Trade Tatler
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Ronald Reagan



THIS ISSUE:     05 Nov - 11 Nov

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Woolworths  Is there something Sir would like to tell us?

Breezing through the new wing at CT International on our way to a welcome Johnny Walker in the first class lounge, we spotted this curious bit of non-spec branding outside what we took to be the soon-to-be-opened Woolies. It’s designed using something the interestingly-bearded fellers down in the studio tell us is a “bold, contemporary sans-serif font”, which suggests that the Posh one might be targeting a younger, funkier bunch. The store itself is a 700m2 “boutique” affair with a mix of food, casual and holiday fashion, beauty and cellphones, as well as a “to go” counter, and will be open from 5 in the a.m. to 11 at night. It’s a replica of the successful experiment at OR Tambo.
Comment: Except, of course, for the new branding...

Tatler Reporter 09/11/09

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Shoprite  But it worked just a moment ago, we swear!

Shoprite has lashed out, there seems no other expression for it, at the banks, for an intermittent fault at Interserv, the automated clearing house owned by the banks. The problem, it appears, is that money placed in a holding account when a punter buys something on her card never reaches the vendor. This results in the unhappy scenario where a couple of mournful beeps on the cellphone inform the shopper that she’s been relieved of R131.24, whereupon the teller tells her that her transaction has been declined. Nostrils flare and white spots appear on cheeks. The punter then goes to the bank, where, Shoprite informs us, unhelpful staff send them back to the supermarket for justice. Shoprite is taking the issue up with the Reserve Bank, on the grounds of lost revenue, consumer frustration, and apparent indifference on the part of the banks.
Comment: They’re bankers, this much we know. But are they a bunch of complete and utter bankers?

I-Net Bridge 09/11/09

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Fruit & Veg City  Down on the farm

Ex Pick n Pay squeeze Fruit & Veg City has announced an expansion of its Fresh Stop JV with Caltex. Eight Star Marts have already been converted to temples of crunchy goodness and delicious home-baked goodies, and another 20 will join them by Christmas with 150 planned in the next three years. Turnover in the converted stores is up by 50-60%. FVC has made a great success of bringing fresh fruit and veg, as it happens, from the farm gate – or at least the wholesale veggie market – to the consumer at a low, low price, rather than investing in pricy fresh DCs as bigger retailers have done. The strategy has seen the business double its turnover from R1.5 billions in ’05, with 100 stores on the ground under four separate trading brands – FVC itself, Freshstop, The Food Lover’s Market and the Food Lover’s Cafe. A key recent investment has been three meat packing houses – FVC wants to be as big a player in meat as it is in the green stuff.
Comment: Businesses like FVC and Dis-Chem are rattling the big boys and achieving a certain scale without shedding too much of their original owner’s equity.

Financial Mail 09/11/09

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SABMiller  If you are a big tree, I am a small axe...

Activist shareholder and professional bloody nuisance Theo Botha has caused the Financial Services Authority, the UK’s stock exchange regulator, to launch a governance probe against SABMiller relating to the transparency of processes in the appointment of its directors. At issue, according to Botha, is that CEO Graham Mackay sits on the boards of Reckitt Benckiser and Philip Morris – and that three appointments of this nature are against the LSE rules, and perhaps against the spirit of the independence of directors. In August last year, you’ll recall, there was something of an uprising at the AGM, where 15% of shareholders voted against a pay increase for the existing directors. Around the same time, governance advisors Pension Investment Research Consultants (PIRC, would you believe) advised shareholders against re-electing six directors they considered to be insufficiently independent to protect the interest of smaller punters.
Comment: A storm of very important principles in a very big teacup.

Sunday Times 08/11/09

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Bread  Less bread, more dough

The price of a loaf of bread dropped ever so slightly in September, according to the lab-coated number crunchers over at StatsSA. But don’t get excited, warns the National Chamber of Milling. When the petrol price rises again, as it inevitably will, the devil’s own equation kicks in, and it becomes affordable to sell wheat for ethanol. So wheat goes through the roof and the price of bread goes up again. And don’t mention the cost of delivery. What does the Competition Commission think about this? They reckon just so long as high prices are the result of something other than collusion, fine by them. The price of wheat, by the by, accounts for just 20 - 25% of the price of bread, which is structured to lag any movements there so as not to upset the market.
Comment: Market forces may have the inevitability of continental drift and the capriciousness of a Joburg thunderstorm, but they are far from benign, whether the Berlin Wall fell or not. If you get our drift, not sure that we ourselves do...

Business Report 03/11/09

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Trading Updates  A little bit sweet, a little bit stripy...

Both Illovo and Tiger Brands issued trading updates this week, and illuminating stuff in both cases. Illovo expect an increase in operating profits of 35% for the six months to September, thanks to better global prices and increased production in Zambia, although for complex reasons of foreign exchange, earnings per share would in all likelihood remain flat for the period. In anticipation of the release of their annual results, Tiger have said that they expect an increase of 18-21% in headline earnings per share (HEPS) for the year to September, which analysts, bobbing gently in their oxblood-leather pool chairs, have hailed as “outstanding”. The number includes proceeds from the unbundling of its shares in Adcock Ingram, and the sale of its 73% interest in Sea Harvest.
Comment: Considering the troubles of manufacturing, good stuff from these big boys.

Business Day 09/11/09, Fin 24 03/11/09

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Sustainability  Come on team

The 2009 Supply Chain Intelligence Report reveals somewhat sternly that when it comes to metrics on environmental impact, most major South African industries are not all that, with 41.3% saying they had no plans to incorporate such measures into their businesses. Our own great industry is slightly more in tune with the market’s demand for sustainability reporting, but only just, with a third of manufacturers saying they have no plans to include these metrics, compared with 35.8% of retailers. However, 55.6% of FMCG manufacturers say that environmental issues are critical in decision making, compared with 38.1% of retailers. The theory is that a lot of our manufacturers are aligned with or owned by international businesses which have higher standards in this area.
Comment: Looking at the annual reports of the bigger businesses, a more responsible picture emerges, in most cases, ahem.

Bizcommunity 06/11/09

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Household spending  The hard times tables

If the Reserve Bank’s biannual Financial Stability Review is to be believed, and why not, South African households are in a heck of a state according to almost every indicator. Growth in nominal income has dropped from +14.1% in the second quarter of last year to -4.3% this year. Household net wealth has declined by 8.7% compared with growth of 3.4% last year. The value of household assets fell by 10.1% compared with growth of 4.2%, while household debt is up to 47.1% of GDP compared with 46.3% last year. Some of the indicators, however, suggest that some form of recovery may be on the way – growth in debt has dropped to 4.1% from 14.1%, gearing (that’s the ratio of interest repayments to household income) is down to 9.5% from 11.6%, and household consumption is down to 61.8% of GDP compared with 62.3% a year ago.
Comment: Only 20 days to the end of the month, people!

Business Report 04/11/09

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Appointments  The corner office

P&G have announced the appointment of Stanislav Vecera, most recently GM in Nigeria, as new GM for the South African operation. In Nigeria, the Czech presided over a phase of great growth and expansion, overseeing operations in 16 African countries and opening a flashy new detergent factory in Ibadan. Cadbury have announced the appointment of Mike Middleton (ex marketing Director for South African Chocolate) as Category Director: Chocolate for the Africa, Middle East region. 03/11/09, 04/11/09

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Pharmacy  A drug on the market

The government appears to be about to do the right thing by the little feller, tabling a new set of dispensing fees for pharmacists that exempt marginal businesses from the maximum levies – this after pharmacists took the matter of limited dispensing fees to the Constitutional Court where they argued that it would put many of them out of business.

Business Day 09/11/09

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Unilever (Int)  Now that’s what we call vitality

Unilever has beaten the forecasts of analysts in their chrome and glass penthouses with an increase in sales volumes, growing revenue by a pleasing 3.4% in tough conditions and fulfilling the promise of newish CEO Paul Pollman to rev things up a bit, after a run of lagging rivals Nestlé and P&G in the numbers. How did he do that? By lowering prices, boosting adspend and accelerating innovation, which is where all of us would be well-advised to invest in these trying times.

Business Day 06/11/09

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Advertising  Somewhere, beyond the moon...

Doing some research on intergalactic travel, we happened upon this, somewhat unexpectedly, and felt strangely guilty. Thank you, Mr Ackerman. But why on earth The New York Times? And how did you know we’d be there?

Tatler Reporter 10/11/09

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