We have maintained a particular focus this year on further strengthening our product quality and food safety practices, stabilising operational performance in our supply chain, and implementing clear processes to boost productivity, efficiencies and workplace safety. In addition to upgrading some of our factories and investing in renewable energy, we have continued to seek opportunities to deliver value from our procurement and logistics activities.

Developing world-class manufacturing facilities

Our ability to deliver long-term value for our shareholders and other stakeholders is dependent on the quality of our manufacturing operations. Through our capex programme and our operations support strategy, we are striving to build agile, fit-for-purpose operations that deliver continuous improvement in productivity as efficiently and safely as possible, ensuring product quality and enhanced environmental performance. We continue to place a particular priority on progressing manufacturing excellence custom and practice (MECP) across our operations, focusing our activities initially on 10 priority sites with the greatest need for improvement. It is pleasing to report that we have achieved a 22% improvement in overall equipment effectiveness (OEE) across these priority sites over the past three years, with Tiger Brands now inside the best-in-class definition area for OEE. In addition, over the same period, we have achieved R247 million in savings through material usage variance (MUV).

Our total capital expenditure this year amounted to R1,2 billion, with investments to expand and optimise our existing capacity, upgrade infrastructure and replace ageing equipment, realise innovation opportunities, improve our energy and water security, and ensure regulatory compliance. Specific projects included relocating and upgrading our peanut butter plants, investing in automation in Home and Personal Care, and upgrading the aerosol canning line.

During the year, we successfully completed commissioning of solar power at four of our sites and are looking to roll out similar initiatives at the balance of our operations. This forms an important step towards our goal of sourcing 65% of our manufacturing electricity requirements from renewable energy by 2030, and ensuring greater energy independence from the Eskom grid. Our investment in plant and equipment is supported by investment in safety performance, competency-based training, talent attraction and retention, and building a skills pipeline through management trainees and apprentices.

We have incorporated our management of occupational safety, security, health and the environment (SSHE) into our MECP management framework, benchmarking our maturity level against industry best-practice standards. As part of our commitment to safety, we have tied safety performance to remuneration incentives at senior management levels, contributing 10% to the variable performance reward under our short-term incentive (STI) scheme. At a group level, our emphasis on behavioural safety has resulted in a marked improvement in our overall safety performance. Our lost-time injury frequency rate (LTIFR) decreased from 0,45 in 2022 to 0,25. Despite these improvements, regrettably there was one employee fatality and two serious injuries. The fatality occurred at an off-site warehouse for our Chococam facility due to unsafe stacking practices; stacking operations at this warehouse were immediately halted until recommendations from an incident investigation are fully implemented. Further details on our occupational health and safety performance and management activities are provided in our sustainability report.

Embedding a product quality approach

We made good progress this year in embedding an integrated food safety and quality system, in which robust operating processes are supported by well-trained people supported by a culture of quality excellence. We have established measurable product safety and quality objectives across all our operations and at group level, and we monitor and report on performance against these objectives and targets through a quality scorecard, implemented across all sites and categories.

This year, we restructured the resourcing of our Quality and Food Safety Centre of Excellence, introducing clear oversight lines and distinct roles and responsibilities across six priority focus areas, with technical personnel appointed in each of these areas. To cultivate a culture of quality excellence, we have been piloting a culture survey index that seeks to identify the strengths, weaknesses and opportunities related to enhancing our food safety and quality culture and performance throughout the organisation. We also approved funding this year to digitise our quality and food safety management system, which will further strengthen our management and reporting on food safety and quality.

Following these initiatives, we have seen significant improvements in our overall quality performance, with a 7% reduction in consumer complaints. Following two product recalls over the past two years, it is pleasing to report that there were no product recalls in 2023, as well as no notices from government authorities for any regulatory food safety violations.

All our food manufacturing operations comply with the Global Food Safety System Certification 22000 (FSSC 22000) standard recognised by the Global Food Safety Initiative (GFSI), with each operation conducting quarterly GFSI self-assessments. As part of our certification commitments, we conduct regular internal audits and risk assessments at our manufacturing facilities, targeting specific opportunities to mitigate or eliminate identified risks. This year, with assistance from external experts, we initiated a new audit process for certain food categories in alignment with the American Institute of Baking (AIB) Standard, a stringent and credible audit standard that emphasises the production environment and operational aspects, complementing our FSSC 2220 certification audit processes.

All our suppliers and third-party manufacturers are required to possess food safety certification, ideally recognised by the GFSI. As a minimum, we conditionally accept Hazard Analysis and Critical Control Points (HACCP) certification. This year, all our third-party logistics warehouses were certified against the BRC Global Standard for warehousing and distribution. We also undertook onsite audits of a prioritised selection of suppliers and third-party manufacturers, using our recently introduced supplier quality assurance (SQA) protocol.

Driving value through centralised procurement

In response to the lingering supply chain impacts of the COVID-19 pandemic, an increasingly challenging geopolitical landscape, and heightened supply chain disruptions from extreme weather events, our procurement team's priorities have shifted significantly over the past two years towards mitigating supplier risk, ensuring seamless supply chain continuity, and managing inflationary pressures.

While there has been a softening recently in the global price of some of our key commodities, this price softening has not been sufficiently reflected in our South African market due to the depreciation of the rand and the cost impact of sustained loadshedding. In addition, a firming in fertiliser pricing has driven higher production costs for critical commodities, such as sugar, beans and tomatoes. Extreme weather events and limited access to critical raw materials have further strained the supply fundamentals of key commodities – including cocoa, oranges, gelatine, eggs, groundnuts and beans – exacerbating an already constrained supply chain feeling the impacts of China's COVID-19-related lockdown that was only lifted earlier in this financial year.

This year, we have been executing on our ambition to become a leading procurement function in South Africa and to bring us in line with global procurement best practice. We have begun implementing our recently revised procurement strategy, focusing on three key pillars: building value-enabling capabilities, becoming functionally excellent in our chosen capabilities, and supporting the team and organisation with leading digital technologies. These changes will deliver an estimated R500 million in productivity gains over three years, enhancing our central procurement function through increased access to spend, capability building, digital enablement, and changes in our operating model.

We have made good progress this year with our digital transformation process, starting work on digitising source-to-contract activities, as well as our supplier management, spend analysis and risk management functions, all of which will go live before the end of this calendar year. Digitising and automating our operational and administrative activities will streamline our policies and processes, contributing to increased business efficiencies, improved compliance and spend visibility, and enhanced cost-savings. We remain committed to making further investments in talent, with advanced training and capacity building sessions already in progress.

As we refine our supply chains, we are continuously striving to ensure more sustainable sourcing practices. Over the last two years, our procurement team has successfully implemented new procurement and supplier management policies and revised our existing policies on B-BBEE and ethical sourcing.

Transforming our logistics activities

In 2021, we launched an ambitious logistics transformation programme aimed at realising significant cost-savings and improving overall efficiencies. The programme covers 12 broad focus areas and several individual projects with the goal of developing a function that is self-sufficient and agile, where we have full ownership of the intellectual property and data, as well as improved overall visibility and management of the logistics process. Since launching the programme in 2021, we have secured R210 million in savings, and anticipate reaching R260 million by the end of the next financial year.

Through this programme, we have implemented a new warehouse management system at two of our warehouses, which has already delivered some significant benefits, reducing stock-taking time, improving stock accuracy to 99,9%, improving stock rotation and traceability, and improving direct delivery efficiencies. We will be rolling this system out at our other sites next year. We have completed the re-organisation of our customer support centre, which delivered R2,5 million in savings, and we have introduced a pallet weight optimisation initiative at some of our facilities, yielding improvements in transport cost efficiencies. We have also introduced a freight desk control tower and on-boarded a specialised team. This has provided end-to-end visibility of both import and export flows, resulting in improved stock management and enabling leveraging of economies of scale to obtain best freight rates and overall improved freight management. The annual freight rate benefits are estimated to be around R12 million. We are currently reviewing the possibility of converting our forklifts from gas/diesel to lithium ion batteries, which we believe will deliver significant environmental and cost-savings benefits.

With almost 40% market share and one of Tiger Brands’ Billion Rand Brands, Fatti’s and Moni’s has been a firm favourite in the pasta category. This year, the Fatti’s and Moni’s Always Eat’alian TV campaign was recognised with a silver Loerie award, the highest accolade for creativity and innovation.