AVI – Testing times ahead

Using our detailed local retail pricing data, we reveal AVI’s likely 1Q21 price movements across its food and personal care brands and find that the group has maintained its pricing strategy going into FY21. We find aggressive price increases within many divisions apart from Indigo and believe that AVI may be protecting its GPM against likely cost-push inflation later in FY21. We reflect on AVI’s financial performance during South Africa’s 2008/09 recession and believe that its food brands displayed significant resilience during that period. While margins were briefly negative during the recession, the margin recovery across most divisions was swift. SARS trade data points to encouraging hake export momentum going into 1Q21 while abalone exports had a poor start to the quarter, and implies that I&J may only stage a full recovery in FY22