The strong get stronger

The big South African brand owners have been on strong acquisition and investment campaigns over the past two years, and this is a good indication that these businesses believe the strong retail sales growth has long term sustainability. While our first article mentions a slowdown is retail sales growth, if you read the full article you will see that in most opinions a continued growth period can be expected. This period of sustained growth is sure to change the landscape of the South African retail industry. Will the strong get stronger?

Craig Ballantyne
craig@fastmoving.co.za

Please feel free to make comments or raise new issues by emailing the editor
editor@fastmoving.co.za

NEWSBYTES

Retail sales slow in January
Statistics SA said on Wednesday that real retail sales growth in January had settled to 5.6 percent year on year, confirming the trend indicated by Tuesday's AC Nielsen data. December sales, stripping out inflation, had increased by a revised 8.5 percent year on year.
Read more.

Tiger Brands' two sweet acquisitions
Last week saw Tiger Brands in action when they acquired both Cadbury Schweppes's Bromor Foods, as well as Nestlé's South African sugar unit. Bromor Foods own brands such as Oros, Energade, Hall's, Monis and Roses. It was also reported that Tiger is reviewing its fishing interests, which have been underperforming, but is investing in food, pharmaceuticals and homecare, where it expects substantial growth.

Premier Foods to consider a listing after success of turnaround strategy
Premier Foods will reportedly consider a listing once its turnaround strategy has yielded sustainable results. Premier's turnaround strategy has focused on township markets, where it has seen an increase in sales as it has made products more available.
Read more.

Nestlé's R300 mil upgrade plans
Nestlé South Africa is set to spend R300 million on upgrading and expanding its facilities to improve its efficiency and profitability. Nestlé will also establish a presence in Angola through importing, distributing and using third-party facilities for manufacturing.
Read more.

Game Worcester open to huge crowds
The town of Worcester in the Western Cape came alive on March 23 when the 66th Game Store opened its doors, bringing the unique pink Game flavour to the town.
Read more.

GLOBAL NEWS

Sainsbury back at number two
Sainsbury has regained its position as the UK's second-largest supermarket chain from Wal-Mart Stores' Asda chain, with Tesco in at number one.

Asda launch pilot Essentials store
Friday 31st March has witnessed the opening of the first pilot Asda Essentials store, the first take on a discount concept opened by the big four grocers in the UK. The outlet - described as a convenient store by Asda is located in the bustling Midlands town of Northampton - Planet Retail.

South African Consumer Confidence

Consumer confidence at a record high
According to First National Bank, consumer confidence in South Africa in the first quarter of the year was at its highest level ever in the 24-year existence of the composite consumer confidence index (CCI).
Full article: CLICK HERE.

ACNielsen show consumers lack willpower
According to LifeChoices, a 21-country qualitative study of middle class working women conducted by ACNielsen, consumers know all the good eating messages, and are motivated to implement them, but seem to lack the ability to consistently make slightly lower calorie choices in out of home consumption.
Full article: CLICK HERE.

Local Investment Company Acquires Canderel's SA Operation
Local strategic investment company, Fore Good Investments has announced the successful acquisition of Merisant SA (Pty) Ltd., formerly a wholly owned company of Merisant International. Internationally Merisant markets and sells low calorie sweeteners in over 85 countries. Its brands include Canderel, Equal, NutraSweet & Sucaryl.
Full article: CLICK HERE.

Tereos to become world's 2nd largest sugar processor
Tereos, a European sugar co-operative, has announced that it may increase its annual sugar output by more than 70 percent should it win a bid to take over Illovo Sugar. The acquisition would make Tereos the world's second-largest sugar cane processor.
Full article: CLICK HERE.

Dion stores equips disadvantaged school children
More than 2700 children from two schools in Diepsloot and Tembisa are now well equipped for the school year thanks to a Dion Stores initiative in which all of the schools' learners from grades 1-7 were presented with backpacks filled with stationery during March.
Full article: CLICK HERE.

GLOBAL NEWS

Supermarkets strangle UK independents
George Monbiot from the Mail and Guardian explores The United Kingdom's Office of Fair Trading (OFT) having launched an inquiry into the behaviour of the big grocery chains.
Full article: CLICK HERE.

Tesco to launch mobile content portal
Tesco is preparing to launch a mobile content portal which will tie in closely with the retailer's Clubcard loyalty programme and could see points earned through shopping in-store used for the purchase of mobile content. The company is currently searching for a third-party supplier to develop the portal, which will feature a full range of mobile content, reports Planet Retail.

The value of promotions

Recently I bought two promotional razor packs from Schick containing 6 blades and a razor for R59 each. I was obviously thrilled about a great deal on a great product, but was left asking what the impact would be further down the line?
What is the true value of a promotion? For the retailer, they get to promote their super low prices (often at the manufacturer's expense). For the manufacturer, he has a short term boost in turnover and may gain a significant market share. The obvious winners however, are consumers who grab at the opportunity to save a buck. This all seems great, but what about the negative consequences after the promotion ends?
After purchasing my two promotional packs, I am effectively out of the razor market for about a year, as are many others consumers. This creates an erratic demand that is difficult and expensive for both retailers and manufacturers to manage. Wal-Mart doesn't do promotions - they say you get the best prices in their stores each and every day. It seems to work for them - is this perhaps the cheaper and easier way to retail?

I don't know. If you know, or have any thoughts on the matter, please feel free to e-mail me on craig@fastmoving.co.za.

Craig Ballantyne
craig@fastmoving.co.za

Please feel free to make comments or raise new issues by emailing the editor
editor@fastmoving.co.za

NEWSBYTES

Pick 'n Pay's Ackerman receives Lifetime Achievement Award
Pick 'n Pay Founder and Chairman, Raymond Ackerman, recently received the Lifetime Achievement Award for Consumerism from the Department of Trade and Industry. These awards acknowledge individuals and organisations that champion consumer protection and education. Ackerman received the award for individuals in recognition of his commitment to championing consumerism, and the significant contribution made to improve consumer welfare.

New chairman for Clover SA
John Bredin has been appointed Chairman of Clover SA as of March 2006. Bredin, who takes over from Dr Vos Grey, will also serve as vice chairman of Clover Industries Limited (CIL) and alternate director of Clover Danone Beverages Limited.
Full article: CLICK HERE.

SABMiller seal Topvar deal
Brewing giant SABMiller plc (SAB) have said that following receipt of approval from the Slovak Anti-Monopoly Office on March 13, it had acquired 48.4% of the Slovakian brewer Topvar. Under the terms of the agreement, the controlling shareholders will sell further shares to enable SABMiller to increase its interest in Topvar to at least 67% by the end of September 2006.
Full article: CLICK HERE.

Superbrands finalises council for 2006
Superbrands has finalised the independent Council for Superbrands South Africa 2006. After the tremendous success of the inaugural project in South Africa, which featured more than 80 of the strongest brands operating in South Africa, Superbrands South Africa Volume Two will tell the story of many of the brands who have been instrumental in forming the branding landscape in the nation.
Full article: CLICK HERE.

GLOBAL NEWS

Coke runs dry in Zimbabwe
For the first time in at least 40 years, supplies of Coca-Cola dried up on Wednesday last week in yet another sign of the crippling economic crisis in Zimbabwe.
Full article: CLICK HERE.

Wal-Mart to expand in China
The chief executive of Wal-Mart Asia, Joe Hatfield, has disclosed that the retailer plans to take on 150,000 people in China over the next five years, five times the number it currently employs in the country, as the company prepares for a major store expansion. This year the company plans to open 20 stores in China in both major metropolises and smaller cities - www.planetretail.net