EG Group Pulls Out Of £750m Deal To Buy Asda’s Petrol Stations

After agreeing to buy Asda, Mohsin and Zuber Issa, the founders of EG, and their private equity backers TDR Capital, announced plans in February to finance the acquisition in part by selling the supermarket’s petrol stations to their own forecourts business for £750m.

Asda will retain the petrol forecourts business and the associated revenue and profits. However, the £750m expected from the deal will now come from £500m of debt and £250m of its own cash.

NamNews Implications:

• £500m extra debt means sweating Asda more…
• Apart from pressures on costs of goods and shelf price increases.
• Fingers crossed re the £1bn sale of Asda distribution assets.

#PrivateEquity #Asda #RetailDebt

Grocery Sales Down, Prices Up; Tesco Outperforms Market

Take-home grocery sales fell by 1.2% over the 12 weeks to 3 October, partly because the reduced availability of petrol led to shoppers limiting the number of trips they made to supermarkets.

Despite the dip, the data from Kantar shows sales remain 8.1% higher than they were before the pandemic and every retailer recorded better sales compared with the same period in 2019.

NamNews Implications:

• Key for suppliers to compare their sales with anticipatory Christmas shopping by cautious shoppers.
• Despite relatively little share movement, worth comparing the detail re your business…
• NB. the discounters are still an issue for Big Retail, despite counteracting moves by the mults…

#LockdownResults #MultsShares

Tesco Posts Impressive Results After Defying Supply Chain Disruption, But Challenges Ahead

Tesco raised its full-year profit forecast today after reduced costs related to the pandemic and its strong supply chain helped it deliver better-than-expected first-half results.

Tesco saw its like-for-like sales in the UK climb 1.2% over the 26 weeks to 28 August. This followed a 0.5% rise in the first quarter, accelerating to 2% in the second as comparatives softened due to the easing of Covid restrictions in the summer last year.

NamNews Implications:

• ‘UK’s biggest player was able to leverage its supplier relationships and distribution capability to maintain good levels of product availability…
• …events such as Euro 2020 and staycations helped.’
• The key for suppliers is to compare their Tesco performance by format, geography and category.
• Rest assured that Tesco’s ‘bumps in the road’ will be less than those of rivals.
• After all, every little helps… (to ward off PE predators…)

#PrivateEquity #SupplyShortages #Christmas

HFSS Restrictions Offer Opportunities In Convenience Channel

Despite millions of pounds being at risk from the upcoming HFSS restrictions, new analysis highlights some opportunities for retailers and brands in the convenience channel.

The UK Government will introduce new rules for high fat, sugar and salt (HFSS) products in October 2022. They will restrict the advertising of HFSS brands, volume promotions, and the display of HFSS products in-store.

NamNews Implications:

• Stores smaller than 2,000 sq. ft. are an obvious opportunity for some suppliers.
• However, many of whom cannot afford to drill down to that level of coverage, post-Lockdown.
• Making it key to enhance supplier-wholesaler relationships…
• Fast…
• Meanwhile, for stores above 2,000 sq. ft., see the detail of the IRI analysis…

#HFSS #PromoRestrictions

Future Of Morrisons To Be Decided By Auction This Weekend

The UK’s takeover regulator has ruled that the four-month-long fight for Morrisons will be decided by an auction between two private equity groups on Saturday. (details)

NamNews Implications:

• Obviously going to the wire.
• Either way, Morrisons will be PE owned by November…
• Needing a whole new way of managing by NAMs
• See ‘The implications of Private Equity takeover of a Mult’

#MorrisonsFuture #PrivateEquity

Suppliers Seeking Support To Push Through Price Increases In Coming Weeks

Higher supply chain costs are expected to drive up prices in supermarkets by at least 5% in the coming weeks, with more increases to follow.

NamNews Implications:

• Time to take a 5% increase for granted...?
• Perhaps some what-ifs re 10% increases in your category might be of benefit?
• More importantly, it is essential to place these inevitable increases within a realistic context of:
• Shell-shocked consumers emerging from the trauma of 18 month lockdown
• To face the uncertainties of job security
• Increased taxation vs lower public services
• A super-savvy consumer better able to calculate ingredient cost in foods
• More determined to demand demonstrable value for money
• At the very least, this will result in a reduction in demand for products that do not have a clear competitive edge over alternatives available
• Welcome to the new norm of consumer demand...

#Inflation #PriceIncreases #ConsumerDemand

The Just-in-Time to Just-in-Case transition, a retro step?

Just-in-Time = little/no buffer stock, lower cost. 

Just-in-Case = buffer stock = higher cost = inflation...

Tesco Warns Of Christmas Panic Buying Worse Than During Pandemic

The concerns were raised by Andrew Woolfenden, Tesco’s distribution and fulfilment director, during a meeting of the government’s new food and drink taskforce last week. He suggested that the issue of empty shelves could be worse than that caused by the consumer stockpiling which took place during the first Covid-19 lockdown last year.

NamNews Implications:

• The government still don’t get it:
• “We are closely monitoring labour supply and working with sector leaders to understand how we can best ease particular pinch points.”
• Industry leaders have been telling the government for weeks that the solution lies in temporarily making it easier to bring in workers from abroad to ease the crisis.
• Watch this space…(and minimise breath-holding…)

#PanicBuying #ChristmasShortages #DriverShortages