Enhanced livelihoods

Our B-BBEE procurement spend

In 2023, we spent a total of R18,3 billion with B-BBEE-verified suppliers (2022: R14,1 billion), including:

R6,9 billion with suppliers that qualify as black-owned (2022: R6,6 billion)
R6,0 billion with suppliers that qualify as black women-owned (2022: R5,1 billion)
R1,5 billion with suppliers that qualify as small enterprises or exempt micro-enterprises (2022: R1,3 billion)

Preferential procurement

Management

We prioritise the award of procurement contracts to suitably qualified B-BBEE suppliers in line with the B-BBEE Act. These approved suppliers are given preference when all selection criteria are met, and we maintain the right to limit dealings with any suppliers suspected of B-BBEE fronting. We encourage suppliers to advance their B-BBEE credentials, and we assist chosen B-BBEE suppliers in the agri-development space to access capital, skills, and markets through our ESD programme.

Awarding procurement contracts to B-BBEE candidates is integral to our strategic sourcing approach ( see IR – Procurement). We evaluate potential suppliers on various factors, prioritising those who score highest. These factors, which slightly vary by commodity, include commercials, price, business requirements fit, and B-BBEE score, with the latter carrying a minimum of 10% weighting. This comprehensive method ensures that we obtain the best-value package, encapsulating price, quality, service, and delivery performance. Our procurement team streamlined these strategies to offer value to our business and fulfil transformation commitments.

Our primary focus is building local production capacity for certain crops, including groundnuts, small white beans, tomatoes, sorghum, maize and wheat. A foundational challenge we face in transforming our supply chain for these crops is the slow pace of change due to the high levels of capital, skills, inputs and land required by small and under-resourced local enterprises to get to the point of offering a secure and sustainable supply. The volumes that Tiger Brands sources and our rigorous compliance requirements also make it difficult for individual smallholder farmers to compete.

Our ESD programme is therefore critical to advancing the empowerment impact of our preferential procurement approach. Our procurement team works in tandem with our ESD team to improve our B-BBEE procurement performance, particularly through the agriculture aggregator programme. We are advancing our ESD programme, yet face significant challenges in doing so.

Over the last few years, our local and global supply chains have been affected by a perfect storm of converging factors including the pandemic, geopolitical conflicts, China's downturn, and extreme weather events like floods, drought and fires affecting our key commodities. Our local agricultural suppliers face an underperforming economy and have been hit hard by erratic rainfall, floods, drought, pests, watersupply disruptions, power cuts, and rising costs for labour, security, electricity, fuel, and fertilisers ( see – ethical supply chain).

These challenges have affected the quality and on-time delivery of some of our key local agricultural inputs, forcing us to source these inputs from outside the country at a higher cost. It has been very difficult to prioritise local sourcing and empowerment suppliers in this context, where our number one priority has been the security of supply.

Performance

In 2023, our total procurement spend was R34,3 billion, of which 90% was with local suppliers. Our total local procurement spend was R31 billion, of which 53% was with B-BBEE-verified suppliers, and 17% was with black-owned or black-women-owned enterprises. We procured 0,9 million tonnes of grains (excluding rice), with 71% procured locally. All our rice (0,92 million tonnes) was imported as it is not grown locally. We procured 225 000 tonnes of fruit and vegetables, of which 98% was procured locally. Currently 15% 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. Local procurement from B-BBEE-verified suppliers declined for groundnuts (500 tonnes) and small white beans (1 000 tonnes). In 2023, vegetable procurement rose by 22%, driven by increased tomato yields. We acquired 14 000 more tonnes of tomatoes from BEE-verified suppliers. Fruit procurement decreased due to lower demand from our LAF plant and unprofitable margins, with local farmers also shifting towards more lucrative crops.