Business overview

Our strategy

 

Achieving our true potential by 2022

In 2017, a thorough strategic review was conducted and the board approved a strategy for sustainable profitable growth. Supported by four strategic pillars, namely drive growth, be efficient, great people and sustainable future, it ensures focus on areas that will help Tiger Brands achieve its true potential.

Management and the board conducted a further review in FY18 and believe the strategy to be compelling and relevant. To achieve our purpose, we are concentrating on four focus areas. Our progress, challenges and priorities for FY19 are summarised below:

Focus areas   Drive growth   Be efficient   Great people   Sustainable future
Objectives   Clear strategies to win in each category, channel and customer   Efficiency in all we do, cost-effective and an advantaged integrated supply chain   A great place to work and winning culture that energises consumer-obsessed agile people   Sustainable planet, communities and company
    Focused execution
Progress
in FY18		  
  • Consumer insights, media and strategic pricing capabilities
    in place; innovation operating model resourced
  • Improved availability and optimal pricing strategies in key categories
  • Distorted marketing investment to key brands, and focused working spend
  • Innovation ahead of budget and tracking upwards
  • Improved customer relationship and service
  
  • Integrated supply chain implemented across group
  • Total continuous improvement savings
    of R707 million
  • Good progress on shop-floor development
  • First wave of shared services (HR + finance) implemented
  • IT roadmap and capability in place; IT investment prioritised
  • Procurement forum established to govern key purchase decisions
  
  • New operating model implemented
  • Savings in line with budget
  • New capabilities appointed
  • Critical vacancies in management filled
  • Group-wide talent review process conducted
  
  • Introduced a supplementary sustainability report covering broader ESG-related topics
  • Enterprise and supplier development (ESD) office operational
  • Financial and non-financial support, agronomics and agrarian support as well as business mentorship
Challenges  
  • Managing volume, margin and market share
  • Meaningful innovation
  • Growth of private label
  • Listeria crisis
  
  • Drive supply-chain efficiency and unlock cash
  
  • Embed operating model
  • Enhance speed of execution
  • Drive One Tiger culture
 
  • Employee safety and security
  • Climate change (changes in weather patterns, drought in production areas and the impact on sourcing raw materials, changes in legislation, carbon tax)
  • Adequate pipeline of critical skills
  • Increased regulation
  • Policy on land expropriation
  • BBBEE compliance
Priorities FY19  
  • Availability and fair share
  • Optimal pricing strategy
  • Optimal pack sizes/format
  • Meet consumer needs and trends
  • Disproportionate investment in key
    brands
  
  • Agile and dynamic supply chain
  • Continuous improvement savings
  • Significant IT investment
  • Further improve group quality, safety and security standards
  • Prudent and diligent approach to capex approvals
  
  • Talent: embed standardised framework with targeted strategies
  • Leadership: develop executive succession plan
  • Great place to work: transformation, review rewards strategy
  
  • BBBEE: level 4 by FY22
  • Enterprise supplier development: increase procurement opportunities for black-owned enterprises through ESD fund and capacity building, supplier compliance, import replacement
  • Socio-economic development: align with national priorities
  • Sustainability: ethical sourcing and human rights policies approved, meet improvement targets for energy, water, waste, packaging; environmentally friendly packaging

Our measures of success

Key performance indicators * 2022 target disclosed   FY18   FY17   FY16 Progress
Net sales (R billion) Category growth +1 – 2%   28,5     31,3     30,6  
Gross margin (%) +150 – 180 bps   32,5     33,4     31,8  
Marketing investment (% of net sales) +100 – 160 bps   3,0     2,5     2,5  
Operating margin (before IFRS 2 charges) (%) +100 – 160 bps   11,7     14,8     13,7  
Return on average net assets (%) >35%   26,6     35,3     30,4  

* From continuing operations.