Tiger Brands plans to divest maize and sorghum lines amid portfolio optimization efforts

SOUTH AFRICA – South Africa’s listed leading food manufacturer, Tiger Brands, is set to divest its maize and sorghum cereal lines as part of CEO Tjaart Kruger’s strategic portfolio optimization plan.

The company announced the move during its presentation of the 2024 financial results on December 4.

Since assuming leadership in November 2022, Kruger has been focused on streamlining the company’s extensive product portfolio, which spans bakery and breakfast cereals, confectionery, baby food, soft drinks, and home and personal care products.

The company has been divided into six distinct business units, each managed by a dedicated executive team, to better align operations with market demands.

The categories include milling and baking, grains, culinary, snacks and beverages, home and personal care, and international operations, the latter of which houses the canned fruit business Tiger Brands has been attempting to sell since 2020.

This restructuring is part of the company’s efforts to focus more effectively on high-performing categories and address challenges arising from South Africa’s economic conditions.

A key aspect of his strategy involves trimming 20% of stock-keeping units (SKUs) to enhance profitability.

Maize and sorghum cereals, widely consumed in South Africa, have been identified as “underperforming categories” targeted for disposal.

These include the Ace brand in maize and the King Korn sorghum meal (mabele) under the King Food ‘superfoods’ line.

The company has indicated that the divestment process is expected to conclude by the first half of 2025, though details on the specific brands up for sale remain pending clarification.

According to the company, they are discussing with potential buyers but have not yet provided further information on the sale process.

Tiger Brands reported modest financial improvements for the 2024 fiscal year, with earnings per share (EPS) rising 13% to 1,942 South African cents and headline earnings per share (HEPS) increasing by 4% to 1,810 cents.

However, the company continues to face significant challenges, including high inflation, power outages, and declining consumer purchasing power.

Inflation in South Africa reached 7% in 2023, contributing to a 6% decline in overall group volumes and an 8% drop in domestic market volumes.

While the company acknowledged the pressures on its consumer base, Kruger expressed cautious optimism, noting some early signs of economic improvement, such as slowing consumer-price inflation and modest interest rate cuts.

However, he emphasized that Tiger Brands’ commitment to offering affordable products remains central to its strategy.

“Our efforts to deliver affordable products for consumers through continuous improvement initiatives and cost leadership across our business will remain a priority and key enabler of growth,” Kruger said.

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