Pop goes the cork on the Graham Beck Brut Rose. A world class, delicious Cape bubbly. And ideal for Valentines.

The wine is introduced by food and wine guru Michael Olivier.

John Fraser is joined in the Johannesburg studio once again by brander and writer Jeremy Sampson and by analyst Chris Gilmour.

After the tasting, the panel discusses the worrying trend towards booze-free journalist and analyst functions and presentations.

Pop goes the cork on the Graham Beck Brut Rose. A world class, delicious Cape bubbly.

The wine is introduced by food and wine guru Michael Olivier.

John Fraser is joined in the Johannesburg studio once again by brander and writer Jeremy Sampson and by analyst Chris Gilmour.

After the tasting, the panel discusses the worrying trend towards booze-free journalist and analyst functions and presentations.

In our latest podcast, Michael Olivier pops the cork on a Delicious Cape Bubbly- the Graham Beck Brut Rose.

John Fraser is joined in the Johannesburg studio by branding expert Jeremy Sampson and by investment analyst Chris Gilmour…

An ideal choice for Valentine’s Day.

The panel also discusses the current distressing trend towards hosting events with soft drinks only…..

Michael Olivier unveils an impressive Cape Red, the La Motte Millennium 2011.
John Fraser is joined by guest tasters Chris Gilmour from Absa Investments and Jeremy Sampson from Interbrand Sampson.
LaMotte Millenium 2011 7 Feb.m4a

Durban: Toyota South Africa today announced a new R1bn investment in its plant in Prospecton, Durban, as the production line slid into action to roll out the new Corolla model. This investment is in stark contrast to BMW, which last year announced it was pulling out of a R1bn expansion of its plant at Rosslyn near Pretoria.
Johan van Zyl, the ZA Toyota CEO, said that the investment came despite challenges:
“The seven week long production disruption in the last quarter of 2013 damaged our reputation as a trustworthy and stable supplier of vehicles,” he warned. “We will have to work hard to find a mutually beneficial solution with our labour partners to stabilize production for both the local and export market.” And van Zyl suggested the investment was an act of confidence by Toyota Japan in Toyota SA. He said that the investment is underpinned by the latest incarnation of ZA’s investment incentive programme for the automotive sector, known as the APDP – which will help encourage an expansion of local content.
This trend will also be supported by the weak rand. However, he pointed out that with the weak rand, manufacturers will not automatically be able to boost exports, and that the fluctuating currency makes it ‘difficult to establish yourself as a reliable supplier. A weak rand doesn’t mean that you suddenly export more…”
Van Zyl said the current investment was decided before the recent 7 weeks of strikes, but ZA needs stability. “If you are only a supplier to the domestic market, they may be prepared to accept this. But in a global market environment, you must behave like a global player. Strikes are not unique to South Africa, but you don’t have a seven week strike like this.”
He welcomed the project to transform the old Durban airport into a new harbor, as it is close to the Toyota plant, saying that once this has been achieved, Toyota will be able to reap “enormous savings” in getting vehicles on to ships for export.

Tweets of the Day:
Sixth Form Poet (@sixthformpoet): It’s so sad that zebras think they’re white horses visiting their friends in prison.
Latie (@latie_jonker): Jokes about cliques aren’t for everybody.
Mark Robinson (@robboma3): Only a few years ago, the average parents had four children. Nowadays, the average child has four parents.

ZA Confidential will soon be available in full only to those who subscribe. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

The unexpected has happened. Worried about inflation, with an eye on the weak rand and the rate of capital outflows from ZA, the Monetary Policy Committee of the Reserve Bank has raised ZA interest rates by 50 basis points. Governess Gill Marcus said that it had not been a unanimous decision – two of the committee had wanted to keep rates steady. However, with Turkey, Brazil, India and elsewhere in a rate rising rally, she and her team clearly decided it was wise to jump in. And the scale of the hike – twice the 25 basis point increase that might have been chosen – also sent a message. These people have a mandate to manage inflation, inflation is forecast this year to jump above the 3% to 6% target band, and the Reserve Bank must not hesitate to act.

The move will be welcomed, of course, by those in a comfortable financial position, who will enjoy better returns on their deposits. However, it can only act as a dampener on the property market.

Here is what Pam Golding Properties’ Dr Andrew Golding sad to say:

“While inflationary concerns and global economic impacts remain in the spotlight, the Monetary Policy Committee’s stance to increase the repo rate was unexpected, particularly given the sluggish economic growth currently experienced in South Africa. Despite this, the residential property market continues to reflect increasingly positive market sentiment and activity, fuelled by the fact that the market – including both buyers and sellers – has realigned itself in accordance with current trading conditions and the more exacting bank lending conditions required of purchasers.”

Conclusion:

More reaction will continue to pour in, but for now I can just worry that the disposable income of millions of South Africans will continue to shrink – with high food inflation, rising motoring costs and now higher monthly payments on home loans, car loans, credit card balances, overdrafts and so on. And today’s interest rate hike may not be the last…..

With the Reserve Bank meeting the media this afternoon to announce if there will be a change in interest rates, and a growing expectation that there may be a hike this year, Investment Solutions has raised the possibility of the rand slipping further – to as low as R13 to the dollar. Chief Investment Officer Glenn Silverman told a media briefing this morning that the global environment will “swamp” domestic influences, and we should be focused on what happens in the US. He is predicting that as there is a slowdown in the pumping of money into the system by the US Federal Reserve– known in the jargon as tapering – there could be a fall of 10% to 15% in the S&P 500, which might be expected to lead to a similar slide on the JSE. However, he argued that the rand might act as a “shock absorber” for the JSE, weakening to cushion the impact. In such a scenario, we might see the local currency fall to around R13 to the dollar. However, Silverman believes it could be a year of two halves, and following a possible decline in the rand in the first half of 2014, it could revive to around R11 to the dollar in the second half. “It may go down first, and then up later,” he suggested. Investment Solutions’ Market and Research Analyst Brad Fainsinger had earlier given the results of the multi manager’s survey of 20 top-rated ZA fund managers about their outlook for this year. This revealed that they expect a rise in global growth, leading to a 2.5% to 3.5% rise in ZA GDP. Inflation could break out of the 3% to 6% target range, coming in at between 6% and 7%, and there is also an expectation that interest rates will be hiked this year. (Ignore this last bit if you are reading ZA Confidential after this afternoon’s announcement from the Reserve Bank and they surprised us all with a hike…..). The fund managers expect the rand to return to a R10 to R11 to the dollar range. The fund managers expect a rise in the JSE all share index, although they anticipate a slowdown on the rates of growth of recent years. Resources are the most favoured sector, and industrials the least favoured. However Fainsinger pointed to a big contrast within resources, with gold being least liked of any sector and platinum shining through as the most favoured.

Tweets of the Day:
Funny Tweets (@iQuoteComedy): Me a nerd? Haha no, I’m just making sure I don’t end up working at McDonald’s with you in the future.
Politics & Law (@PoliticsL): Instead of giving a politician the keys to the city, it might be better to change the locks. Doug Larson
Mark Twain (@MarkTwainQuote): Familiarity breeds contempt – and children.
Lee Mack (@LeeMcKillop): How does that old saying go???? If you can’t beat them…………what’s the point in having kids….

ZA Confidential will soon be available in full only to those who subscribe. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

For our latest Die Vine Intervention podcast we taste a fruity red, the Altydgedacht 2011 Pinotage.
And we discuss whether pinotage might lead the branding and marketing of ZA wines. With guru Michael Olivier and guests Jeremy Sampson and Chris Gilmour. On http://www.zaconfidential.com

I was chatting this morning over a coffee with one of SA’s black diamonds – a highly successful businessman who has run some pretty important companies. You would recognise him if you saw him. He reminded me that when we chatted a few months ago, he had predicted the rand would continue weakening and the economy would be in trouble. Now he is predicting that it will be difficult for South Africa to avoid some pretty nasty unrest, as actual food inflation climbs, eroding the spending power of the people. He is also not convinced that the current leadership is capable of doing much about all this. We also chatted about Davos. Now I am sure there are benefits for seven of our ministers if they go to this global event and network away and get a better perspective on the world. But they are also justifying the trip by trying to sell government’s National Development Plan, to convince the world we are the place to do business. As my pal suggested, they haven’t had a lot of
success pushing the investment case within SA – witness last year’s cold feet (or should that be cold tyres?) by BMW. Nonetheless the TV and radio networks are full of chummy interviews with normally aloof and inaccessible ministers, who gush in their belief that they are doing an important job in convincing the world that SA is an ideal investment destination. Who is their audience, really? Those listening to the interviews and reading the reports back in SA, or the global business leaders? It is hard not to be cynical as we approach an election. I suspect a lot of taxpayers’ money is being spent (and I have no clue of the extent to which ZA media presence at Davos is being subsidised by Brand SA or other state bodies) to put forward an image. That we have impressive politicians, at ease with the world’s political and business elite, and they are doing a far better job in Switzerland than they would if they were back home attending to the sinking rand, a labour
crisis in the mining industry, a power utility which is urging its customers not to use much of its product, and traffic lights in Sandton which still don’t work. I hope I am wrong. I hope the Davos dividend is massive. But I am not holding my breath.

Tweets of the Day:
Ellen DeGeneres (@TheEllenShow): What do you get when you cross a parrot and a lion? I don’t know, but when it talks, you’d better listen. #ClassicJokeWednesday

ZA Confidential will soon be available in full only to those who subscribe. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

On the face of it, electronics manufacturer and distributer Ellies had some pretty poor results for the 6 months to October, with revenue down 3.8%, earnings a share down 40.7%, and the loss of an important Eskom contract. However, ZA Confidential went to the company’s Johannesburg analyst presentation to try to get a better feel for how things have been going…. CEO Wayne Samson said that the underlying consumer and infrastructure businesses have been growing well. He says the company is working hard on keeping up sales to consumers at a difficult time. Meanwhile, the weak rand has been forcing up costs, and these are now being pushed through to retailers. He says the Ellies brand has been built, and there is a lot of in-store presence for their products. However, there is a big challenge with a lot of competing unregulated “illegal” products on sale in some ZA retailers. The regulator appears not to be doing much to tackle these cheap imports from China. “We spend a fortune on tests and approvals and for other guys to come in without doing this is not a level playing field,” Samson complained. Ellies has cut its own HQ office electricity costs from R250 000 to R150 000 a month – and offers a service to other companies to help them do a similar job. “We have invested a lot in R&D. Most products are designed in-house. With the rand where it is at the moment, it makes sense to manufacture locally,” Wayne said. He noted there are a number of energy projects in the DRC. What do our experts make of it all?

Simon Brown from justonelap.com:
Weak results, which were telegraphed by CEO Wayne Samson at the last set of results – revenue was off 3.8% while HEPS fell just over 40%. The consumer segment under pressure with the weak rand hurting costs – the impact of which has not been fully passed on to consumers, and hence the company saw a shrinking of margins. The new OpenView HD launch was delayed so only accounted for a few weeks in these results while DDT is still not rolling out, albeit likely to start this year. Overall nothing special in the results, but equally no horror stories – with the second half of the year likely to remain tough.

Ian Cruickshanks from the SAIRR:
My initial shock at a substantial profit drop was partially offset by Wayne Samson’s confident presentation on the handling of the setbacks, which included the non-recurrence of the Eskom project. However, fears remain on Ellies’ large exposure to foreign exchange, with rand positions only 50% hedged (Wayne’s comfort level). However there remains a 50% high-risk discomfort level. Their strategy of big investment in R&D is likely to bring results in both domestic markets, and in exports. Their commitment to hydroelectric projects in the DRC is likely to bring good returns in the longer term.

Conclusion:
There remains enough entrepreneurial vision and solid business brains within Ellies to keep me on-side, even though the numbers did look a bit disturbing. I just think that a company with such diversity, and a commitment to green energy, has to prosper. Nice to see, too, their efforts to build in the rest of Africa.

Tweets of the Day:
Hazel Porter (@michowl): I named my WiFi after my last boyfriend because it’s never fully connected with me. And also because I caught my neighbour using it.
Funny Tweets (@Funny_TweetsQ): There’s an app on my phone that makes me look fat. It’s called camera.
Best Jokes (@best_jokes): “Doctor! Doctor! I feel like a pack of cards!” “Sit down and I’ll deal with you later.”…. #cards
Funny Tweets (@iQuoteComedy): My girlfriend told me to go out and get something that makes her look sexy….. I came back drunk.

ZA Confidential will soon again be available in full only to those who subscribe. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1
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