerschaum pipe, Oom Christo Wiese has proceeded calmly to unbundle Steinhoff’s African holdings, including Pep, Ackermans, and the JD Group into a separate entity called STAR, through which it will list these assets on the JSE. And also, incidentally (or not, Oom C being a sly old jakkals), through which it will now acquire a controlling interest in Shoprite, in a deal worth R35.5billions of rands. Having entered into call option agreements with three major Shoprite shareholders - Titan Premier Investments, a company controlled by a Wiese family trust, the Public Investment Corporation and the Lancaster Group – STAR will hold about 22.7 percent of the economic interest and 50 percent of the voting rights in The Big Red One, and Wiese’s dream of a more consolidated structure will be realized. Ahahahahahaaaah!

Comment: Behemoth, anyone? Steinhoff is on the verge of becoming a global power in grocery retail, in one fell swoop.

Last week, we mentioned in passing that Pick n Pay was adding a second online DC to the one already up and running in Cape Town, where click-happy customers have been treated to increased product availability and range, special online promotions and improved delivery times. In Gauteng, where online orders have previously been serviced out of stores, demand for similar services has grown to the extent that a dedicated warehouse is now viable. Pick n Pay launched home-delivery shopping in 2001; it has grown to become SA’s pre-eminent online grocery retailer although this is not yet saying too much given the low portion of online grocery sales in SA. While poor bandwidth and a deep-seated distrust of the security of online payment initially depressed performance, Pick n Pay’s online offering has been growing in double digits since 2012.

Comment: South Africa is not – yet– the ideal market for this form of retail. But Pick n Pay’s competitors ignore the format at their peril.

Over in the United Kingdom, commentators are rightly wringing their hands over the mountain of food waste generated in the grocery value chain: in the last twelve months, over £13billion of food was wasted, 60% of it avoidably. Only 2% of this is lost at retail, where pencils tend to be sharper than almost anywhere else; 17% of it originates with manufacturers, while the rest – at a whacking £400 per household per annum – is lost on the home front. Some retailers are now experimenting with solutions like the sale of vegetables once considered too ugly to eat, while organizations such as FareShare and Food Cycle sell edible food that is past its ‘sell by’ date and can no longer be sold by supermarkets. Other solutions include better packaging (Tesco), offers which don’t incentivize punters to buy more than they need (Sainsbury), and the discounting of slightly past-it produce (Intermarché). Across the pond, and on an entirely unrelated topic, it appears that reports of the demise of Walmart have been greatly exaggerated – despite the purchase of Wholefoods by Amazon, the entry of German outfit Lidl into the market, the renewed focus on groceries by Target and Kroger’s newly beefed-up private-label offering.

Comment: Whether Walmart’s drive online will stand up to the competition remains to be seen.

Looking for growth north of our borders last week was Distell, which announced a massive, two-part acquisition of spirit-producer Best Global Brands (BGB), which operates in Angola, Kenya, and Nigeria. The cost of the acquisition will be capped at R8.6billion, and while BGB is substantially smaller than Distell, it will give Distell a toehold on the continent with a stable of products that are generally higher-margin than Distell’s existing brands. It’s also a highly cash generative business with synergies for Distell in procurement, route-to-market and production. And while shareholders have been slow to signal their approval of the deal, the fact that there is any deal at all must put some heart into them: Distell is not known for its sudden movements. 

Comment: Solid stuff, with the cautious two-part acquisition structure tempering the boldness of the move.

One of the great successes in the last decade of the South African grocery industry has been the rise of the now ubiquitous breakfast brand we know and love as Futurelife. Here’s CEO Paul Saad, who sold the business for a tidy packet to Pioneer just a couple years back: “My aim was to create the most nutritional product possible at the lowest cost and convenient. We believed the product should contain quality ingredients, had to taste great and could be enjoyed just by adding water,” he says. The cereal was supplemented with the addition of Moducare, a daily multivitamin under license from big brother Stephen’s Aspen business, and single-handedly trail blazed the functional foods category which the trend analysts were getting all hot under the collar about five years ago or more. International success, we believe, will surely follow. Putting its money where hungry mouths are, Futurelife also serves around 150,000 nutritious meals a month to South African children in Early Childhood Development (ECD) centres through the Futurelife Foundation.

Comment: Another great idea and great business out of the fertile soil of KZN.

The treasury has commenced a study into the key characteristics of over-indebted consumers, particularly among low-income groups, with a view to one day embarking on some form of debt relief. This as part of Malusi Gigaba’s 14-point plan to help pull the dear old economy out of recession. And as the University of South Africa (Unisa) warns that over a million jobs could be lost by next year if we don’t manage to address the issue of stagnant – or at this point negative – economic growth. Together with Momentum, Unisa released an alarming index last week which shows that the balance between growth in employment and the gross domestic product (GDP) declined from 0.7 in 2011 to -0.2 in 2015 and is expected to go below -0.3 this year and in 2018. And StatsSA has reported that 48,000 formal non-agricultural jobs were lost from the economy in June, each one of which represents a family in fear of falling below the breadline. 

Comment: Some may speak of efficiencies, and shareholder value, but every job shed in South Africa represents a failure on the part of the businesses and the government to which we entrust our economy.

Tiger Brands offshoot Albany Bakeries is investing R350million into an upgrade of its Bellville plant and the construction of a brand new facility. The new plant, bakery buffs will be fascinated to know, will be equipped with two proper Tweedy high-speed dough mixers that will double the bakery’s output. Over the next five years, the plant will also double the number of stores its serves in the Western Cape, from 5,000 to 10,000.

Congratulations to our friends at Boxer Superstores for picking up top prize in the Trade category of the KZN Top Business Awards, ahead of fellow-finalists Hirsch’s and Sparkport Pharmacies. KZN has been a springboard for Boxer into the wider realm of South African trade, where it has established itself as a major retail brand.