THIS ISSUE: 16 Jun - 21 Jun
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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SPAR The Emerald Aisles
Four years ago, BWG was in a spot of bother, with piles of debt and vulture funds looking to finish it off and sell its organs to the highest bidder. Enter – as you are well aware – SPAR South Africa, which bought the business for €55m, lock, stock, barrel and €130m worth of debt. In 2017, BWG showed turnover of €1.4bn, with operating profit of €33.3m, and they’re expecting profit growth in the double digits this year. “[SPAR] would tell you that we've outperformed, above their expectations, which is great because from their perspective it was a big move for South Africa to invest in Ireland," says ebullient Irish CEO Leo “The CEO” Crawford. After the SPAR transaction, BWG went on to acquire rival Londis, and have just been given the nod by the authorities to buy 4 Aces, a supplier to other rival Gala, and who knows whether Gala itself might not be next. Certainly Mr Crawford isn’t saying.
Comment: The gift that keeps on giving for SPAR, whose move to diversify at a critical time will surely find a place of honour on the business’ figurative mantelpiece one day.
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International Retailers Master Full
Asda has hooked up with techie business Foodmaestro to provide customers with dietary needs a means of finding them in Asda stores and presumably online. Last year, Tesco did something similar with Spoon Guru. The name “Dietary Doyenne” is apparently still available, as is “Nabob of Nutrition” if anyone else wants a go. Also, major brands like Kerrygold are losing some of their shelf space to Tesco’s Project Reset. Or is it Reboot? These catchily-branded initiatives are so confusing! Aaagh! It might have been Project Restart in Safe Mode. Over in the US, in the meantime, punters are being advised by analysts “not to write Lidl off yet”, which is a direct quote.
Comment: Now, lead me to that sugar, gluten and lactose-free dessert, won’t you?
MANUFACTURERS AND SERVICE PROVIDERS
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Libstar Cream of the… oh shutup!
“Who?” you ask, and you are wrong. Libstar Holdings Ltd holds, among other entities, classy dairy outfit Lancewood, and Lancewood is going up against French giant Danone in what will doubtless one day be known as “Les Yoghurt Wars”. Lancewood, you see, is launching a new range of yoghurts and shakes in order to snaffle up some market share from the likes of Danone and Clover. The range will hit the fridges in July, marking the culmination of a series of moves by which Libstar hopes to become a significant player in this space, including the acquisition of Sonnendal Dairies last year, which upped its capacity for the production of the tangy, creamy snack. They’re also making a play for the convenience meal sector, as their purchase of convenience specialist Millennium Foods last year attests. Libstar’s sales grew 10% to R8.8bn in 2017.
Comment: Today’s South Africans something something fast-paced lifestyle something “food on the go” something convenience. And also high margin. Good luck, that plucky contender.
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Sea Harvest Plenty more fish
Local fishing outfit Sea Harvest have just dropped R885m on the purchase of Viking Fishing Holdings, while in a side deal Sea Harvest Aquaculture is acquiring 51% of Viking’s aquaculture outfit. Sea Harvest, you might recall, listed on the JSE last year, picking up a cool R1.3bn in the process, and they’ve been positively champing at the bit to go on a buying spree ever since. Sea Harvest is of course SA’s biggest frozen fish business, with a 36.7% share of the market, but it aspires to a little more than this. But what does one get when one acquires a fishing business? This: assets across various locations in South Africa, Namibia and Mozambique, including fishing rights, vessels, fish-processing facilities, aquaculture farms, and working capital. From a transformation perspective, the acquisition is also a big deal: Sea Harvest is controlled by BEE investment holding company Brimstone.
Comment: The transformation of the fisheries has been an epic yarn of derring-do on the high seas. With maybe a little treasure thrown in too.
TRADE ENVIRONMENT
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The Economy Foggy with a chance of icebergs
So after inflation ticked upward somewhat sharply for the month of April to 4.5%, economists guessed another rise would be on the cards for May, but, shock horror… look at this! Inflation in May moderated to 4.4%, the VAT and fuel hikes offset by the lowest food price inflation since 2013 and pork hitting a post-listeriosis four-year low. Meat is falling, cereals are cheaper than a year ago, as are bread, oils, sugar and fruit. Out in the world, the dear old ZA Rand has had a torrid time of it, falling for five straight days on the possibility of Trump’s insane and unnecessarily precipitous move on tariffs for China. And the JSE followed suit. The IMF, in the meantime, is waxing Old Testament about our high debt levels and bloated public wage bill, the only part of our economy which is growing at any significant rate, although the ratings agency Fitch (whose executives all dress like Victorian undertakers) has opted to keep our credit rating unchanged at, erm, junk.
Comment: The South African economy is a big ship to turn around. It is to be hoped that the new skipper has a firm hand on the wheel.
IN BRIEF
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Clover Pretty sure this is a first…
Like something out of Charlie and the Chocolate Factory, Clover have launched a ready-to-eat range (with variants like mac ‘n cheese and beef lasagne, you get the picture) that whistles once it’s cooked. Packaged using brand spanking FreshVacSeal™ technology, the Whistling Chef range offers time-strapped SA punters fresh-food flavour with an extended shelf life (makes whistling sound, speaks in Jamie Oliver accent for the rest of the day, yeah?).
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Pick n Pay Virtuous spiral
So what is to be made of the plastics crisis? Let’s shop around for some ideas. With the assistance of a group of 70 women in the Western Cape known as The Township Group, Pick n Pay launched its 100% RPET bag some few months back, manufactured from material made from recycled plastic bottles. The Township Group has also been supplying Pick n Pay with reusable bags – over 600,000 of them – since 2009. This initiative supplements Pick n Pay’s developing approach to taking non-reusable plastics out of the value chain – with the introduction this year of 100% recyclable plastic bags, the phasing out of plastic straws, the reduction of plastics in private-label products like earbuds, and, significantly, offering the free collection of plastic from online customers’ homes. -
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Generation Next Vrrooooom!
And still PnP related… If it was an Ultra Luxury Motor Vehicle, it would be a Lamborghini, although we’re not saying that the retailer is overpriced, overpowered and boxy. We’re merely comparing where they came in their respective categories in the Sunday Times Generation Next Brand Survey, which was first. Pick n Pay was followed, in this order in the ‘Coolest Grocery Stores’ category, by Woolies, Checkers, SPAR, Game and Shoprite, with Shoprite and Game trading places from last year, but the rest holding steady.
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Shoprite Grand Central
Shoprite now has 2,800-odd stores spread far and wide across this great continent of ours – a continent, which, most retailers will agree, is devilishly tricky to deliver stock on, or to, whichever you prefer. How, then, does Shoprite do it? You won’t find the answer here. They have the recipe to their secret sauce firmly under lock and key in their Brackenfell bunker. It’s no secret, though, that they saw the benefits of centralised distribution way ahead of most of the competition. And they’ve kept at it, centralising even further with the opening last year of their Cilmor facility in Cape Town, which covers 123,000m2 and combines the operations of five separate DCs, in ambient, frozen and chilled sections. It’s said to be the most technologically advanced of its kind on the continent.
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