In the first quarter of the financial year, we undertook a detailed review of our operating model and organisational structure with the aim of addressing some of the identified challenges within the business and restoring Tiger Brands to deliver on its full potential. Through this review we sought to enable more agile and rapid execution of our strategy by decentralising decision-making and streamlining the ways of working across our businesses.
Following this review, in January 2024 the board approved a revised leadership structure, in which we revised our operating model into six business units led by five managing directors reporting directly to the CEO. We merged two leadership layers into one, eliminating duplicate roles and realising valuable efficiencies in our headcount. As part of this new federated operating model, and to bring in some fresh leadership, we appointed five new managing directors to the Exco team with effect from 1 February 2024.
We have simplified and clarified the roles and interdependencies between business units and enabling functions, ensuring greater cohesion across the organisation. Our restructuring efforts have extended to deploying category-specific services back to the business units from the centre, including decentralising our procurement function, enhancing agility in decision-making concerning manufacturing, procurement and customer strategies.
The management teams have been relocated to the factories and operations, resulting in a significant scaling down of the head office, facilitating a more hands-on culture of decentralised decision-making as close to the frontline as possible, and strengthening accountability. This revised structure has delivered valuable annualised cost savings.
As part of this process, we have rejuvenated our culture transformation journey, initiating work on the Tiger Way Playbook to standardise processes and systems. This initiative is designed to embed the new operating model and drive more efficient execution of our strategy across both businesses and enabling functions.
Managing director: TBI has resigned effective January 2025
Our people strategy guides us in developing and mobilising a winning culture across Team Tiger, and it leads our approach in attracting, developing and retaining the diversity in talent and leadership capabilities needed to achieve our goals of execution excellence, innovation and an agile, consumer-focused culture aligned with our new operating model.
There are three pillars of our people strategy:
We have made good progress this year on each of these strategic objectives. Following the implementation of the new operating model, we have prioritised culture transformation as a critical enabler of performance. Throughout the year, we have initiated various interventions to align and empower our leaders to co-shape and lead our new culture change programme, equipping individuals and teams to own this change, and embedding and sustaining the new winning culture across the organisation.
We have sharpened our focus this year on talent acquisition, accelerating the development of a diverse talent pipeline for critical skills and strengthening our efforts on building critical capabilities and on cultivating inspiring agile leaders. We made several significant appointments as part of our new operating model, including the appointment of five managing directors, one of whom is female, as well as a new chief manufacturing officer. Following the establishment of our talent acquisition hub – to prioritise the filling of critical vacancies and proactively build robust talent pools both internally and in the market – we have significantly reduced our average time to fill vacancies. This year, we made 511 new hires in critical and leadership roles with 55% of leadership vacancies filled through internal career moves and promotions. Despite a challenging landscape, our attrition rate for core and leadership roles remained steady at 10% compared with a market trend of 13%.
We have continued to make steady progress in promoting workforce diversity, with African, Coloured and Indian (ACI) representation reaching 95% across our workforce, with 64% ACI representation in senior management and 58% in top management. On gender equity, women made up 30% of our workforce, with 40% in senior management and 25% in top management roles.
Our reward strategy – which seeks to inspire exceptional performance and attract and retain top talent – is reviewed annually to boost performance, align with market standards, and meet the evolving expectations of both employees and shareholders. Our remuneration policy explicitly addresses unjustifiable pay differentials, ensuring our pay practices prevent discrepancies between employees in the same role, as well as across race and gender groups. We follow a systemic approach by aligning individual pay and pay scales with similar roles in the market, and we have clear guidelines to ensure fair execution of new appointments, promotions, and pay reviews. During each compensation review, pay differentials are considered, reported and interrogated through various lenses, including gender and race.
For a review of our performance on our people strategy, see our Sustainability report 2024
Driving innovation in our products, packaging and processes is critical to delivering on our growth ambitions and to meeting the constantly evolving needs of the consumer. Although Tiger Brands has a long-standing history of strong innovation, we recognise that our more recent innovation activities – from ideation through commercialisation to execution – have been undermined by various shortcomings, including an inability to take rapid decisions, high inertia in execution and low flexibility in manufacturing, resulting in our speed-to-market falling short of benchmark.
Informed by a review of global innovation best practice, we have sought to address these challenges by creating a more streamlined two-track innovation process that balances the benefits of agility with more traditional linear product development. This approach ensures continued renovation of our core products, while encouraging experimentation with high-risk, high-reward innovations that are more appropriate to meet evolving consumer demands where speed-to-market is more significant.
We have defined our innovation timeframe to capture existing and emerging opportunities over three horizons:
Horizon 1 – Market penetration
Innovations relating to existing products in existing channels that seek to grow consumption – for example through innovations in ingredients, packaging type and/or pack size
Horizon 2 – Market development
Innovations that seek to increase the footprint of an existing product – for example through innovations in channel distribution, customer engagement and/or route to market
Horizon 3 – Product development/diversification
Innovations that result in new products, aimed at expanding a category portfolio and/or entering a new portfolio category
We are placing a strengthened focus on delivering game-changing horizon three innovations, leveraging our brand strength across our three focus areas of affordability, health and nutrition, and snackification.
Our digital strategy provides a comprehensive framework and roadmap to leverage digital technologies to improve productivity, drive growth and enhance the experience of our customers, consumers, service partners and employees. In implementing the strategy our focus this year has been ensuring effective execution of digitisation initiatives in the following priority areas:
Recognising the potential contribution of AI in dramatically improving Tiger Brands' performance, we have identified a list of AI use cases that will deliver significant benefits with minimal investment in the following areas: demand planning, supply chain optimisation, elasticity pricing, fraud detection and predictive maintenance.
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, operational excellence and enhanced environmental performance.
Our total capital expenditure this year amounted to R0,97 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.
We continue to place a particular priority on progressing manufacturing excellence custom and practice (MECP) across our operations. It is pleasing to report that we have achieved a 4,9% improvement in OEE across our prioritised sites over the past three years, with Tiger Brands now inside the Best in Class definition area for overall equipment effectiveness (OEE).
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 total recordable case frequency rate (TRCFR) decreased from 0,28 in 2023 to 0,19 in 2024, while our lost-time injury frequency rate (LTIFR) decreased from 0,25 in 2023 to 0,19 in 2024. We are also continuing with our various activities to minimise water and energy use, increase renewable energy, and reduce food, packaging and process-related waste. Further details on our occupational health and safety performance and management activities are provided in our sustainability report.
Our approach to food safety and quality is guided by globally recognised certification standards. All our food manufacturing operations comply with the Global Food Safety System Certification (GFSSC) 22000 standard, recognised by the Global Food Safety Initiative (GFSI). Additionally, all operations conduct GFSI self-assessments quarterly. Our Home and Personal Care (HPC) manufacturing operations are ISO 9001 certified. We comply with all relevant food safety legislation and regulations and maintain government certificates of acceptability for all our operations. We are advancing the implementation of a digital food safety and quality management system, now in year two of a three-year initiative to enhance our management and reporting capabilities through digitisation. The first phase is 98% complete, with various key modules developed. Phase two, currently 47% implemented, will include a system's rollout to our Chococam factory in Cameroon.
As part of our certification commitments, we regularly conduct internal audits and risk assessments across all manufacturing facilities to address and mitigate identified risks. These assessments cover products, processes, equipment and infrastructure. Last year, we reviewed our risk assessment process and initiated a new audit process aligned with the American Institute of Baking (AIB) Standard for specific food categories. Although the AIB Standard is not GFSI-recognised, it is a rigorous and credible audit standard, focusing on the production environmental and operational aspects, complementing our GFSSC 22000 certification. The auditing of all food manufacturing sites against the AIB Standard continued in 2024, with all remaining sites set for completion by November 2024. Action plans to close gaps identified in these audits are ongoing and closely monitored.
All our suppliers, especially third-party manufacturers, must hold food safety certification, ideally recognised by GFSI, such as GFSSC 22000, British Retail Consortium (BRC) Global Standards, International Featured Standard (IFS), or Safe Quality Food (SQF) programme. At a minimum, Hazard Analysis and Critical Control Points (HACCP) certification is conditionally accepted. In 2024, all third-party logistics warehouses remained certified against the BRC Global Standard for warehousing and distribution.
Over the last six years, we have significantly strengthened our quality and food safety systems and continue to build on this progress. Regrettably, in the first quarter of FY24, we faced some challenges in customer satisfaction, with complaints increasing by 25% compared to the same period in the prior year. In response, we have implemented site-specific action plans to address these issues, with weekly oversight meetings to track progress. This focused effort has led to significant improvements in complaint rates since Q2. For 2024 overall, we achieved 2,85 complaints per million units sold, representing a 4% decrease in complaints per million and 7% decrease in consumer complaints. We experienced no product recalls and received no notices from government authorities regarding regulatory food safety violations.
This year, the increased frequency and severity of extreme weather events – as well as growing stakeholder and regulatory scrutiny on biodiversity, deforestation, human rights and fair labour practices – has highlighted the critical importance of ensuring sustainable agricultural sourcing practices.
Recent weather-related events have affected the global supply of key global commodities such as cocoa beans from West Africa and oranges from the US, Spain and Brazil, while deforestation in Indonesia, Malaysia and Brazil continues to raise concerns over the sourcing of palm oil and other key commodities, leading to significant price fluctuations and supply chain challenges. Locally, heat waves have severely impacted the production of small white beans and groundnuts, while an unexpected black frost in Limpopo province, severely impacted tomato production, hampering operational efficiency at our processing plant.
We are also seeing farmers shift to more reliable and profitable alternative crops, which is reducing the local availability of some key raw material inputs such as wheat and white beans in particular. These challenges have led us to explore supply options beyond South Africa's borders, intensifying the need for alternative sourcing solutions within and beyond the SADC region, and complicating our efforts to prioritise local preferential procurement while ensuring security of supply. To reduce a potential growing reliance on imports and to combat food security challenges, we are also working more closely in partnership with local farmers.
Our ethical sourcing policy, approved by the board in 2018, reflects our commitment to working with suppliers to strengthen sustainable sourcing practices. The policy, publicly available on our website, outlines the responsibilities of our staff and suppliers to mitigate supply chain risks and defines the ethical principles we adhere to, on issues such as human rights, fair labour practices, preferential procurement and environmental protection.
Our engagement with suppliers on these environmental and social issues is limited to our intermediary suppliers' sourcing and certification processes and does not extend to primary producers or farmers. We are in the process of developing a more comprehensive supplier assurance process to improve integration of the requirements of our ethical sourcing policy into our activities. Our digital procurement platform will facilitate improved supplier interactions, including through regular self-assessment questionnaires, surveys and unannounced independent audits of suppliers. At present, formal supplier audits are limited to food safety and quality, but we plan to expand these to cover human rights and environmental aspects.
To mitigate the sustainability risks of high-impact raw materials, such as palm oil and cocoa, we require our intermediary suppliers to hold sustainability certifications. We regularly engage with these suppliers on their sustainability certifications and practices, with our preferred cocoa and palm oil suppliers having programmes in place aimed at lifting farmers out of poverty, eradicating child labour, achieving carbon and forest-positive outcomes, and sourcing sustainable ingredients. These suppliers are members of the International Cocoa Organization (ICCO), Fairtrade and the Supplier Ethical Data Exchange (Sedex), and are regularly audited by these bodies to ensure compliance.
Our sustainability report 2024 provides a more detailed review of our approach to sustainable agricultural sourcing and to supporting suppliers through preferential procurement and enterprise development.