Africa right for Shoprite

Shoprites's march into Africa will continue, despite the unwillingness of South African consumer brands to wholeheartedly follow the retailer across the border.

"If it was after 7[pm] and I've had a glass of Chardonnay, I would say they are stupid. But I can't say that while I'm sober and in a public gathering such as this one," joked Shoprite CEO Whitey Basson at the company's annual results presentation yesterday.

The Shoprite group, which has Shoprite, Checkers and U-Save in its grocery stable, and OK Furniture and House & Home in its furniture division, plans to spend R1.5-billion this year to open new stores in other African countries.

That is more than twice the amount earmarked for expansion in South Africa and more than 16% of turnover of R102.2-billion from outside South Africa.

Last year 20 new stores were opened in the rest of Africa, bringing the total to 169 in 14 countries. Now, 31 new stores have been confirmed for the year until June 30 next year.

Basson sees Nigeria as a great untapped market. It is Africa's most populous country and since the rebasing of its gross domestic product Nigeria now has a larger economy than South Africa.

One of Shoprite's Nigerian supermarkets last year sold 350000 bottles of wine, more than nine stores in the Cape Winelands put together.

The continent already accounts for nearly a sixth of the company's revenue and both profits and revenues are growing faster on the other side of the border than here.

But the products on the shelves are increasingly from elsewhere, because South African producers often do not have the stomach for Africa, according to Basson.

He did not name the products or the companies involved, but said that it did not bode well for the local manufacturing sector.

"I think the okes are tired of making mistakes," he said.

Shoprite made a trading profit of R5.7-billion. Its share price dropped more than 5% yesterday as the results fell below estimates.