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GOVERNANCE AND RISK
70
Tiger Brands Limited Integrated Annual Report
2014
Risk management
continued
4. Environment risk assurance
Marsh (Pty) Limited conducts compliance
audits and reports on the group’s
environmental, health and safety risk
management programme.
Significant risks
Tiger Brands has identified the following key
risks as being the most significant risks facing
the group. These do not comprise all of the
risks affecting the group and are not presented
in any particular order of priority. Additional
risks and uncertainties not presently known to
the group (or currently deemed immaterial) may
arise (or worsen in severity), which could affect
the long-term sustainability of the group’s
business and/or operations.
Domestic trading environment
The trading environment in South Africa remains
challenging, with manufacturers facing intense
competition and weak consumer demand due to
the ongoing financial constraints on disposable
incomes. These factors are exacerbated by
above inflationary input cost pressures, which are
fuelled by the weak rand and cannot be fully
recovered in pricing or increased volumes. Further
pressures persist as consumers have become
more value conscious, increasing their trial of
cheaper products.
Tiger Brands’ response has been to maintain
its price competitiveness on shelf by driving
operational efficiencies and cost savings. The
level of marketing support and focus on new
product innovation has also increased in order
to drive top-line growth.
Innovation
Critical to Tiger Brands’ success is its ability
to anticipate consumer preferences and offer
relevant, high-quality products in a competitive
and ever-changing consumer environment.
Failure to drive innovation could negatively
impact the brands’ relevance to consumers
and consequently erode the equity value of the
company’s brands and result in the loss of
market share. Tiger Brands continually monitors
and analyses market trends and conducts
research on consumer habits and attitudes.
The group keeps its core brands pertinent and
contemporary by investing extensively in
innovation through product performance
enhancements, variant and range extensions
and new category entities. The group is
intensifying its efforts on brand building through
increased marketing support, new product
development and innovation, as well as
through the appropriate investment in
R&D resources.
Customers
The increasing consolidation of the retail
trade and emergence of buying groups has
intensified the competitive pressures on
manufacturers. Retailers are competing against
branded manufacturers through their focused
private label offerings whilst driving selling
prices down through extended promotional
activity.