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FMCG News South Africa

Tiger Brands acknowledges a tough trading environment

Tiger Brands’ performance for the six months that ended 31 March 2024 reflects a tough trading environment in which consumers remain constrained.
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Total revenue for the year regressed by 1%, driven by price inflation of 8% and overall volume declines of 9%. Good volume growth in Exports was offset by declines in the Domestic Business.

In the Domestic Market, significantly improved performances were reported from the Groceries, Beverages, Personal Care, Tiger Brands Food Services Solutions (Food Services) and Baby segments. This was, however, diluted by an underperformance in the Grains portfolio and volume declines in Bakeries.

Total revenue for Exports and International increased by 22% to R2,6bn, maintaining good momentum in trajectory in the Rest of Africa business with solid and sustained volume growth of 10%.

Exports reported marked improvements in volumes, revenue and profitability. Building on the rejuvenation and remodelling of the Group’s key distributor model, volumes increased in Mozambique, Zambia and Zimbabwe.

The company declared an interim dividend of 350 cents per share for the reporting period.

“Our immediate operating landscape remains challenging with preliminary indicators suggesting South African consumers are under heightened strain. Although there has been a slight uptick in employment numbers, wage growth has decelerated under the burden of inflation and high interest rates.

At least for the foreseeable future, we expect consumers will continue to feel the pressure.

During the reporting cycle we restructured our business to bring focus and enhanced agility in decision-making while initiating programmes to ensure our loved brands are relevant and affordable to consumers,” Tjaart Kruger, chief executive officer, Tiger Brands.

In the recent Ask Afrika Icon Brands 2024 survey, eleven brands in the Tiger Brands portfolio received top places across 19 categories, with consumers voting them some of South Africa’s most loved and trusted. Seven of these brands were named Icon Brands.

The company’s Benny and Crosse & Blackwell brands were also recently named the most recognised and most purchased by consumers in Mozambique, with the Benny brand earning the title of Most Popular Packaged Goods brand (FMCG) in the sub-Saharan African country.

Driving brand relevance and affordability for consumers is a key priority in efforts to revitalise the group and stimulate sustainable growth and profitability. In this regard, further progress has been made in identifying estimated savings of R500m throughout the company’s value chain.

The company is also actively streamlining its product offerings across all segments to discontinue underperforming stock-keeping units (SKUs), identify further optimisation opportunities and enable strategic investment to support its core brand portfolio.

During the reporting period, Tiger Brands commissioned a new peanut butter manufacturing facility for its Black Cat brand on Johannesburg’s West Rand, following a R300m capital injection. Investments in state-of-the-art equipment at the manufacturing site will improve reliability and efficiency.

Packaging line upgrades introduce greater in-house flexibility for quicker innovations and new product offerings in line with consumer demands for value and affordability.

To access the group results and dividend declaration for the six months ended 31 March 2024, click here.

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