Stocktake: Let’s just can 2021, already
by Louise Burgers. Tiger Brands recalls 20 million cans of veggies; and an update on the civil unrest toll.
by Louise Burgers. Tiger Brands recalls 20 million cans of veggies; and an update on the civil unrest toll as retailers tally the cost of South Africa’s insurrection-lite. We may not have our baked beans to bolster our panic buying stash, but at least we have our booze back as ‘adjusted’ level 3 of lockdown returns. That’s something. But since some provinces remain at third wave peak of Covid infections, it’s certainly not happy hour yet.
Total recall by Tiger Brands of canned veggies
All canned veggies date stamped 1 May 2019 to 5 May 2021 are being recalled by Tiger Brands. That’s about 20 million cans of Koo baked beans and Hugo canned veggies. The product recall comes after defective batches of cans were identified by a supplier. Further testing revealed that leaks could occur at the seams, when two cans out of 287,040 transported for testing did develop side seam leaks. As the company explained, “A leak in a can presents a risk of secondary microbial contamination after the canned products are dispatched into the marketplace. Where such contamination occurs, it will present a low probability of illness and injury if the contaminated product is consumed. Notwithstanding that only two side seam leaks had been detected as a result of the transport test, with consumer safety as an absolute priority, Tiger Brands considers it appropriate that it institutes an immediate recall of all products that could potentially be affected. This involves the withdrawal of specific canned vegetable products manufactured under the KOO and Hugo’s brands between 1 May 2019 and 5 May 2021 (both dates inclusive), amounting to approximately 20 million cans, which is 9% of annual production. A full list of the potentially affected products can be found at www.tigerbrands.com.” Koo canned fruit and Koo canned pilchards are not affected by the recall, as those cans are supplied by a different supplier. The financial impact of the recall, including the cost of the potentially affected stock that may be written off, transport and storage costs, as well as the loss of margin on the returned stock, is estimated at between R500 million and R650 million, the company reported. This follows on losses of R150 million reported by Tiger Brands last week after the looting. Its rice, and snacks and treats divisions were particularly affected. It also suspended bakery operations and the distribution of bread last week.
Tallying the cost of our mini-coup
We continue our roll call of retail carnage in Gauteng and KZN, as retailers updated investors further in the past week as to the cost of the civil unrest. These are the lowlights:
- Famous Brands reported that more than 600 restaurants were temporarlily closed in response to the unrest. The total number of stores that have been damaged and rendered non-operational is 90, the majority being in KwaZulu Natal (KZN). The reopening time frames are unclear at this stage due to access to specialist equipment, the company said. “Our contingency logistics plan is working well while our logistics facility in Westmead KZN is repaired. We expect that the repair process will take approximately two weeks. Famous Brands may be required to provide franchise partners with cash flow support if the SASRIA insurance process is inefficient.
- Spar provided an update on clean-up operations after a preliminary assessment, reporting that 38 looted stores have been cleaned, restocked and reopened; the KZN distribution centre will be fully operational by 25 July 2021; 112 stores remain closed as repair and cleanup operations continue; both wholesale and retail insurance claims assessed to be adequately covered; short-term bridging finance secured to extend support to the retailers impacted; and one Spar truck was lost in the violence. Commenting on the situation, Brett Botten, Spar CEO said: “Despite the loss of business caused by the recent civil unrest, the Spar retailers have expressed a firm commitment to start again. This speaks to the resilience and entrepreneurial spirit of [our] retailers, who are intensely aware of the role they play within their communities. We are understandably concerned about the impact on our communities and our country, and for this reason Spar has resolute desire to rebuild and help lessen the extent of the damage and devastation caused within our communities.” The group said it was still experiencing disruption in the availability of certain products due to the damage and destruction caused to certain supplier facilities and warehouses: “We are working closely with all our affected suppliers to try and ensure these products are back on shelf as soon as possible; [and] engaging with severely impacted smaller suppliers and will offer them all necessary assistance.”
- The Clicks and UPD distribution centres in KZN were both looted and damaged. At the peak of the violence, 339 Clicks and 26 The Body Shop stores were closed as a precautionary measure to protect employees and customers and to limit potential losses. A total of 54 stores were looted and vandalised, representing 6% of the group’s store base. As at 22 July 2021, seven of these stores have already been reopened; and 38 of the 47 stores that remain closed have pharmacies. The unrest also impacted the COVID-19 vaccination programme, with 127 Clicks vaccination sites being forced to close during last week. Currently 15 remain closed.
- A Distell DC (distribution centre) in KZN was damaged and operations disrupted. Damage is estiated at R100 million. “We are deeply grateful to our supply chain and distribution teams, as well as our security personnel and partners at the South African National Taxi Association (Santaco), who have worked tirelessly to protect our business,” the group said.
- Mr Price advises that the damage caused by looting did not increase materially beyond what was first reported and totals 111 stores. At one stage over 500 of the group’s stores were temporarily closed, but that number now sits at 20 temporary store closures. The Durban Port is experiencing some bottlenecks but this is expected to ease as all facilities are operating. The group’s intention is to reopen all looted stores but this will be considered based on the specific circumstances of each store location, and the status of the individual shopping centres in which these stores are located.
Engen’s growing footprint in the DRC
Engen continues to expand in the Democratic Republic of Congo, with the recent opening of two new Engen service stations. Engen currently operates 67 service stations across the DRC, as well as two fuel depots and two lubricants depots. “The launch of these two new sites – Engen FS Kauka and Engen FS Pompage, Kinshasa – is an affirmation of the continued prospects for growth in the country,” says Charles Nikobasa, managing director of Engen in the DRC. Drikus Kotze, general manager of Engen’s Commercial and International Business Division, says since entering the DRC in 2007 when it purchased 60% of Shell en RDC, Engen has been growing steadily in the country. “The DRC is an integral part of Engen’s growth ambitions and we’ve been aggressive in our retail roll-out over the past decade. Today we operate 67 service stations, two fuel depots and two lubricants plants. Engen operates a retail network of 230+ service stations in six countries: Botswana, DRC, eSwatini, Lesotho, Mauritius and Namibia; as well as a further 1 000+ sites in South Africa. The company also focuses on the commercial fuels and lubricants sectors in these countries, as well as having reseller agreements for lubricants in several other sub-Saharan African countries.
Mr Price finalises Yuppiechef deal
Mr Price has concluded the purchase of high-end kitchenware omnichannel business, Yuppiechef, effective 1 August 2021. Yuppiechef has two primary operations: Yuppiechef Online, the retail division comprising the online platform and seven stores; as well as a wholesale division, which develops, and imports branded goods for wholesale distribution. Mr Price Group CEO, Mark Blair, said: “Welcoming Yuppiechef into the group is a very exciting moment for us. This gives us the opportunity to serve a new customer base and grow the skills within our group. We share a similar culture and outlook for growth and look forward to taking hold of opportunities together.” The Yuppiechef management team will continue to run the business with the full support of the Mr Price executive team.
This week in numbers
Distell says the industry has repeatedly warned and demonstrated via research, that alcohol bans fuel illegal activity, particularly amongst crime syndicates which are significantly strengthened during prohibition. It is becoming increasingly difficult to reverse this as syndicates become entrenched. It says the recent unrest demonstrates the unfortunate effect syndicates have in an environment where poverty and unemployment have been exacerbated from the pandemic. “Recent research shows that bans on alcohol sales have increased and fueled the illicit trade. This has now reached an unacceptable 22% (nearly a quarter) of total market volumes in South Africa, worth R20,5 billion in sales value. This has cost the fiscus R11,3 billion in tax revenues, at a time when the country can least afford it.”
QUOTE of the week:
“It is crucial to also bear in mind that the Asia-US trade has a massive impact on global supply chains, and with US peak shipping season yet to get into full swing, market conditions are poised to get worse rather than better in the coming months. This means any stock – received on time or even ahead of schedule – will increase in potential value if one’s competitors have failed to get stock in time. This could result in increased market share, adding a different dimension to discussions about the cost of shipping,” said Denys Hobson, logistics and pricing analyst at Investec for Business, in Retailing Africa.
*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: firstname.lastname@example.org.
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