THIS ISSUE: 16 Mar - 22 Mar
YOUR NUMBERS THIS WEEK
-
Pick n Pay Accounted for
One day the world will acknowledge the home-grown genius of the stokvel, and financial institutions everywhere will scramble to get on board. In the meantime, there’s Pick n Pay, which together with Absa has just launched the Grocery Stokvel Account. This financial instrument (ahem) will enable stokvels to earn an attractive rate of interest on their savings, provided they go on to spend these savings at Pick n Pay, where they will also receive further attractive discounts for their patronage. Stokvels, as any number of PowerPoint presentations will tell you, generate an annual economy of R49bn in South Africa, and also many, many lively parties: there are 800,000 stokvels operating at any one time, and it’s never only about the money.
Comment: The challenge is to harness the power of the stokvel without attempting to co-opt it. It’s a South African gem which we should treasure and preserve.
-
-
Shoprite “Hurry boy, it's waiting there for you!”
Having shifted its focus from the grim post-Soviet landscape of Eastern Europe to the lusher plains of East Africa, Shoprite now finds itself head to head with French retail behemoth Carrefour. This is an inevitable and long-awaited match up, with both businesses making strides on the African continent, Carrefour in the north and Shoprite sub the Sahara. In February, Shoprite secured leases on spots in seven prime Kenyan malls, where they will open stores this very FY. Carrefour, in the meantime, is opening its fifth store this year, aiming for the wallet of the posher punter in a country where growth in household spending is thought to be somewhere a touch above 5% per annum. That said, most Kenyan households still have disposable income of under $5,000 per annum, creating fertile ground for Shoprite’s Usave discount brand. But don’t write off the locals: Tusky’s and Naivas have over a hundred stores between them, and keep prices down by shopping local.
Comment: That’s it. We’re packing our puttees and pith helmets and dashing off to cover the most exciting retail story on this great continent we call home.
MANUFACTURERS AND SERVICE PROVIDERS
-
Astral We are chicken, hear us roar
Newly-resurgent poultry producer Astral is exercising its vocal cords in the service of the little guy, militating, if that’s the word, for an exemption from VAT. Chicken, they argue, should join pilchards and sardines as the only VAT-exempt meats on a list of 19 items which includes such staples as brown bread, eggs and milk. CEO Chris Schutte has nothing against tinned fish per se (an expression we are using in this publication for the first time in ten years, welcome aboard son!), “But we believe that a review of this basket is long overdue and that chicken should be included,” he avers. He points out, reasonably, that chicken is the cheapest source of meat protein on the market and is consumed by South Africans at the rate of around 40kg a head every year.
Comment: If we were a treasury official with an eye on the coffers, this would be our precise reason for leaving things as they are. An exemption would indeed be a boon for South Africa’s cash-strapped punters though.
-
-
AVI Sleepless in Springfontein
Dispatches from the jittery trenches of the coffee wars currently raging in the beverage aisles of the beloved country. “Aggressive competitor activity”, as AVI tersely put it, has seen AVI dropping prices on Frisco and losing revenue and operating profit on coffee brands in the last six months. Competitors Nestlé, which bring both Nescafé Gold and Ricoffy to South Africa’s somnolent, are going all-in, having investing R1.2bn on their Estcourt, plant, and dropping further wedge on chicory farming in KZN and the Eastern Cape. Coffee consumption is on the up in the Beloved Country: while we drink only between 250 and 300 cups (each, obviously) every year, compared with the 500 they chug in Europe, the stimulating beverage is gaining market share at the expense of black tea.
Comment: The stuff of free-market capitalism. Competition, not coffee. Or both, come to think of it.
-
-
Listeriosis Total recall
Tiger Brands anticipates that it will have lost around R377m in costs associated with the recall of products affected by the listeriosis outbreak. The business took the decision last week to recall all products manufactured in its Pretoria plant, and all Enterprise products across the country. The costs associated with a loss in brand equity have yet to be calculated. RCL FOODS, in the meantime, have announced that independent tests – conducted by French scientists, nogal – have cleared the Wolwehoek plant of infection by the listeria bacterium responsible for this outbreak. Nevertheless, products from Wolwehoek have been recalled as a safety precaution, and the plant temporarily closed. Remgro, which holds a 77.2% stake in RCL, has said that it sees no threat to its investment in the business.
Comment: Much has been learnt from this tragedy – notably the value of timely and candid communications, and the sensibly limited tolerance threshold of South Africans on issues of food safety.
TRADE ENVIRONMENT
-
The Economy Also, unicorn index spikes
January’s consumer sales, according to the Mastercard SpendingPulse report, grew at the same pace as those of December for the first time in five years, climbing 3.8% after taking inflation into account. Speaking of which, this pleasing development may be attributed in part to lower inflation, to a stronger rand and to increased agricultural production. Other good news is that foreign investors are upbeat about South Africa’s growth prospects, where unfortunately our own investors are more cautions, according to Bank of America Merrill Lynch SA, who report that there was inflow of $5bn in foreign capital since mid-November. And finally, all three ratings agencies responded favourably to February’s budget, with the consensus being that Moody’s would hold off on a downgrade this week.
Comment: The news is not all good, to be sure, but for the moment, let’s bask in the balmy airs and gentle sunlight of positive territory.
IN BRIEF
-
Shoprite What a card!
Doing the right thing by the not-for-profit community this week is Shoprite, whose new Act for Change buying card allows welfare organisations and social enterprises a 5% discount across participating outlets, as well as the opportunity to save cash for a rainy day. One such client is the Vlottenburg Community Organisation, which operates a feeding scheme for children in Kuils River, and which participated in the pilot.
-
-
International Retailers Are you fulfilled?
In the US, general dealer Target is upping its omnichannel game in order to survive in a market increasingly threatened by Amazon, improving its fulfilment and delivery services with the expansion of its free two-day delivery and curbside pickup options. This amid a three-month-long retail slowdown that has everyone nervous, and where German discounters Aldi and Lidl are making significant inroads, with Lidl in particular using their advertising to call out mainstream chains for their inefficient and uneconomic practices. Over the pond, in the meantime, Tesco seems to be bouncing back from a long slump along with the news that it should soon be acquiring wholesaler Booker.
-
-
Massmart Crystal clear
Big up to Game and P&G for repeating their successful clean water programme which supplied roughly 2.4million litres of clean water to needy communities in 2017. From 14 February to 10 April this year, money from every P&G product bought at Game goes towards the supply of clean water. Funds raised finance P&G’s Children's Safe Drinking Water Programme (CSDW), which donates P&G’s Purifier of Water packets to needy communities throughout the Republic. Nice one.
Sign up to receive the latest SA and international FMCG news weekly.
Tatler Archive
Next Event
19 September: Corporate Retail Comparative Performance H2