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A rough week in the news for our friends at SPAR. For starters, the business is still enmired in a legal how’s-your-father with their biggest members, the brothers Giannacopoulos of Empangeni, against whom it has lost 11 court judgments; the most recent of them is a refusal from the Supreme Court of Appeal of the right to appeal against an earlier High Court decision. Currently the brothers have a damages claim in excess of R2.1bn outstanding against SPAR. Then there is the independent probe – requested by SPAR after allegations that it was discriminating against black members – which found no evidence of racism but did find that the retailer overpromised how much some new store owners would earn, while understating their expenses. Moving on, reports have surfaced of some nimble footwork around the purchase of the Midrand Mega SUPERSPAR, for the initial sum of R1,000 – usual practice for a loss-making venture. The purchaser then paid R8m for the business after its attached TOPS was included, and SPAR proceeded to effectively pay his loan back in monthly instalments as a “marketing contribution”. The move enabled SPAR to inflate the income of the SPAR division in question.

Comment: A great South African business, but with some work to do in restoring the trust of members and shareholders.

Let’s post-game Black Friday, shall we? Over to you Naas. According to Shoprite, staple items such as toilet paper, nappies, washing power and soft drinks sold hand over fist as expected, although air fryers also put in a good showing. Pick n Pay Group marketing exec, Andrew Mills, said that punters wasted no time stocking up on essentials to refill their pantry on items like UHT milk, coffee, rice and sugar – and nappies and air fryers. Woolies? Long life milk, toilet paper, ice cream and butter, but yes, being Woolies, also bubbly, which their better-heeled punters like to quaff over Chrimbo. And air fryers? Pshaw! It’s Nespresso machines all the way for the Dapper One. Game opened at midnight and saw a +96% increase in transactions in the first hour of trading compared with last year, and a similar increase in revenue. Getting out of the weeds and taking a bit of a bird’s eyes view of the jamboree, FNB reported that its customers spent a record R3bn during the event, R2.4bn of it in store, and a more-than-solid R670m online.

Comment: There’s life in the old fiscus yet. Hopefully the spending holds up over the festive season.

Big news this week from Clicks which has acquired for a cash consideration of R105m The Sorbet Group, from current owners Old Mutual Private Equity. The Group is a beauty salon franchise chain of over 190 outlets under the Sorbet (all-round beauty therapy), Sorbet Man (men’s grooming) and Candi & Co (ethnic hair, treatments and hairstyling) brands. “Sorbet has a natural strategic fit and is closely aligned with Clicks Group’s health, beauty and wellness offering,” says Clicks CEO Bertina Engelbrecht. Next, joining (checks notes) Pick n Pay on the cool new A2X Stock Exchange is Woolworths, which will also keep its primary listing on the dear old JSE. Finally, to food services, which have seen revenues increase +18.6% YoY in September – assisted mightily by the quick service restaurant (QSR) sector, to which South African householders have gravitated during COVID.

Comment: For more on this dynamic sector and the trends shaping it, you’ll want to have a look over here at our brand new QSR report coming out soon.

Sharing the gloom that comes from having a war on your doorstep, European retailers are pessimistic about the prospects of a successful festive season, even as they enjoy the bump that Black Friday gave business. Only 20% of German retailers, for example, report that they’re optimistic about sales between now and the end of the year according to a survey by Germany’s HDE retail association. Next, in news of the heartwarming, Tesco briefly opened the world’s first ever “reverse supermarket” last week. The ‘Give Back Express’ pop-up in London received donations in cash or from a list of recommended items for distribution through its charitable partners, FareShare, which estimates that it will distribute 13,000 tons of food to needy people this winter, and the Trussell Trust which notes that 320,000 people used a food bank for the first time between April to September this year. Finally, in words we never anticipated writing in a sentence, Walmart is bringing to market a charcuterie board for dogs. Regrettably, they’re calling it a “Bark-uterie Board” and it contains, per Walmart, a “joyful and flavorful assortment of chews and biscuits your dog is sure to love.”

Comment: When European retailers sneeze, we’ve already got the flu.

Annual results from two of SA’s biggest chicken producers this week, and they’re a tale of two companies indeed. First up, Astral, which grew profits a (ahem) stellar +126% to R1.07bn for the year through September, on the back of revenue growth of +21.9% to R19.3bn. This the Group attributed in part to cost increases it was able to pass on to consumers, to the recovery from COVID, and to the growth in volumes, up +9%, which is something of a big deal in poultry. Less successful were rival Quantum Foods, where revenue rose +11% to R6bn in the same period, and operating profit tanked -78% to R33m. While egg prices rose +8.4% on average, feed costs increased +17.8%, and the year was badly affected by an outbreak of avian influenza in the Western Cape in January, which saw the loss of about 13% of egg production, the culling of 400,000 layer hens at a total cost of around R29m.

Comment: The travails of the poultry industry, with its crippling input costs and unfair global competition are well documented. But these results show that there’s more than one story to be told.

More results, this time from RFG Holdings, which manufactures Rhodes and Bull Brand canned products, and whose revenue grew +21.9% to R7.3bn for the year through September, with operating profit up a tidy +54.1% to R574m. While RFG has been able to pass on some cost increases to its customers and consumers, the business believes that inflation should peak in 2023. It has benefited not only from higher price on the shelf, but also from volume growth as people opt for longer-lasting cheaper canned goods in uncertain times. Unrelated, the energy drinks market is growing at the rate of around +20% annually, says Tiger Brands. And the Striped One wants 10% of that sweet and jittery market by 2028. Enter Energade Boost, launched in October, which in addition to its more stimulating ingredients also contains lutein, found in carrots, associated with eye health, and marketed as a benefit to those, like gamers, who spent their lives in front of monitors.

Comment: Energy drinks are pioneers of the functional foods movement. And it seems there’s life in the old category yet.

Time for our monthly check in on the dear old South African economy, courtesy of the boffs down in research. First up, retail sales for the month of September were down -0.6% YoY, against expectations of +1% growth, with load shedding the wild card here. Next, CPI stormed through at +7.6% for October, with food inflation a blistering +12%, the highest it’s been since 2009 when we were recovering from a global financial crisis. Not unrelated, the interest rate, up 75 basis points, and at 10.5% the highest it’s been since 2017, also on the back of food inflation, but this time drought related. Then the PPI, which indicates the shape of CPI to come: +16% YoY for September, but happily down from 22% in July, indicating that things might be moderating somewhat. Finally, the RMB/BER Business Confidence Index (BCI) which having dipped from 42 to 39 in the Q3 slipped again to 38 for the final quarter of the financial year, driven by the first significant falls in wholesale and retail confidence since the start of COVID, and dragged further south by load shedding.

Comment: : The fact that business confidence remained largely unchanged suggests there might be some resilience in the economy yet.