The phrase "from farm to fork" is a popular one in the US, particularly among organic farmers, to describe a well-controlled chain between producer and customer.
In SA we are good at certain parts of the food chain, be it farming quality chicken and eggs or building world-class fast food chains. I’ve been to most continents and would be hard-pressed to find a burger chain as good as Steers.
In this month’s IM, Anthony Clark looks at both the farm and the fork. In his cover story he writes about what should be a simple business. Astral Foods was unbundled from Tiger Brands in 2001 as Tiger considered chicken and eggs to be commodities which didn’t fit into its portfolio — quite why it thinks bread and mealie meal aren’t commodities is another story.
But Astral is fascinating as it is at the eye of that perpetual storm known as the international commodity futures market: feed is such a high proportion of its total costs. On the fork side, Clark isn’t as forgiving as I am about Famous Brands’ venture into the UK with Gourmet Burger Kitchen. A disaster, of course, but if it never makes mistakes, then the group isn’t taking the risks its shareholders expect it to take.
Spur is a more average business. I miss the days when couples could go to a Spur for a proper night out without youngsters tearing around and screaming. But it works. I hope their RocoMamas chain proves to be a long-term success, it is a good compromise between buying a burger in a polystyrene container and forking out for a steakhouse. We will also look at textbook failure Taste, which may live to fight another day — at the tackier end of the jewellery trade.
All fascinating, but most of us invest in funds rather than directly in shares. The feature on passive investments covers a drier topic than fast food. But all of us need to decide what role index funds should play in our investments. I like to see passive funds as disrupters, the TymeBanks bringing low fees to an industry in which, with sufficient scale, it is easy to make money.
But index funds can have high concentration risk in a small market — do you want more than 20% of your portfolio exposed to Prosus and its pyramid holding company Naspers? Active managers can add value in the long term, particularly to pension funds which are paying institutional fees.
In the current coronavirus-related collapse in the JSE, passive investors would have taken the full brunt. Active investors had the ability to switch to cash.
It is a pleasure to stand in for my long-time colleague Marc Hasenfuss. Happy reading.
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