THIS ISSUE: 08 Apr - 14 Apr
YOUR NUMBERS THIS WEEK
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Metcash Lightening the load
As of Saturday last, Metcash has closed 56 stores, including Metro Cash & Carries and Trade Centres, pretty much halving its footprint in terms of store numbers, with the loss of around 1,000 jobs, in order to hunker down and build the business back up to its former glory. Some analysts believe that pressure on the independent trade as the majors moved into the townships has whittled away Metcash’s customer base. It is hoped that by losing the underperforming stores, existing punters will migrate to those nearby, consolidating the customer base under the Metro brand, as Trade Centre is to trade no more. The big news is that Metcash will be rolling out an undisclosed number of hybrids later this year, an initiative to be funded in part by institutional shareholders like Old Mutual, which holds a 9.7% stake.
Comment: We look forward to the resurgence of a leaner, meaner Metcash. And indeed to the continued survival of its customers in the trade.
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Fruit & Veg City A site for store eyes
The forty-fourth Freshstop opened this week, on Spine Road in the evocatively-named Site C in Khayelitsha. This would be the first Freshstop opened in a township, and the emphasis at this store is on the fresh offering, which occupies a larger than usual area of available trading space in keeping with research conducted into the needs of the community. Freshtstop, you will recall, is a Fruit & Veg City franchise project and is attached to Caltex service stations around the Beloved Country. In additions to Fs and indeed Vs, it offers hot takeaways from the Pitstop café and a convenience range of groceries.
Comment: The township convenience market is about to explode, in a good way, unless of course you happen to be an independent superette or spaza.
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Pick n Pay Onward soldiers
Pick n Pay is fighting a war on two fronts against the obergruppenfuehrers and commissars of the Competition Authorities – one in the arid wastes of Australia, where the toothbrush-moustached bureaucrats are mounting a rearguard action against their disposal of the Franklin’s asset to Metcash, and a dirty guerilla affair amid the scrub and boulders of Zimbabwe, where they are attempting to acquire a further 24% of TM Supermarkets. While The Blue One is buoyant about the prospects for the deal, it does not intend investing further in the Zim at the mo, and neither does Shoprite, which has one super in Bulawayo, and decided recently against the acquisition of OK Zim.
Comment: Although we are reliably informed that commercially speaking, things are hotting up as Uncle Bob continues his slow shuffle off the old mortal coil.
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Clover Roll me oooooover…
Clover launched its oddly compelling Tropika dairy/juice brand in Nigeria last year, piloting the project in a JV with local outfit New Age Beverage Co., and things, we are told, are going rather well. It turns out that Nigeria is exactly the sort of market that Tropika is after, and that Clover are considering expanding their dairy operations there too. They are also looking at projects in other undisclosed locations, while at home they focus on efficiencies, busily moving factories from Midrand to PE and Pinetown, and leveraging the capacity (you like that? “leveraging the capacity”!) of its field force to take over the distribution of all Danone products for a small consideration, ahem.
Comment: Of course Clover already enjoys good motherland exposure through Shoprite’s African stores.
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P&G Crunch time
Procter & Gamble have rather unbelievably shown that they alone have the power to resist a Pringle by selling the unnaturally perfect snack brand off to a certain Diamond Foods in a stock deal worth $1.5billion American. This is of course a big deal, but bigger still as it marks the departure of the world’s largest consumer goods company from food, altogether. The idea for P&G is to ignore the burgeoning sales of Pringles in the not-fully-tapped emerging markets in order to focus on more profitable home and personal care portfolios, while Diamond will now be in a position to expand its global supply chain and manufacturing base. Last year, Pringle enjoyed sales of $1.4billion in 140 markets.
Comment: And we’re pretty sure we’ve got some down the back of the couch. Pringles, that is. Not dollars. Or markets. Obviously.
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SAB You. Outside. Now.
In a stunning legal victory for the little guy, SAB has shown the Competition Commission exactly who is boss around here by managing to get the Competition Tribunal to acknowledge – reluctantly – that it had no jurisdiction to hear a complaint brought against SAB seven years ago by the Competition Commission that the brewer, inter alia, carved up markets between wholesalers and priced discriminately between outlets. The original complaint was bought by independent liquor wholesaler Nico Pitsiladi, but expanded upon by the Comish – and it is on this expansion that SAB has successfully taken issue, throwing into doubt some of the other 30-odd cases currently in referral before the haughty patricians of the Tribunal.Comment: So keep it tight, gang, if you want your case to hold water.
TRADE ENVIRONMENT
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SADC Shampoos without borders
The General Manager of P&G (South and East Africa) has expressed excitement for the potential of Africa, with its 800 million consumers as a market, but has cautioned sternly that import duties are hindering trade within the continent and making expansion more difficult for businesses like his. P&G currently has four factories on the continent – in the RS of A, Morocco, Egypt and Nigeria, and would like some more – but suggests that a duty-free SADC trade zone might be of some assistance in this regard. Something else that would help would be better transport infrastructure in countries other than South Africa.
Comment: This is the kind of pressure we need. Keep it up, big guy. And ask SAB (above) to help you.
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Consumer Debt Newsflash
South African consumers borrow too much and save too little. This just in from Stanlib, who suggest that the recent modest decline in our Household Debt to Disposable Income ratio, after a sharpish rise to historical highs since ’07, is more because we’re earning more than stashing it under the mattress. And when our income comes under pressure from the impending explosion of food and fuel prizes, it’ll all head horribly south once again. South African businesses, on the other hand, have never saved more, holding on to the wedge instead of forking it out on capital investment, which has declined from over 25% to below 20% over the last two years.
Comment: Thus setting up some vicious economic circle or other, no doubt.
IN BRIEF
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Clicks Aaaaaah Nunu!
Clicks is extending its legendary loyalty offering to expectant mothers and new parents through an adorably lower-case initiative called babyclub, which will give them savings on an extensive range of baby products, automatic entries into appropriate competitions, notifications of events nationwide, and eventually, an all-expenses-paid education at Harvard.
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Tetrapak Can you do the Flying Crane?
Origami kings Tetrapak, who came up with their cunningly folded packaging design while idly toying with a piece of foolscap in the kitchen one sunny afternoon, have achieved global sales of €9.98billion, up 5.2% in the year to Feb and beaten their 5-year emission’s target hands down. Respect.
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I&J Imitation is the sincerest form of packaging
I&J have been requested by the Western Cape High Court to kindly remove from the shelves any of their packs of Oven Crunch bearing a resemblance to packs of Sea Harvest’s Oven Crisp. Which is pretty much all of them.
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Snackworks Don’t mind if we do
Snackwork’s AVI subsidiary and SA’s favourite manufacturer of crunchy teatime treats, has announced a major brand refresh and new packaging for some of its best-loved biccies, including, wait for it, Maries, Zoo biscuits, Tennis biscuits, Jolly Jammers, Eet Sum More’s, Romany Creams, Choc Kits … we’re beginning to sound like the Mole at Rattie’s riverside picnic at the beginning of Wind in the Willows, which you should have read by now.
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