
THIS ISSUE: 14 Oct - 20 Oct
Right now, there’s enough food to go around. The problem, as identified by the UN which marked World Food Day on 16 October, is that currently it isn’t going around. But in the face of climate change and geopolitics, our relative abundance may not last. As an industry, we’re uniquely positioned to tackle challenges like food waste and unsustainable production. Best we get busy. Enjoy the read.
YOUR NUMBERS THIS WEEK
RETAILERS AND WHOLESALERS
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Pick n Pay Pick n Choose
Interims from Pick n Pay this week, with the big news that for the first time ever they’ve whipped back the curtain to reveal Boxer’s performance in all its admitted glory. But taking a leaf out of the Pick n Pay book, we’ll get to that later. First up: Group sales were up a handsome +11.5% to R51.3bn, while trading profit increased by a more muted +5.8% to just north of a billion. The Pick n Pay brand, including its new mid-market value offering, QualiSave, grew sales +5.4% in a performance the business calls “respectable”. Boxer Superstores now, different story: turnover grew a massive +27.2% with like-store sales up +14.2% from a business which now comprises 30% of SA sales. Group sales in the rest of Africa were up +17.9% to R2.4bn, with a particularly strong performance in Zimbabwe, and online sales grew +82% in a competitive environment, and off a low base. Pick n Pay is going all in on its three-tier Ekuseni strategy, which it believes has started to deliver even in these early stages.
Comment: How about Boxer, eh? Nice to see the results reported separately. For more, please pop over here and have a look at the sterling work of our erstwhile analysts.
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Dis-Chem Points for Dis-Cussion
Dis-Chem has found itself as something of a lightning rod this week for our ongoing national discomfort over how best to share the economic resources of the country, and repair some of the wrongs of the past. At issue is the now-notorious internal memo, leaked by conservative trade union Solidarity, in which Dis-Chem founder and CEO Ivan Saltzman places a moratorium on white management hires, including external appointments and internal promotions. This, he says, is because Dis-Chem’s efforts to meet its BEE targets have been inadequate, and that the business needs to avoid a potential crippling fine of 10% of turnover should it not transform in line with existing regulations. Dis-Chem has subsequently retracted the letter, in the face of opprobrium from across the spectrum and calls for a consumer boycott. Interestingly, the Dis-Chem board is relatively diverse, although for a listed company it does include a higher-than-usual proportion of Saltzmans.
Comment: At some point, we all need to acknowledge that transformation on the scale we’re attempting, nationally and in our businesses, has never been attempted. We need to cut ourselves – and each other – some slack.
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In Brief If you’re appy and you know it
Big up to Shoprite this week for winning the ‘Most Innovative Solution and App of the Year’ category at this year's MTN Business App of the Year awards, for its mobile app featuring Money Market account functionality. “Winning App of the Year and Most Innovative Solution is the result of the collaboration, commitment and dedication from the Financial Services team and Information Technology partners to give customers what they want and need in a dynamic, feature-rich application,” says Shoprite Financial Services GM Jean Olivier. And congrats also to Massmart, who announced it is set to open its Campsdrift Park Makro in Pietermaritzburg on 23 November, just shy of 500 days after last year’s social unrest left the store a blackened shell. The all-new store will showcase a variety of changes including the addition of a butchery, fresh produce sections, and an extended range of general merchandise as well as Makro’s newly introduced e-commerce pick-up department and express check-out. Massmart indicated that it would cost around R2.5bn to replace lost stock and repair its KZN properties.
Comment: A commendable effort from Massmart, which suffered disproportionally during the riots.
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International Retailers “Out of many, one”
Bit of a kerfuffle in the increasingly incorrectly named United States this week, as fourth and fifth ranked supermarket giants Kroger and Albertsons negotiate for the former to acquire the latter in a $25bn transaction that would see the unionised businesses able to compete more vigorously with non-union outfits like Walmart. The merged entity would become the third largest retail chain in America – the two had combined sales of $43bn last year – and the further consolidation of the sector could lead to higher prices for increasingly embattled punters. Accordingly, the US Senate’s anti-trust panel is giving the deal the once over. Moving on, the adorably named Abu Dhabi-headquartered supermarket chain Lulu Group International is planning on listing on an as-yet-unnamed stock exchange. Lulu, which operates 239 stores in 23 countries and employs more than 60,000 people, joins a horde of Gulf-region listings as oil enjoys a boom.
Comment: Interesting to see whether Kroger and Albertson’s will get their crack at being as unassailably vast as Walmart.
MANUFACTURERS AND SERVICE PROVIDERS
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Smollan eXcellent
Nice work from global retail specialist (and Trade Intelligence parent company) Smollan, which has just made a significant investment in eComplete, a turnkey end-to-end e-commerce solutions company that helps brands succeed at e-commerce. This partnership has the potential to play a major role in shaping brands in South Africa and beyond – by building a responsive omni-channel ecosystem leveraging e-commerce, brands benefit by fast-tracking a customer centric online presence, the ability to scale, tailored marketing, analytics and managed logistics. Smollan and eComplete have a combination of superior Takealot and Amazon knowledge, capability and experience with proven results. The deal represents a coming together of two different businesses with complementary capabilities, giving their clients an opportunity to grow faster in the digital space through end-to-end solutions, says Chief Growth and Innovation Officer Mike Smollan.
Comment: From the last mile to the last megabyte, Smollan has a talent for forging meaningful and profitable partnerships around the world.
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In Brief Hopping mad
Big up to Nederburg, which has been singled out as the best performing cellar at this year’s prestigious Veritas Awards, South Africa’s longest-running wine and brandy competition. The respected winery walked away with no fewer than 26 awards, including five double gold, three gold, eight silver outstanding, seven silver and three bronze medals. Not faring so well this week is sugar miller Tongaat Hulett, which despite reducing its debt from R11.7bn to R6.3bn is R1.5bn shy of its peak working capital requirement after a planned equity capital raise from Magister Investments fell through. The board has approved a restructuring plan in an attempt to keep the lights on and awaits the nod from “various stakeholders”. And moving abroad, German discounter Lidl has been successfully sued by Lindt for trademark infringement over a gold-foil wrapped bunny that the Swiss choccie house argues correctly looks suspiciously like its own. Lidl’s stock of bunnies will now be sent to their long and silent rest.
Comment: Tough times for Tongaat Hulett, a venerable and iconic KZN brand.
TRADE ENVIRONMENT
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Food Security The hunger games
Some context: According to the World Bank, 60% of South Africans live below the poverty line, and 2.5 million adults and 600,000 children experience hunger every day. The United Nations has established the end of hunger as integral to its sustainable development goals (SDGs), specifically Goal no. 2 (Zero Hunger) and Goal no. 12 (Responsible Consumption and Production). And a 2021 NASA study reveals that climate change may affect the production of maize and wheat as early as 2030 should emissions continue unabated. Fitting that we should consider all this as the UN marked World Food Day on 16 October. “By aiming for better production, better nutrition, a better environment, and a better life,” they said, “we can transform agrifood systems and build forward better by implementing sustainable and holistic solutions that consider development in the long term, inclusive economic growth, and greater resilience.” This against the backdrop of a Transnet strike locally, involving 40,000 employees who are asking for a wage increase that matches inflation, that may very shortly threaten the availability of fuel, electricity, and of course food. And the IMF has lowered its expectation for our GDP growth for the year from 2.3% in July to 2.1% as the global economy cools more broadly.
Comment: Food security is one of the defining issues of our age, our country, and our industry, and as players in the food sector we are all uniquely positioned to bring our talents and resources to bear on the challenges that lie ahead.
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