Tiger Brands has embarked on a brand refresh of its personal care category to regain market share on some products.
The packaged goods company’s home and personal care (HPC) segment, which houses brands such as Jeyes, Ingram’s Camphor, and No Hair, reported a 4.8% decline in half-year revenues to R1.4bn. It was also hit by a shortage of aerosol cans during peak season, resulting in a drastic reduction of volumes of Doom insecticide.
One of the brands most under pressure is Ingram’s Camphor cream, which is battling to attract new customers. “There is competition in the hand and body creams segment targeted at our Ingram’s Camphor cream. There are sophisticated competitors with significant capacity. At the same time, we have some strong local players that are actually quite good at the game, and are able to provide very affordable products,” said CFO Thushen Govender.
He said the company was focused on remaining relevant to core users and attracting a new user base with innovation by launching functional creams, “essentially to de-seasonalise the product, which historically has been a winter product, and to evenly spread sales throughout the year”.
We have had an exceptional performance from the international team, where exports of Ingram’s in particular and aerosol to Zambia have been performing very well.
— Thushen Govender, Tiger Brands CFO
Tiger Brands will also look at introducing new packaging.
Its pesticide products will get a brand refresh, and marketing campaigns will be ramped up. “But it’s important to appreciate, despite those challenges, the performance from that business was very credible,” he said.
On an aerosol can shortage, caused by a local supplier not able to meet demand, Govender said the company was now working with one of the largest global suppliers of aerosol cans.
Lwando Ngwane, equity analyst at All Weather Capital, said one of the areas of concern was the sustainability of the company’s HPC division: “HPC has some very good brands, however, it seems this has become an extremely competitive space, which puts Tiger Brands’ brand equity and pricing power at risk.”
Govender said exports remain a strategic priority to recover personal care volumes. “We have had an exceptional performance from the international team, where exports of Ingram’s in particular and aerosol to Zambia have been performing very well.”
Tiger Brands, which produces well-known household brands — including All Gold tomato sauce, KOO, Black Cat peanut butter, Oros, and Jungle Oats — has been on a turnaround journey since late 2023, which has seen the company dispose of a number of businesses, including Baby Wellbeing, its baby products business.
The producer of Albany bread and Fattis & Moni’s pasta recently announced the sale of Langeberg & Ashton Foods, which makes canned deciduous fruit. It will also exit the maize business by selling its Randfontein Maize Milling operations, along with the Wheat Mill, to facilitate a simpler and expedited transaction, as they are located on the same manufacturing site.
It cited intense competition in the maize market sector sparked by the establishment of regional millers.
“The maize industry has proliferated; there are 350 maize millers in the country. If you walk into any wholesaler, you will probably find 20-25 brands of maize. I don’t think it’s a business, strategically, that you can build a big brand and build big distribution; it doesn’t work like that anymore. We haven’t made money in maize forever,” said CEO Tjaart Kruger.
The company will also exit its chocolate confectionery business, Beacon. Kruger said the chocolate segment has not performed for many years, and competitors have better offerings.
Ngwane said: “I think Tiger Brands will struggle to find a buyer for this asset, at least a buyer willing to pay a premium for it.”
Overall revenue was ahead of the prior year by 2% at R18.5bn, driven by price inflation of 2.1% and relatively flat volumes. Group operating income for the first half of the year increased by 29.9% to R1.8bn. Tiger Brands declared an interim dividend of 415c per share and a special dividend of R12.16 per share.
Govender said there has been a recovery in key categories, including rice and pasta. “For the first time in many years, we are making a profit on pasta.”
Ngwane said the company’s half-year performance was positive. “Execution on the turnaround strategy is going exceptionally well thus far. It was encouraging to see both milling & baking and the grains divisions record significant margin improvements, especially given that these segments have been the biggest drags on the company’s performance in the past,” she said.
Sean Culverwell, investment analyst at Anchor, said while revenue growth was muted, the core business’s volume growth of 2.6% was pleasing: “Management provided several financial and strategic targets to the market at the start of 2024, and on all accounts, the group is delivering ahead of expectations.”
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