SA braces for festive grocery shortages

Retail operators and economic analysts said the country was facing a gradually worsening shortage of some commodities due to increased spending for the Christmas and New Year holidays.

They said the early festive shopping boom had resulted in several retailers failing to meet demand for products by South African consumers, ahead of what is expected to be the country’s record highest holiday spending season.

Over the past two weeks several supermarkets have reported shortages of grocery items such as rice, peanut butter, cleaning fluids, jam, biscuits, cigarettes and fizzy drinks.

Products such as tea, coffee, sugar and some canned goods are also expected to be in short supply this season along with other items such as cement liquid petroleum gas and carbon dioxide, which is used in the production of fizzy drinks.

With the latest shortages coming only days before the beginning of festive period, economic analysts have warned there is a genuine need for concern.

The country’s three largest supermarket groups have shifted the blame for the shortages on to manufacturers, who they said were “unprepared” for the huge demand of the festive season.

They said no exception had been made to increase production to match the anticipated festive demand.

David Robbins, deputy chairman of the Pick ‘n Pay supermarket group said the company’s suppliers were failing to keep up with Pick ‘n Pay’s demand.

“Across the country, suppliers are only fulfilling 69 percent of Pick ‘n Pay’s orders right now,” Robbins said.

Another retail giant, Shoprite Checkers, said it was also experiencing “a decline in service levels” from suppliers.

The group said it attributed the shortages of some commodities to the massive growth in retail demand over the past year, with increased consumer spending affecting producers’ abilities to meet demand.

“The manufacturing industry’s forecasts did not keep track with the upcoming middle-classes whose buying power is now far outstripping the history of the past few years, when capacity planning was done for today,” Shoprite Checkers said.

However the suppliers have insisted that consumers need not be worried despite the shortages.

Pioneer Food Company said its Bokomo Foods division had run out of capacity, but the “constraints have largely been addressed”.

The company said it had made new investments to enhance output at its Weet-Bix, Corn Flakes and ProNutro plants.

Tiger Brands business executive for grains, Tjaart Kruger, also said the company was managing to meet demand although there was “room for improvement in making deliveries more efficient”.

Throughout the year Reserve Bank Governor Tito Mboweni has urged South African’s to reign in their spending, which he warned would have a ripple effect on inflation and the country’s manufacturing and on.

Already, the huge demand for commodities has resulted in gradual increases in prices that economists say will only slow down in the first quarter of next year.

The South African Red Meat Industry Company (Sarmic) recently said the average price of meat in the country had increased by 45 percent this year, largely due to strong demand and inadequate supply.

Sarmic said the country was suffering from a reduction of imports from traditional markets in Brazil, which has been affected by the foot and mouth disease, and also Botswana and Namibia, where exports have been dented by drought. The Bureau for Economic Research said South African consumers were likely to feel the burden of soaring food price inflation in the New Year.

It predicted further food price inflation increases of between 10 percent and 15 percent, before prices begin to slow sometime in March 2007.

December 2006
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