Our process for prioritising the award of procurement contracts to B-BBEE candidates is integrated into our primary strategic sourcing. We assess potential suppliers across a range of criteria, and give preference to a preferred supplier that scores highest. The assessment criteria differ slightly for each commodity, but include commercials, price, business requirements fit, and B-BBEE score. The B-BBEE score carries a 10% weighting across the full range of assessment criteria.

This inclusive approach ensures that our requirement for the best-value package are met, comprising best price, quality, service and delivery performance. Our procurement team has rationalised these strategies to deliver value to the business and meet transformation obligations. We support suppliers to improve their B-BBEE credentials, and we support selected B-BBEE suppliers in the agri-development space to access capital, skills and markets through our ESD programme.

Our ESD programme is critical to advancing the empowerment impact of our preferential procurement approach. A fundamental challenge we face is that transformation in the ingredients and agricultural categories is slow due to the high levels of capital, skills, inputs and land required to establish a sustainable supply. The volumes that Tiger Brands sources and our rigorous compliance requirements also make it difficult for individual smallholder farmers to compete. We are advancing our ESD programme, amplifying our investment commitments, and proactively seeking partnerships to unlock collective impact and better address black economic empowerment together.

Over the last two years, however, Covid-19 and the war in Ukraine have led to significant changes in the global supply chain, which have increased cost pressures and created shortages that have impacted our business. As a result, our procurement practice has necessarily become less intentional and more reactive. We have had to adapt speedily to unforeseen changes, and source what we can, where we can, to keep our operations running. We have also faced internal challenges this year, struggling to fill a number of vacancies and stabilise our procurement team see our people. It has been very difficult to prioritise local sourcing and empowerment suppliers in this context, and our number one priority has been security of supply. Fortunately, we were able to make some key appointments during the latter half of the year, including a new procurement director: ingredients.

In 2022, our total procurement spend was R28,1 billion, of which 91% was with local suppliers. Our total local procurement spend was R25,7 billion, of which 56% was with B-BBEE verified suppliers. We procured 0,88 million tonnes of grains (excluding rice), of which 68% was procured locally. In addition to the grains procured, 0,29 million tonnes of rice was imported as rice is not grown locally. We procured 262 000 tonnes of fruit and vegetables, of which 100% was procured locally. Currently 0,9% of the fruit and vegetables we procure locally are from verified B-BBEE suppliers, with grains remaining a challenge at less than 1% from B-BBEE suppliers.

Our procurement team is working in tandem with our ESD programme, particularly the agriculture aggregator programme, to improve our B-BBEE procurement performance. A primary focus is building local production capacity for certain crops, including groundnuts, small white beans, tomatoes, sorghum, maize and wheat. In 2022, we increased our local procurement from B-BBEE-verified suppliers across groundnuts (1 300 tonnes), small white beans (2 850 tonnes), and wheat (2 027 tonnes), procuring a total of 5 450 tonnes compared to a total of 4 366 tonnes in 2021. Fruit and vegetables volumes declined by 20% due to lower tomato yields in the 2022 season. Fruit reduced due to lower demand from our LAF plant, and unprofitable margins. Farmers are starting to replace fruit and vegs with more profitable crops.