Tiger Brands

Our customers and consumers

Highlights

Challenge

Our approach

Our customers are the retailers and wholesalers we distribute to in South Africa. We segment our major customers by:

• Channel (modern trade, general trade and pharmacy)
• Chain (major retailers, cash-and-carry shops)
• Format (including hypermarkets, supermarkets and spazas – informal stores mostly in townships).

To sustain strong relationships and a growth mindset, dedicated customer executives and shopper managers work in functional teams to serve each customer and their shoppers directly.

Our consumer-focused approach adds value to our company by offering a positive consumer experience that builds brand loyalty, the key to our continued success.

Consumer strategy

Our marketing strategy is driven by our focus on consumers – and how to satisfy their needs better in our specific areas of the FMCG market. Key features include:

• Maintaining the number 1 or 2 position in our categories by investing to support our power brands
• Investing in marketing support and innovation to drive our organic and new business growth plans
• Continually evaluating new or adjacent category opportunities, either through acquisition or innovation – particularly where we are able to drive expansion based on our leading brands
• Keeping abreast of key consumer trends and adapting our marketing strategies to better satisfy their needs
• Continually striving to encourage healthier eating by our consumers
• In prevailing economic conditions, providing greater value for money through a portfolio strategy based on affordability.

Source: Nielsen, company data.

In our international strategy, we aim to nurture and grow the businesses we currently own in the rest of Africa, and strengthen our exports from South Africa by evolving the distributor model, determining optimal coverage and improving in-market visibility.

Customer strategy

Our operating landscape is undergoing significant and ongoing changes that affect the way consumers are shopping and, therefore, the way we go to market and meet in-store execution demands. Key elements of the retail landscape include:

• A crowded trading arena
• Shifting route to market, including the growth of independent channels, while hybrid stores blur the lines between retail and cash-and-carry formats
• Continued rise of private label
• Resilient independent trade
• The increasing role of data and technology
• Retailers seeking margin and growth opportunities
• Targeted collaboration/joint business planning
• Modern trade expanding into the rest of Africa.

Our performance is tracked against three key metrics: customer growth, market share and service levels, including on-shelf availability, promotional and pricing activity. We set service level targets, which are agreed with customers and consistently perform within this range. We continue to focus on in-store execution and have exceeded the 50 basis point improvement target set in FY16 on a basket of strategic products.

Given these factors and building on our progress to date, our strategy is based on five priorities:

GROWING WITH CUSTOMERS Continued focus on growing channels, customers and formats through tailor-made offerings and measured by top-line growth with customers and market share			GROWING DISTRIBUTION AND REACH IN GENERAL TRADE Delivering relevant customer marketing activity for general trade retailers with specific activation such as stokvel drives			Growing in-store Actively engaging retailers to improve on-shelf availability, promotional effectiveness and brand exposure at point of purchase
GREAT PLACE TO WORK Building capability by attracting top talent to meet retailer needs and capitalise on shopper marketing data and insight generation			PENETRATION IN AFRICA Continue to leverage Tiger Brands’ basket through stronger distributor management and trade channel development General trade remains a critical success factor and modern trade continues to grow in Africa
Underpinned by key enablers: • Continue to focus on growing channels, chains and outlets • Optimise retailer data mining and insight generation • Joint business planning and collaboration

2017 overview

Customer and consumer engagement
Tiger Brands engages with customers in South Africa and our other operating countries using a number of channels. We talk to our customers about category strategy, value chain efficiencies, trading terms, as well as pricing and promotional activities. These engagements take place on regular call cycles as per the industry standard and as requested by trade customers. Our ongoing progress is tracked through the independent advantage survey.

Our consumer services division manages all consumer interaction, including compliments, suggestions, product enquiries and complaints. Staffed by Tiger Brands employees, the call centre has now transitioned into a contact centre, assisting consumers via telephone, SMS, email, Facebook and WhatsApp.

In FY17, the contact centre had an average call answer time of 25 seconds and managed 73 056 consumer calls, while consumer complaints showed a 10% decrease, year on year.

Our customer relationship management (CRM) system allows us to capture and store all consumer engagement. These interactions are classified, prioritised and channelled to the appropriate quality and senior management teams. For all consumer complaints, company feedback is given after an investigation and independent analysis, when necessary.

Consumers are also compensated for the value of their defective product(s) – this is managed case by case with vouchers issued via SMS. An additional claims process is also available for consumers.

The contact centre is governed by an internal standard operating procedure, which includes processes to engage with consumers and customers as well as facilitate product recalls, when necessary. We are also able to assist with consumer insights. Our processes are aligned to the consumer goods and services ombudsman, Consumer Protection Act and Protection of Personal Information Act.

Consumer insights

We value consumer insights and invest in ongoing research surveys such as the brand health tracker and Nielsen market share research:

• Brand health gauges the degree of brand recognition, consumers' likelihood of choosing our products and how well we satisfy the needs of the market. We track brands across 21 categories and, in most of these, the health of our brand is far above our nearest competitor
• Nielsen research tracks product market share by value and volume, distribution, pricing and product movement (see Group profile).

We use these insights to improve category understanding, pinpoint consumer needs, develop productive market segmentation models and identify potential market opportunities. They are vital in enabling us to continually refresh our brands, position our pricing, innovate and develop our marketing strategies. In 2017, key trends from our research included the role of foreign traders in the independent trade, the importance of growing in-store, the need for strong category management tools and the ability to track promotional investments. These trends have been incorporated into our customer strategy above.

Consumer nutrition and food safety
As a leading manufacturer, we are aware of the significant impact Tiger Brands has on the nutrition and thus health of its consumers. We monitor advances in nutrition and broader health issues, including World Health Organisation (WHO) and South African Department of Health public health concerns.

With malnutrition affecting a significant proportion of the populations we serve, we understand the important responsibility that comes with manufacturing staple foods like bread and maize meal, particularly to people in lower-income categories.

Guideline daily amounts and Eat Well, Live Well: We are dedicated to helping consumers make better food choices so that healthy living becomes easier. In 2009, we were the first South African company to voluntarily initiate the Eat Well, Live Well system that includes the guideline daily amount (GDA) table on all Tiger Brands' products. The GDA notes the five nutrients that have an impact on non-communicable and lifestyle diseases, such as heart disease, type 2 diabetes, obesity and some cancers. The GDA table allows the consumer to balance high-risk nutrients for the day, and make better food choices. The Eat Well, Live Well system has its own icon – only featured on products that constitute better food choices for overall health – and website, where consumers can learn about incorporating healthy eating into their lifestyle (www.ewlw.co.za). Consumers also have access to our nutritionist for further information or assistance.

Eat Well, Live Well is also active on social media such as Facebook, where consumers can interact with others on the site and with the nutritionist. To date, we have over 118 000 followers. We continue to evaluate and develop products to meet the "better for you" option, in line with the Eat Well, Live Well programme.

In 2017, we launched the Be Nutrient Wise system on the front of each pack. The Be Nutrient Wise logo alerts consumers to be mindful of guideline daily amounts (available in the GDA table) and thus monitor nutrients in their diet that increase the risk of a lifestyle or non-communicable disease.

Fortification: In line with South African regulations, we fortify staple foods such as wheat flour (for bread) and maize meal with key vitamins and minerals. These include vitamins A, B1, B2, B3, B6, B9 (folic acid), iron and zinc. Under pending changes to these regulations, cake flour will also need to be fortified for the benefit of consumers. Our Golden Cloud product range has already been reformulated.

In addition, we voluntarily enrich other products including breakfast cereals such as Morvite, certain Jungle cereals and Ace Instant with micronutrients. Products are specifically developed to target certain requirements, for example Jungle Energy bars are enriched with B vitamins that assist in releasing energy, while Morvite has been specifically developed with micronutrients to assist the immune system.

Sodium/salt reduction: Tiger Brands reduced salt levels in 2016 in affected food categories: bread, breakfast cereals, processed meats, savoury snacks, instant noodles and stock concentrates, to comply with South African regulations. We support the efforts of government to improve the health of South Africans, and will continue to work towards even lower sodium levels for the 2019 deadline.

Taxation of sugar-sweetened beverages: In February 2016, the South African minister of finance announced a tax on sugar-sweetened beverages. There have since been many interactions with National Treasury, including comprehensive written submissions and presentations to parliament's standing committee on finance by Tiger Brands. We have also interacted through our industry bodies, BevSA and the Consumer Goods Council.

Comments on the policy paper were submitted to National Treasury. Tiger Brands concurs with BevSA, our industry body, that a tax would have far-reaching socio-economic repercussions without a substantial effect in reducing obesity. As such, the tax should be withdrawn and existing collaborative efforts to address obesity between the Department of Health and industry should continue.

While comments and parliamentary hearings have led to changes in the tax model and rate of tax, the intention remains to tax sugar-sweetened beverages as a "health promotion levy", based on the amount of sugar in the product. The latest deliberations in parliament resulted in a request for treasury to again review related issues, specifically job losses and labour impact. We await the outcomes of this process but note treasury's indication that the implementation date has moved from April 2017 to April 2018.

Consumer regulatory compliance and industry participation
Tiger Brands ensures a high standard of compliance to consumer legislation and codes. We comply with the Consumer Protection Act, Foodstuffs, Cosmetics and Disinfectants Act and other laws that ensure consumer protection. Areas of compliance refer to aspects of product labelling, pricing policies, product liability and safety, returns policies, marketing, standard terms and conditions and promotional competitions.

In terms of the Consumer Protection Act, we have made the required changes and conducted training across our business to ensure compliance. Our staff at the consumer services unit, which addresses consumer complaints, have also been trained on effectively managing consumer complaints.

In addition, we subscribe to the consumer goods and services industry code, enforced by that ombud, and adhere to the Advertising Standards Authority code on responsible advertising to consumers. We also adhere to the Cosmetics, Toiletries and Fragrances Association (CTFA) compendium, an industry code on the composition and labelling of personal care products.

Tiger Brands is a member of the Marketing Association of South Africa and our chief marketing officer is active on the board of this industry body.

Looking ahead

In designing the optimal operating model as part of the strategic review process, we identified the required capabilities to enable our strategy and growth ambitions. The process determined a need for upskilling, and in the case of consumers, specific capability gaps were identified in terms of understanding the price elasticity of our brands and digital marketing. The recruitment process is under way. These skills will be supported by enhanced processes and systems as well as an integrated operating model.

The new operating model will refocus on the consumer, reignite innovation by introducing concentrated innovation capabilities while engagement with Tiger Brands will become easier through a unified sales team and an integrated supply chain. With a deeper understanding of our consumers, better engagement with our customers and a renewed focus on R&D, we will be able to respond quickly by creating a forward-looking innovation portfolio.