Monday started with a bang this week on the news that Massmart is on course to be owned outright by Walmart and delisted from the JSE. And that change-maker CEO Mitch Slape is stepping down and handing over the reins to Jonathan Molapo, who joined the business as COO in January (checks notes) 2022, from a career in the energy industry, most recently as CEO of Astron Energy. Walmart, which still sees Massmart as the platform for its ambitious Africa strategy, plans to buy all the shares it doesn’t already own for R62 each, a 53% premium to the last closing price, even as rival Amazon establishes a bridgehead on the continent. All of this was revealed on the presentation of the Group’s interims, in which it was also made known that turnover was up just +1.9% to R38.1bn, driven by food and liquor growth to the tune of 7.1%, with a trading loss of -52.4% to R377m.

Comment: The move by Walmart is a vote of confidence in our economy and our industry. The delisting will enable the business to pursue its cost-cutting and restructuring more aggressively, without shareholder scrutiny. And the arrival of Mr Molapo is a significant appointment in a sector more closely beginning to resemble the society it serves. For more on the results, go here.

Buyer and purveyor of low-cost goods from the marketplaces of the world, Mr Price has entered the lucrative but contested baby category swinging, with the launch this week of standalone Mr Price Baby stores at Eastgate Shopping Centre, Menlyn Shopping Centre, Mitchells Plain Promenade Mall, Carnival Mall, Parow Centre, and Pine Crest Centre. The stores are offering value across the gamut of tyke-adjacent categories, including changing, personal care, bath, travel, drinking, sleep, feeding, play, and clothing. Across the economic spectrum, baby is a category where parents will not lightly settle for private label, particularly when it comes to products where safety or nutritional requirements are concerned. Accordingly, the business will be stocking such respected brands as Pampers, Huggies, Purity, NAN, NUK, Avent, Milton, and Joie.

Comment: An interesting development for our retailers already active in this space, notably Clicks, Dis-Chem, Shoprite and Game. Does Mr P have FMCG firepower? Or will it be using recognised brands to support the core model of selling low-cost clothing to SA’s value-conscious punters?

Fighting words this week from former UK boss of Lidl, Ronny Gottschlich, who reckons that sales at German discounters will outstrip those from the UK’s largest supermarket chain Tesco within five years. Lidl and Aldi have opened hundreds of stores across that sodden archipelago in recent years as cash-strapped punters broaden their scope in search of value. The discounters have clawed £2.3bn in annual sales away from Britain’s Big Four – Asda, Morrison’s, Sainsbury’s and Tesco. Across the pond, now, to check in with Whole Foods on the five-year anniversary of its occasionally rocky marriage to Amazon. Amazon bought the business for $13.7bn in 2017, with Whole Foods under threat of a hostile takeover by activist investors. While there have been some cultural changes – like assimilating Amazon’s gig-economy workers into the more family vibe at the wholesome grocer, and a horde of online order pickers now outnumbering suburban health-seekers in the aisles – the merger has delivered for Amazon. Whole Foods remains its only truly successful bricks and clicks venture.

Comment: Retailers are born, not made.

In 2020, you will recall, PepsiCo made local waves with the outright acquisition for R28.9bn of Pioneer Foods. How’s that going? Pioneer is apparently one of PepsiCo’s top ten revenue contributors globally and plans to expand here and into the rest of Africa are still on track. Pioneer now operates 42 food and beverage plants in South Africa, and 70 DCs, and employs around 12,500 people, bringing to market such iconic brands as Sasko, Weet-Bix, White Star and LiquiFruit. The deal wasn’t just about brands, rands and cents though. As part of the public interest commitments made to the government, PepsiCo would invest at least an additional R5.5bn to achieve a sustainable business locally and an export centre to the rest of Africa, modernising and increasing production capabilities, adding routes and distribution capabilities, and investments in social initiatives, including a R600m spend on the Kgodiso Development Fund, which supports initiatives in education and supplier development.

Comment: A textbook deal – good for both buyer and seller, and good for South Africa.

As four in ten consumers globally express interest in moving to a more plant-based diet, choccie-and-dairy giant Nestlé is launching a vegan version of its wildly successful KitKat brand. KitKat V uses a rice-based formula as a milk substitute and took two years to develop. The first production run will be 300 tons a year, to be sold at an initial premium of around 30% to the milk-based range. Compatriot Lindt & Sprüngli has already tested oat milk-based chocolate bars under its Hello label. Back on these shores, Adcock Ingram has recorded a 12% increase in turnover to R8.7bn, for the year through June, with trading profit up +22% to R1.1bn. Flagship brand Panado hit a personal best of annual sales over R500m, contributing mightily to the bottom line in a generally affordable and balanced product portfolio.

Comment: Nice work from a workhorse of the pharmaceutical industry, bringing an FMCG savvy to marketing its brands.

Some datapoints this week on the cost of things, and things don’t look good for the embattled South African consumer right now. First up, StatsSA released the CPI numbers, revealing that prices across the agreed basket of goods and services were up +7.8% YoY in July from +7.4% in June. Our own sector, under the banner of Food and Non-Alcoholic Beverages, was one of the main culprits, increasing by +9.7% YoY, and contributing 1.7 percentage points to the total. Transportation was even worse, up +25% and adding 3.4 percentage points to the mix. Secondly, providing a more granular view of the impact of food inflation, the latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that the average basket increased by +12.6% YoY to R4,775.59 in August 2022. This state of affairs is unlikely to ease – as the price of oil remains volatile and droughts in Europe and China put further pressure on food prices, more pain will surely come.

Comment: A globalised economy, a global pain. There is a degree to which greater food security and lower inflation might be assisted by more local solutions.