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Transforming our business Graham O’Connor Group CEO.

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Presentation on theme: "Transforming our business Graham O’Connor Group CEO."— Presentation transcript:

1 Transforming our business Graham O’Connor Group CEO

2 The World of SPAR Founded in 1932 Netherlands Adriaan van Well Objective to put independent retailers in a position to compete with the chains

3 Our Name D Door Eendrachtig Samenwerken Profiteren Allen Regelmatig D Door Eendrachtig Samenwerken Profiteren Allen Regelmatig “ All will benefit from united co-operation”

4 Founded in 1962 – Colin Michelsen Launched in 1963 8 Wholesalers & 500 Stores SPAR South Africa

5 SPAR Today… Stores SPAR South Africa (Sep 15) 1811 People64 500 Retail sales R76, 5bn Customers 60 Million p.m.

6 Our Brands, our Pride

7 SPAR Retail Sales

8 196319872015 Retail Turnover (R) 0 1.5bn76.5bn Stores5004721811 Wholesalers821 Cases Despatched 020m219m 50 Years Of Power SPAR GROUP

9 GUILDS THE SPAR GROUP LTD INDEPENDENT RETAILERS REGIONAL GUILD (6) NATIONAL GUILD SPAR and TOPS in 1 Guild BUILD IT has a separate Guild

10 VISION To be the first choice brands in the communities we serve. SPAR STRATEGY PURPOSE To provide leadership and access to a full support service to retailers to enable them to run sustainably profitable and professional businesses.

11 SPAR Values Passion Passion Entrepreneurship Entrepreneurship Family Family

12 STRATEGIC IMPERATIVES Deliver excellence in fresh Supply chain optimisation Leadership on owning “centre of community” Retail profitability New business opportunities Transformation

13 The retail environment Roelf Venter Group Retail Operations Director & Guild Chairman

14 STORE NUMBERS AS AT SEPTEMBER 2015 FormatsTOTAL SUPERSPAR315 SPAR366 KWIKSPAR132 BUILD IT320 TOPS608 Savemor25 Pharmacy45 GRAND TOTAL1811

15 BLACK OWNED STORES AS AT SEPTEMBER 2015 FormatsTOTAL SUPERSPAR30 SPAR60 KWIKSPAR7 BUILD IT68 TOPS57 Savemor13 Pharmacy12 GRAND TOTAL247

16 Our Enterprise Development Initiatives Kevin O’Brien Risk, Sustainability and Corporate Governance Executive

17 STANDARD FMCG SUPPLY CHAIN SUPPLIER RETAILER DISTRIBUTION CENTRE RETAIL STORES CUSTOMER

18 SPAR GROUP SUPPLY CHAIN SUPPLIER SPAR DISTRIBUTION CENTRE SPAR RETAIL STORE CUSTOMER SUPPLIER

19 SIDWELL

20 CASAMOLA

21 SPAR GROUP SUPPLY CHAIN SUPPLIER SPAR DISTRIBUTION CENTRE SPAR RETAIL STORE CUSTOMER SUPPLIER R56 Billion pa

22 1TIGERR 3 762 208 253 2COCA COLAR 3 214 208 534 3UNILEVERR 3 134 351 247 4PIONEER FOODSR 2 095 361 044 5NESTLE S AR 1 842 839 308 6BRITISH AMERICAN TOBACCOR 1 763 416 370 7WOODLANDS DAIRYR 1 736 759 079 8DISTELLR 1 669 551 181 9BRANDHOUSER 1 594 922 722 10BLUE LABEL DISTRIBUTIONR 1 563 876 691 R 22 377 494 428 * AT RETAIL SELLING PRICING 40%

23 10MONTEAGLE AFRICAR 1 517 463 486 11SOUTH AFRICAN BREWERIESR 1 475 051 105 12FRESHLINER 1 466 751 885 13CLOVERR 1 429 921 510 14MONDELEZR 896 430 722 15SIMBAR 886 605 364 16PARMALATR 816 347 788 17SNACKWORKSR 790 807 149 19SOVEREIGNR 720 722 372 20WILLOWTON GROUPR 684 925 612 R 32377595810 * AT RETAIL SELLING PRICING 60%

24 SPAR GROUP SUPPLY CHAIN SUPPLIER SPAR DISTRIBUTION CENTRE SPAR RETAIL STORE CUSTOMER SUPPLIER R56 Billion pa R6.5 Billion pa SPAR BRAND

25 1.NO LISTING FEES 2.FAVOURABLE PAYMENT TERMS (7days vs 30days) 3.EFFECTIVE ROUTE TO MARKET 4.FREE SALES AND MERCHANDISING TEAMS 5.FREE ADVERTISING SLOTS 6.REASONABLE GUARANTEE OF OFFTAKE (PROVIDED QUALITY AND PRICE CRITERIA CAN BE MET ) ACTION POINTS FOR BLACK SUPPLIERS OF SPAR BRANDS

26 SPAR GROUP SUPPLY CHAIN SUPPLIER SPAR DISTRIBUTIO N CENTRE SPAR RETAIL STORE CUSTOME R SUPPLIER R56 Billion pa R6.5 Billion pa SPAR BRAND R14 Billion pa

27 Rural Hubs

28 The context Opportunity to improve fresh particularly in rural areas Develop and drive a model of more localised sourcing of bulk produce Enables inclusion of emerging farmers Reduces transport costs, improves lead times, increases freshness and shelf-life Scale out what retailers like Peet Snyman have been doing Delivering excellence in Fresh is key to setting SPAR up for the next 50 years Real benefits Enabling a food system that can provide affordable and nutritious food for rural communities Development of an inclusive agricultural system

29 Nutrition FAP shared ownership (to include both producers and retailers) Rural Hub Fresh Assembly Point (FAP) Geographic area up to 200km radius Rural Hub Model 1 Registered smallholder farmers currently trading within loose value chains Safe, fresh, nutritious food Packhouse facilities Quality control Pricing benefits Shorter delivery period Dedicated technical assistance and agricultural know-how, financial loans and access to inputs for famers. Market off-take Excess Produce Main Stream (national markets) e.g. Tiger Brands & Unilever Informal & Government led schemes Farmer 1 Farmer SPAR DC (incl. Freshline) AVAILABILITYACCESSUSE Food and nutrition security: Sustainable Local SourcingConsolidate Supply / DemandAccess to Local Markets

30 2015 2016 - 2017 Selection of 3 Rural Hubs Locate Rural Hubs in areas of High numbers of emerging farmers requiring market access and development support High agricultural potential High rural poverty Many SPAR stores

31 Mopani Hub 27 SPAR stores within 200km radius of Ofcolaco (near Tzaneen) Initial focus area Broader focus Initial focus area: 10-15 farmers 10 stores Broader focus: 30-40 farmers 27 stores

32 Farmer SPV FAP shared ownership Rural Hub Fresh Assembly Point (FAP) 2. Input Finance 8. Demand from local retail and regional DC’s 3. INPUT FUNDING INPUT & DELIVERY AGREEMENT 6. TRAINING & TECHNICAL SERVICES Seed | Fertilizer | Herbicides | Insecticides etc 4. PURCHASE INPUTS 5. DELIVERY AGREEMEN T 9. RECOVER EXPENSES 10. PROFIT PAYMENTS 7. HARVEST YIELD Business model $ DUTCH GOVERNMENT Financial Services Provider e.g. FNB, Nedbank Business Support Provider TechnoServe or Lima Funding Technical Support Provider 1. Capex and opex FAP Capital Expenditure R22.4m FAP Operational Expenditure R15.0m SPAR people time and travel R6.2m SPAR SA Contribution R43.6m

33 The FAP business structure Business structure must recognise the importance of fostering loyalty by offering stakeholders equity in the FAP Each FAP forms a private company Shareholding split between SPAR, farmers and retailers SPAR provides capital and operational expenditure to establish FAP SPAR controls operations of FAP through majority shareholding until FAP becomes financially self-sustaining Majority shareholding transfers to farmers and retailers once FAP financially sustainable It is critically important to SPAR that the Hub is a financially viable business entity that will over time be owned and managed by the local community

34 Conclusion Questions THANK YOU


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