In April 2020, SA moved into unprecedented territory when the Covid-19 pandemic that had been ravaging populations across the globe finally hit home. Overnight, businesses were shuttered, employees furloughed and the economic wellbeing of millions brought into question.
Pick n Pay also saw growth in the core food sector, recording a 4.2% sales volume increase while at the same time opening 42 new stores. Spar recorded an 8.8% increase in earnings due to strong demand in the grocery sector. While the have nots suffered, the haves increased sales and market share while independent retailers and small and medium enterprise food producers and processors who supplied them were left behind.
More importantly, government has identified SMEs as a key to economic growth, an essential part of the plan to increase employment. In SA most food production and food processing companies fall into this classification. While it is true that safety standards should never be compromised, these are not the only demands that are placed on SME food producers and processors and bear a financial cost. In addition, the supermarket giants have a long list of discounts, rebates, fees and allowances charged to suppliers who sell in their stores.
And this is not the only threat to their market. Supermarket chains, often owned by banks, brokers and mutual funds, have little interest in the food they sell, or the locality where the food is sold. They sell where they can generate profit. As a result, the supermarket chains are spreading from their traditional locations within shopping malls to rural communities and townships, placing SME food producer and processor alternative avenues to market under threat.