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BUILDING A GROWTH PIPELINE

To realise our ambition of building a growth pipeline through best-in-class category, channel, and customer strategies, we have been driving an innovation pipeline, optimising our product portfolio, winning at the point of purchase, and pursuing growth in Africa, while identifying opportunities for inorganic growth.

Delivering growth through innovation enablement

This year we stepped up our innovation efforts across the group, successfully completing 21 innovation projects across all our consumer growth areas, achieving a R1,1 billion (4,2%) innovation rate with a priority focus on value, health and nutrition, and snackification.

Although our performance fell slightly short of our internal ambitions for the year due to pipeline re-prioritisation, pleasingly we are now outperforming the market in terms of share of innovation. We measure our share of innovation against our market share to understand whether we are pulling our weight in driving category growth; this year we achieved a positive share of innovation, improving significantly from -17,1% in 2021 to +3,2%.

This year we developed an evolved Tiger commercialisation framework that enhances our existing process. As part of this, we have developed and rolled out a set of tools and guidelines to support innovation project leaders and team members by providing clarity and access to current best practices. We now have access to a single centralised commercialisation source (the Tiger Commercialisation iHub) that houses all information for project teams. We have made important progress this year in harnessing the value of various external partnerships and collaborations with universities and expert third-party suppliers that have been helping us to address technology gaps and drive speed to market. We have also been working with the Tiger Venture Capital Fund to supplement our own internal pipeline, accessing external innovators and ideas that may not yet be scalable or easy for us to build internally.

Optimising our product portfolio

To deliver on our growth ambitions, we are continually evaluating and optimising our product portfolio. Using a structured approach, we have identified those categories with high attractiveness and competitive strength that should be invested in and grown, those where we will focus on improving profitability, and those to be evaluated for possible exit through a carefully structured process.

Informed by this assessment we see potential for further growth in Rice, Breakfast (Jungle), Snacks & Treats, Beverages, Home Care, Exports and International, including Chococam, with opportunities for enhanced profitability in Other Grains, particularly Baked Goods and Pasta, Groceries, and Flour. We are investing in product and process innovation, driving further process efficiencies, and/or expanding production capacity in these areas. In rationalising our portfolio, following a review of our forecast five-year performance against the stated portfolio objectives, we are continuing to review the status of the following business units over the medium term: Deciduous Fruit, Maize, Sorghum-based beverages and breakfast, and Personal Care.

Winning at the point of purchase

We are seeking to secure sustained growth and win at the point of purchase by delivering on our commitments in three broad focus areas, underpinned by optimising our sales force and people capabilities, and by improving our data and IT platforms. Our targeted focus areas are:

• Growing in new and existing channels
  • by improving channel segmentation, expanding our reach in general trade and forecourts, growing our e-commerce presence, and strengthening our position in neighbouring countries
• Ensuring best practice revenue management
• Delivering an impactful presence at the point of purchase through enhanced customer engagement and precision execution.

We have made pleasing progress this year in almost all these focus areas, delivering against most of our agreed success metrics, other than our performance in terms of general service levels, which was particularly impacted earlier in the year following various supply challenges that meant we were unable to meet customer demand.

On channel segmentation, we have been working to embed shopper-centricity into our segmentation of stores and our growth strategies to ensure greater customer alignment, more impactful trade execution and increased shopper conversion. Developing appropriate insight and understanding of broad shopper profiles is informing our shopper activation and store execution principles and plans, and ensuring more effective shopper messaging and campaigns, targeted pricing and promotions, and appropriate price and pack architecture.

Recognising the growing importance and contribution of the informal market to the total South African FMCG sector, and that this market is growing ahead of modern trade, we are pursuing various initiatives to expand our reach in this market (general trade), as well as in forecourts. Through our aggressive roll-out plan, we have targeted reaching 60 000 active spaza stores by 2024, supported by a dedicated team of sales representatives, and delivery through three different distributions models. Since completing a baseline audit two years ago, we have already improved the availability of our targeted SKUs.

We believe that there is valuable growth potential in the Hard Discounters sector – those merchants with fewer SKUs, at lower prices driving hard deals on promotions – where we have traditionally been under-indexed. To realise these growth opportunities, we have developed differentiated price packs, targeted promotions and merchandising, and lower-cost route-to-market initiatives, and we have been pursuing partnerships on private label brands.

In response to the recent and anticipated rapid growth in the e-commerce channel, we have been driving various initiatives to raise our online presence and become the preferred supplier to prioritised e-commerce partners. We have made pleasing progress in our three targeted areas: increasing sales in "Bricks and Clicks" (such as Checkers Sixty60 and Pick n Pay ASAP) by building occasionbased cross-category promotions and ongoing brand activations; growing our online presence and conversion in "Pure Play" (such as Takealot and Yebo Fresh) by creating a "shop in a shop" for key categories, sponsored search, soft bundle promotions, and bulk deals; and delivering a reward-based mobile-first transactional food service ordering platform for "Out of Home", in partnership with key distributors. We have also been trialling our pilot online employee shop.

We have prioritised five clear levers within our revenue management practices aimed at ensuring that our product prices, placement and availability are properly aligned within each customer segment, based on an informed understanding of customers' perception of product value. We have refined our new pay-for-performance trading terms framework with clearer performance metrics aimed at incentivising strong customer performance aligned with our strategic growth drivers. To improve identification of profitable revenue growth opportunities, we have developed a comprehensive decision-making tool that connects disparate data sets to enable detailed analysis at an SKU and customer level. Revenue management principles have been embedded across the organisation.

To address the recognised recent challenges in terms of customer service levels, we have been working on various initiatives to improving customers' perception of their relationship with Tiger Brands to ensure that we are consistently rated as a top-three supplier. We will be deepening our direct relationship with customers by moving away from a single seller/single buyer relationship to a series of cross-functional and multi-level relationships. We are continuing to work more closely with customers to ensure greater alignment between our category strategies and customer strategies, as well as involving customers at an appropriate level in our innovation planning and to ensure more effective joint forecasting.

Driving growth in Africa

We have ambitious plans to deliver significant growth across Africa over the next four years, building on our current established presence across the continent. We have been targeting consumer-led category growth through carefully chosen brand investments and innovations in key categories, developing superior routes-to-markets, and investing in developing supply chain capacity, underpinned by strengthening core competencies across the region.

Realising opportunities for inorganic growth

Although our primary focus is to drive organic growth by delivering on the initiatives outlined above, we are continuing to explore alternative growth opportunities. These include specific opportunities that are core and/or near adjacencies to our current business and underpinned by clear consumer trends, while various participation options are being explored.

This year, we have taken a more deliberate approach to systematically identifying and discussing potential M&A opportunities through the creation of an operational investment committee, comprising the chief executive officer, chief financial officer, chief legal officer, and chief growth officers, with monthly meetings scheduled to maintain healthy pressure on the system. We have re-established our interest in M&A opportunities, both in South Africa and the rest of the continent, with key banking partners and advisers across these geographies, narrowing our categories of interest to those that can provide a credible and margin-accretive addition to the Tiger portfolio. Although we analysed several targets and opportunities this year, none were the ideal long-term fit.