Today we continue our theme of 2022 by looking at categories and in particular what will be one of the biggest businesses of the next few years – a business that supplies products and services that help consumers save money and pay less thereby reducing the cost of living especially on unavoidable items.
You can look at this business as no different than the government incompetence industries such as private healthcare, security and education, the premiums on electricity, fuel and even food are costs of the mismanagement of the country. For every litre of petrol for every unit of electricity you are paying a corruption and incompetence levy and because these are input costs in the manufacturing and logistics process every single thing you buy most certainly has this premium. Remembering that the current dispensation also destroyed SA’s rail infrastructure removing rail freight from the equation – a cheaper way to move goods across the country causing countless of foreigner-driven trucks to clog up our highways, damage our roads and pollute our skies all while pushing up the cost of living.
To summarise: this business supplies the products and services that help people (and businesses) save money reducing the cost of living and doing business. I say this now as I write in the context of value to consumer.
Note: I have moved Market Need to the bottom as it has some dense analyses.
Products & ServicesIn this page I will look at this industry as a whole, and later on I will look at the bigger businesses individually. I will start with most important to less important.
I have long maintained my position that the retail majors will be for rich people only and that most people will end up buying from surplus, salvage and clearance stores and if they can afford fruit and veg it won’t be pretty. If the lines outside Cape Town’s biggest clearance store (in an area where houses sell for R2m+) is anything to go by and the vehicles parked in the parking lot, the middle class has fully embraced that in this economy PicknPay and Checkers are for the wealthy and places like Woolworths for the 1% – something I have been saying for many years already. When the media woke up beginning 2022 bemoaning the rising cost of living that means it is really starting to hit the middle class.
There is opportunity in the food industry for salvage and surplus as well as clearance stores. And I don’t just mean local surplus/salvage/clearance, if things continue South Africa will become the global clearinghouse for surplus, salvage and clearance.
The black hole that is Eskom has no end in sight and will demand annual increases that far exceed not only wage increases but inflation. To make matters worse Eskom is a monopoly meaning your only option is to go totally off-grid at an enormous expense.
The biggest business opportunity in 2022 in power generation is small scale solar system funding. Find a business with a Eskom bill of around R10k a month, fund their solar system (panels, inverters, batteries) take them off grid and give them a discount of around 10% to Eskom while guaranteeing power. Structure this over a 4-5 year deal (or however long the lifespan of batteries). Over that period you should see a good ROI (R9000 x 60 months is over a half a million rand), get enough capital to do a few and you will be in the renewal energy business.
There are other things to look at such as:
Smaller products, starting with individual solar products, energy efficient lighting, solar lighting for all non essential lighting.
Then we go further down to the supply of ioT and other smart gadgets learning thermostats and even smart windows, smart light switches.
Everyone should also have a energy usage monitor by now I got one over a decade ago when I didn’t know where my power consumption was going. We were happy with the fancy graphs then now you get one that connects to the cloud.
Then there are the basic products to trade in geyser blankets, etc. I can also see a boom in gas or paraffin for those that can’t afford.
On to petrol…
South Africans are in for a shock even though there is no electricity for a current to pass through the body. Increased oil costs due to conflict and all kinds of taxes on our fuel RAF, tenderpreneur levies, minister slayqueen levies, toll gate levies and to top it all off this lady sold off our oil reserves for next to nothing leaving no buffer for increases:
Tina Joemat-Pettersson, the woman who “sold off” our fuel stock for next to nothing, costing us R2bn and making someone very rich, is to receive a R2.1m bonus. And this money had to be shifted from other energy projects for her. No wonder her cup runneth over. pic.twitter.com/rTVVyOHktB
— Jacques Maree (@JacquesMaree73) December 1, 2017
I don’t think there are fuel saving gadgets that actually work but maybe you can invent one. Other than that there will be opportunities for carpooling businesses. There will be an opportunity for biodiesel. We should be seeing a massive deviation between fossil fuel and biodiesel going forward.
There are lots of water saving devices that actually work. Most of them slow down the water pressure or restrict the flow in which low-flow won’t make much of a difference. Showerheads in particular, it is said that if it can fill a 5 liter bucket in under 20 seconds its going too fast. The water will just go to waste.
Outside of showerheads there are faucet aerators which help water flow out evenly and consistently while cutting down on water usage.
If you have your own place you should have a “Jojo” style water tank by now. Especially in a place like Cape Town where Patricia de Lille might come and harass you so she can give her sister a water meter contract.
You should also look into getting a borehole if you don’t have one. First make sure you don’t have one already.
Some other basic stuff that can be sold to save water include shower timers as well as soil meters to check the moisture content of the soil so people don’t waste water watering plants.
Toilet tank sink
The way it works is that when you wash your hands in the toilet tank sink, the water you use is collected into the cistern, and that water in turn is used to flush the toilet.
Toilet Tank Bank
Fill the toilet tank bank with water and hang it on the inside of the tank wall. With just that simple install you’ll save around 3.6 liters (a range of 2.3 – 4.5 liters) of water per flush.
There are a host of other items that people can save money on, for example gardeners don’t need to buy compost they can buy kits to make it cheaper etc. There will be money to be made for any business that can find a way to make anything comparably cheaper.
If there is one positive to take away of it all, South Africa’s inept government will make you a sustainable person and lower your footprint without even trying.
Now I know most of you are here for my world-leading business analysis. They don’t call me the Oracle of Orania for nothing. I have never been wrong when I said that the ANC is running South Africa into the ground. Here it is:
South Africans are in for a torrid next few years as real inflation (not the made up ANC numbers) far exceeds any type of wage income increases. Most importantly most of the costs that will increase are costs that people cannot avoid such as electricity, petrol, food and water. With the economy in a precarious situation many households breadwinners are losing their jobs. But by far the most dangerous hidden cost to home-owners with bonds (that will boom this business) is the prime lending (predominant) interest rate. Artificially low to spur economic growth during COVID, the chickens will come home to roost. The consensus appears to be a average 25 basis point increase (0.25%) every quarter till end of 2023 at least, with some predicting 12 rate hikes over 3 years (one per consecutive quarter). People who currently have a variable interest rate bond and are struggling will soon start shitting bricks and will need to start side businesses such as stopping to pick up cardboard to sell to recyclers when they ride to and from work. A interest rate of 10%+ by end of 2023 is not outside the realm of possibility. There are no compelling reasons as to why it should not be at pre-COVID levels:
Start of COVID:
End of COVID