THIS ISSUE: 10 Feb - 17 Feb
YOUR NUMBERS THIS WEEK
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Massmart Walmart to purchase Competition Commission
OK, not really. Obviously. It’s just our little bit of fun, you understand. And even if Walmart was buying, which they wouldn’t be, the upright Mr Ramburuth wouldn’t be selling. But it is true that the Competition Commission, to the somewhat theatrical dismay of the unions, has recommended unconditional approval of the deal to the toga’d ancients of the Competition Tribunal, who are probably dusting off the rubber stamp as we speak. They’ve put aside 4 days in March to deliberate on the matter, then it should all be plain sailing for Wakro, which merger will likely come into effect sometime in April. Massmart in the meantime continues to engage with SACCAWU in order to allay its fears of job losses, and it is understood that senior Walmart execs had cosied up to top government types at the recent WEF in Davos for broadly the same purpose.
Comment: Perhaps if Massmart had taken SACCAWU to Davos we would be having a very different conversation right now...
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Woolworths Man of the Forest
The dapper one, still at the forefront of meaningfully sustainable initiatives, has joined the Roundtable on Sustainable Palm Oil (RSPO), a commitment which includes purchasing only certified palm oil used by the ton in its food and beauty products. This will encourage Malaysian and Indonesian farmers to grow oil palms sustainably on degraded agricultural land rather than hacking down virgin forest for plantations, and destroying the habitat of the endangered orangutan.
Comment: One day, we will have to break the news to our children that there are no more orangutans, because we needed cheap palm oil more. Or we could go the Woolies route on this one, rather.
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Competition Oh Captain, my Captain
While the Comish has cleared SA’s big retailers of any impropriety on the collusion front, Mr Ramburuth remains unimpressed with the extent to which common trading practices seem stacked against the smaller supplier. Advocacy and Stakeholder Relationship Manager at the Commission, Mr Oupa Boidibe, has expressed concern that smaller suppliers are being excluded by the “cumbersome” terms set by supermarkets, and is encouraging the Big Boys to facilitate the entry of smaller players by changing their procurement policies and proactively disclosing entry requirements. Also of concern is the information that Category Captains – typically bigger suppliers – have at their fingertips about competing brands.
Comment: Don’t worry, boys. It’ll all come out in the planogram.
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Clover Come a little closer, girl
Remiss of us, but we failed in the holiday rush to report the admittedly surreptitious listing of Clover Industries Limited, under the trader-friendly abbreviation CLR in the Food Producers section of the Main Board of the Johannesburg Securities Exchange (JSE). The listing raised R575million for everyone’s favourite milkman, R350bar of which is to be allocated to the evocatively-titled Project Cielo Blu, who we thought was an R&B singer. Under the Auspices of Cielo “Big Daddy” Blu, Clover will address historical inefficiencies in the supply chain, increase profitability and expand capacity by such expediencies as moving production closer to where the milk is made.
Comment: You know girl, you’re lookin’ real pretty in that red dress tonight. Yeah.
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Tiger Brands A roaring trade
As part of its strategy to expand into Africa, The Stripy One has just acquired Davita, a local manufacturer of powdered seasonings and beverage products which exports to 28 countries in Africa and the Middle East. Its brands are Davita (premium powdered beverages), Jolly Jus (mass market powdered beverage offerings) and Benny (powdered seasonings). Davita’s annual turnover in the year to February 2010 was R567 million, mainly from exports, and rather sensibly the business will be retained as a standalone within the group. The deal was done for a more-ish R1.34-billion.
Comment: As Tiger matures as a business here at home, Africa becomes the scratching post for Tiger 2.0.
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Distell You Bisquit!
Despite the strength of the Zed Ay Are, Distell has done a brisk trade in exports of Amarula liqueur these past six months. Locally, they’ve been shifting more Bisquit, cognac to the stars, but otherwise it’s been relatively quiet on the spirits front, as local brands come under pressure from cheaper imports, and ready-to-drink grows nicely. Overseas wine sales have been a touch on the low side in Europe, although North America and Asia have held up nicely. Africa has been the big story, contributing 64.1% to foreign revenue, while Brazil has also been a pleasant surprise. All of this has seen revenue up by 3.6% to R6.9 billion and sales volumes by 2.8%.
Comment: A performance which KWV’s new shareholders HCI will no doubt be following with interest.
TRADE ENVIRONMENT
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Trends So hot right now
Mintel’s Worldwide Consumer Packaged Goods trends are out, and this year they’re punting subtle shifts rather than humdingers. Here are some of the big ones, reduced to the hors d’oeuvres-sized portions you high-flyers find so palatable:
Quiet Reduction Sodium, sugar and high fructose corn syrup get surreptitiously replaced with healthier natural alternatives like stevia, so as not to frighten the traditionalists.
Redefining natural Terms like organic will become more stiffly defined as the authorities step in, and brands will choose to accentuate the positive of what goes in rather than saying what they’ve left out.
Professionalism of the Amateur What, us? Chef-style food at home, salon treatment in a bottle on the shelf, that sort of thing.
Sustainability Stays Focused on the Basics A bit of a mouthful that one, and not what you’d call catchy. Reduced packaging, reduced water consumption by manufacturers, you get the picture.
Blurring Categories Good Lord Stanley – a toothpaste! No, a detergent! Hybrid products which meet a range of needs, basically.
New Retro The eighties is the new fifties, yawn. Products which remind jaded shoppers of simpler, better times.
IN BRIEF
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Woolworths How about a bit of cheese, Grommit?
Woolworths has challenged cheesemakers to come up some exciting new cheeses, cheeses which will really stand up and get noticed rather than lying exhaustedly about on a chopping board at the tail end of a long Saturday lunch. This in the inaugural Cheese Makers Challenge. We’re thinking of entering our locally notorious Bolivian Death Squad in the semi-hard cheese category.
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Pick n Pay Once a jolly MD camped by... oh shutup
By now, we imagine, the Ackermen are wishing they had never heard of a Lend Dahnunder. The Competition Authoriddies on that benighted land mass are requiring ex-Franklins MD Aubrey Zelinsky to testify against his former employer in a federal court suit to prevent the acquisition of Franklins by Metcash. Pick n Pay reminded Mr Zelinsky of the confidentiality provisions in his employment contract, in the same letter in which they reminded him of monies still owing to him on his retirement package, an error of judgement which has caused certain legalistic eyebrows to tend northward.
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