Tiger Brands:Tiger Brands: Africa ExpansionAfrica Expansion

22 March 201122 March 2011

Neil Neil BrimacombeBrimacombe: :  Executive DirectorExecutive Director

2

1.

Drive SA volume growth2.

Step change expansion in emerging 

markets

3.

Protect No. 1 & 2 category positions4.

Transform ‘go to market’

model 5.

Deliver efficiency gains for re‐investment

STRATEGIC THRUSTS

MISSION To deliver revenue growth that is 3% greater than 

SA GDP plus inflation and achieve our 

blended operating margin of 15%, thereby 

achieving real earnings growth and a return 

on investment which exceeds the company’s 

cost of capital

1.

Our consumers are our business2.

We act with integrity in 

everything we do

3.

We have a passion for excellence4.

We value our people and treat 

them with dignity

5.

We continue to reinvest in our 

society

OUR VALUES

DESIRED OUTCOME

Adding value to life for all the stakeholders of Tiger Brands

VISION To be the most admired branded FMCG company in emerging markets

It starts with a compelling vision and a clear strategy to achieIt starts with a compelling vision and a clear strategy to achieveve

SADC share of world reserves for selected metals & minerals (200SADC share of world reserves for selected metals & minerals (2009)9)

Africa will become the worldAfrica will become the world’’s largest markets largest market

Source: Department of Economic and Social Affairs, UNDP

Key developing regions exhibit resistance to recession & set to Key developing regions exhibit resistance to recession & set to grow at grow at  high rateshigh rates

Source: World Bank

Africa Has Proven More Resilient out of the Downturn as Africa Has Proven More Resilient out of the Downturn as Macroeconomic Conditions ImproveMacroeconomic Conditions Improve

“In the light of positive policy in sub‐

Saharan Africa and an improving world 

outlook, our growth forecast for Africa 

in 2010 is just over 4 percent.”

— IMF, November 2009 

“Signs of recovery are emerging in 

trade and manufacturing. In addition, 

hurt as it was by the crisis, the region 

seems to have avoided the 

macroeconomic instability that 

accompanied previous slowdowns. 

Stronger pre‐crisis positions—balanced 

or in‐surplus budgets, current account 

surpluses, and lower debt levels—

helped many countries absorb external 

shocks.”

—Carnegie Endowment for 

International Peace, January 2010 

Source: Frontier Strategy Group Analysis, EIU

Africa Africa ––

Catching Up with the Catching Up with the BRICsBRICs??

Source: EIU, Euromonitor

Continental growth levels are attractiveContinental growth levels are attractive

Sources: Consensus Economics, EIU

Lower Growth Higher Growth

Forecasted 2010 GDP Growth Rates (%)

Angola 7.3Ethiopia 7.0Uganda 7.0Zambia 6.8Mozambique 6.1Tanzania 5.5Nigeria 5.4Ghana 5.4Sierra Leone 5.2Egypt 4.8Côte d'Ivoire 4.0Morocco 3.8Kenya 2.9South Africa 2.6Zimbabwe 2.5Cameroon 1.4

Africa 4.8

Tanzania

Ethiopia

Uganda

Sierra Leone

Côte d'Ivoire

Cameroon

Kenya

Nigeria

Ghana

South Africa

Angola

Egypt

Morocco

Tiger Brands International: BackgroundTiger Brands International: Background

International expansion remains a key priority

Opportunity zones well understood

Our engagement in the markets has built real competencies

We continue to resource appropriately

Built on experience gained over the last 3 years

Our Priority Zones Our Priority Zones ––

no changes and focus remainsno changes and focus remains

BackgroundBackground

TBI: Executive Director: N Brimacombe

W. AfricaRegional Managing 

Executive

(G. Campbell)

ExportsManaging Executive

(M. Conway)

Business 

Development &  

Stakeholder 

ManagementBusiness Development 

Executive

(B. Ngarachu)

C. AfricaManaging 

Executive

(M. Ndiaye)

E. AfricaManaging Executive

• Nigeria• WA Development‐

Ghana‐

Ivory Coast

‐

Senegal

• Projects

•Davitas • New Territories • Shareholder & 

Stakeholder 

Management

• Government & 

regulatory

• Strategy 

• Chococam• Gabon

• Haco (P. Igathe)• EAH 

(M. GebreMedhin)

Resourcing: Structure To StrategyResourcing: Structure To Strategy

Tiger Brands: Africa Footprint* Our on shore presence * Our on shore presence ……

Ethiopia

Kenya

Nigeria

South Africa

Zimbabwe

Cameroon

Tiger Brands: Africa FootprintTiger Brands: Africa Footprint

* Complemented by our export footprint* Complemented by our export footprint

Tiger Brands: Africa FootprintTiger Brands: Africa Footprint

Further complemented by our recent Davita acquisition announcemFurther complemented by our recent Davita acquisition announcement ent **

Note:Davita has a presence in 

28 countries across 

Africa and the Middle 

East

*

Subject to the fulfillment of a 

number of conditions precedent 

including the requisite approval in 

terms of the South African 

Competition Act

14

HACO Industries (Kenya)HACO Industries (Kenya)

Brands

•BIC•Miadi•Motions•SoSoft•Jeyes•Palmer’s•TCB Naturals

2010

•Sales: 

R189.5m•EBIT: 

R20.1m

•Margin:

11%

Categories

•Stationary•Hair Care•Skin Care•Fabric Softeners•Bleach•Toilet Cleaners

15

Chococam (Cameroon)Chococam (Cameroon)Brands

•Mambo•Kola•Matinal•Choconut•Tartina•Arina•Toutox•Big Gum

2010

•Sales: 

R315.0m•EBIT: 

R37.0m

•Margin:

12%

Categories

•Chocolate•Candies•Chocolate Powders•Chocolate Spreads•Gum

16

East Africa Tiger Brands Industries (Ethiopia)East Africa Tiger Brands Industries (Ethiopia)

Categories

•Biscuits•Laundry Soap•Detergent Soap•Pasta •Flour

17

Deli Foods (Nigeria)

*

EATBI & Deli Foods are expected to generate a combined annual turnover of c. 500m in the first year

Categories

•Biscuits•Crackers•Wafers

18

UAC / Tiger Brands (Nigeria)UAC / Tiger Brands (Nigeria)

Brands

•Gala•Funtime Cake•Coconut Chips•Snaps•Supreme•Funblast•Delite•Swan

Categories

•Water•Ice Cream•Fruit Juices•Snacks•Flavoured Milk•Carbonated Soft Drinks

2009

(31/12)

Sales: c.450m

19

Davita Trading (South AfricanDavita Trading (South African‐‐Based Export Company)Based Export Company)

Brands

•Jolly Jus•Benny •Davita

Categories

•Powdered Juices•Powdered Seasonings

2010

(28/2)Sales: R567m*

Enterprise Value:

R1. 625bn

* 99% Exports

Framing an Investment Case for AfricaFraming an Investment Case for Africa

• PESTEL Discontinuities  ‐

Managing the Vagaries

• Appetite for Risk (Beta factor)

• Our defensive qualities – Brands and Categories

• Investment in enabling capabilities and competencies 

• Balancing the Portfolio

• Investment horizons

Industry concentration levels remain substantially smaller than Industry concentration levels remain substantially smaller than RSARSA

Sources: Euromonitor

Market Share, Top 5 Players% Revenue, 2009

Top 5 Players

Industry Consolidation increasing: Limited windowIndustry Consolidation increasing: Limited window

Source: Euromonitor

Total m

arket sha

re

%

Increasing Focus on Scale over Margin ExpansionIncreasing Focus on Scale over Margin Expansion

• Emerging markets consumers cannot 

often afford prices that leading FMCG 

multinationals charge developed 

world consumers

• Average disposable income per capita 

in Nigeria is Rand 3,100, compared to 

Rand 16,200 in South Africa

• Given this constraint, MNC’s are 

focusing on large volumes and growth 

over margin

Source: Euromonitor, Nestlé, Unilever

Leading Companies Are Accepting Lower Margins 

in Exchange for Growth

Price‐Sensitive Consumers Push 

Down Margins

The modern retail channel remains smallThe modern retail channel remains small

Source: Internal Data

A phased approach allows Target to build momentum as TBI reA phased approach allows Target to build momentum as TBI re‐‐engineers and engineers and  strengthens  the corestrengthens  the core

We seek to balance scale and margin in the short term, and migraWe seek to balance scale and margin in the short term, and migrate the portfolio to te the portfolio to higher margins over timehigher margins over time……

• Tiger Brands built scale and market share in 

South Africa with a strong commodities 

portfolio, and then refined the product mix 

over time to become a large scale, high 

margin business

• Similarly, TBI will leverage the scale of 

strategic acquisitions and grow margins 

through brand renovation and the 

introduction of value‐add and premium 

offerings

MA

RG

IN

SCALE largesmall

low

high

Current 

Acquisitions

Current 

Acquisitions

Potential 

acquisitions in 

pasta, rice, 

bread, etc.

Potential 

acquisitions in 

pasta, rice, 

bread, etc.

Tiger 

Brands 

RSA

Tiger 

Brands 

RSA

• Boost margins by renovating brands, adapting product mix, and bolt on acquisitions

• Grow scale by expanding geographic profile and reaching new consumers

• Grow margins by introducing value-add offerings

• Leverage scale to reach consumers with new, higher margin products

Future 

TBI

Future 

TBI

We unlock value by combining TBI and local competencies and capaWe unlock value by combining TBI and local competencies and capabilitiesbilities

Capability Contributor

IT and Manufacturing Technology Tiger Brands

Global and RSA Sourcing Platform Tiger Brands

Local and Regional Sourcing  Acquisition

Local Manufacturing Acquisition

Local Sales and Distribution Acquisition

Competency Contributor

Marketing Expertise Tiger Brands

Local Brands and IP Acquisition

Local Market Knowledge Acquisition 

General Management  Acquisition

Create value through an integrated sourcing model

Retain local general management to capture local knowledge

Acquire these key criterion from acquisition targets

Brands that have regional appealBrands that have regional appeal

Tiger Brands Regional Brand Application

• Regional mother brands• Cross category evolution

Fix: Finished Goods WarehouseFix: Finished Goods WarehouseBefore

After

Fix: Fixed assets: KenyaFix: Fixed assets: Kenya

Fix: Power generation Fix: Power generation -- TransformersTransformers

NewOld

OldOld NewNew

Optimise Brand Renovation: Optimise Brand Renovation: MotionsMotions

Old New

Optimise Brand Migration: MamboOptimise Brand Migration: Mambo

Current 

Tin Packaging

New 

Plastic Container

with Shrink Sleeve    

Optimise: Brand Renovation: MATINALOptimise: Brand Renovation: MATINAL

Purity Bill board – Nairobi

Engaging our consumers: Traditional mediaEngaging our consumers: Traditional media

Miadi promotion ‐

Uchumi North Rift road show

Engaging our consumers: NonEngaging our consumers: Non‐‐traditional mediatraditional media

Engaging our consumers: Kenya (Clinics)Engaging our consumers: Kenya (Clinics)

Beacon: In market samplingBeacon: In market sampling

Engaging our consumers: KenyaEngaging our consumers: Kenya

Engaging demand drivers: PaediatriciansEngaging demand drivers: Paediatricians

Annual Kenyan Paediatricians  Conference

RTM Capability: CameroonRTM Capability: Cameroon

* Channel, occasion, format, pack* Channel, occasion, format, pack

Channel architecture and RTM capabilityChannel architecture and RTM capability

Strategic dealers

Streets Vendors

Boutiques or Convenience

Table TopKey Player in open market

Traditional trade, stores Traditional trade, stores and openand open--air marketsair markets

RTM Benefit AreasRTM Benefit AreasSales Growth Trade Spend optimisation Headcount  Efficiency

Reduced Cost To Serve Margin Growth Total Business Benefit

Channel – Dedicated salesmen

Sales – Focus on ‘core’

and flexible’

resource

Effective Commercial Career Path

Grow Organisational Capacity

Manage Trade Terms Investment 

Re‐invest in A&P to grow brand equity

Optimisation of sales and 

distribution costs

Speed to Market improvement

Focus range mix channel & 

customer

Improve our Mix from volume 

growth

15‐25% Growth opportunity

More Distribution points

More volume per point of 

Distribution

Value mix 

Top and bottom line Business Growth

Re‐investment in channel Building 

Activity

Efficient & Effective Organisation

RTM MODEL: P&L Impact AreasRTM MODEL: P&L Impact Areas

Gross Sales

Gross Sales

Net Sales

Naked /Gross  Margin

Contribution Before  marketing

Net Operating Profit

BUT BUT ……

it comes with some challengesit comes with some challenges

• Democratic institutions absent or still evolving• Currency instability• Lack of adequate infrastructure, particularly in energy, water &

transport• Acute skills shortages in management & technical areas• Low levels of per capita income• Prevalence of corruption• Demand constraints due to lack of access to credit• Competition from low cost imports• Prevalence of counterfeit products

What we do and will continue to doWhat we do and will continue to do

• Take a term view

• Expand geographically

• Invest for growth

• Drive for results

• Grow and  Develop HR

• Look to maximise

synergies

Investment horizon

Desire for scale

Organic and acquisitive

Hurdle returns

Tiger Brands Academies

Fuel for growth

• Unrelated diversification

• Expand at any cost

• Operate outside our stringent  governance parameters

What we donWhat we don’’t do / wont do / won’’t dot do

Dilute value add

Shareholder returns

Corporate citizenship

Thank youThank you