02 Nov 2011 Standing up for local food producers’ competitivity
The article recently published, The big ‘ouch’ in SA’s food bills, contends that Walmart-Massmart deal will be one of the most refreshing events for retailing in South Africa, as it will put demands on suppliers to work smarter and bill sharper. This has drawn strong reaction from a local food manufacturer, who does not appreciate the accusation that SA food producers are not that competitive and don’t face enough competition. His views will resonate with many…
The writer prefers to remain anonymous, citing it would be ‘suicidal’ to put his name to this riposte. Read on!
“I can tell you that I think, pretty squarely, that from where I’m standing there is PLENTY of competition.
“This is not just from standard, in-the-field threats like all the normal ones you can easily think of, but also the retailers as they have gradually all become their own favourite brand.
“These players effectively straddle both sides, at once quickly and disingenuously blaming the manufacturers for their margins (which are NOT large if compared to their own) and simultaneously also doing their utmost to also screw the manufacturers at their own game by playing at being brand owners, producing the cheapest quality item possible and then undercutting them anyway.
“We are in a (willing) fist fight no matter which way we go, in a situation where the retailers are more and more reluctant to stock anything new or unusual – anything innovative. When they do, standard practice is to exact more than a pound of flesh in discounts and deals.
“And let’s not even go down the road of hoping to be paid on time. Layer upon layer of internal bureaucracy will quite possibly let you through the door to begin with but then stymie any hope of progress from that point on, not least just fixing thousands of costly, incompetent errors typically made during the listing process.
“These same errors land up hurting who in the final calculation? Not the retailer, not automatically and not that they’d notice them immediately.
“The cost of labour goes up and so does the cost of living. Our electricity goes up, the cost of private security goes up. Petrol, taxes, education and toll roads all come like wave after wave.
“And we get hit with not one but sometimes three or four different independent audits ANNUALLY that WE have to pay for in order to supply to various retailers and then, heaped gleefully on top, are an endless barrage of labelling laws and restrictions and regulations. And then there’s the CPA in all its do-gooder, nanny, mewling, hand-holding….
“With margins already squeezed, where exactly is the manufacturer supposed to make any money?
“Additionally, where, one might ask, is the incentive to get into manufacturing (thus providing employment and taxes, among other things) in the first place?
“Not where the smart money is, that’s for sure.
“One would think you’d have to be an idiot to put yourself in the way of this juggernaut and then STILL be called ‘uncompetitive’ for your efforts.
“Rubbish.”