Tiger Brands shows its stripes with aggressive expansion

South African food company Tiger Brands is moving to gobble up more of the continent’s food market.

Amid some soft earnings numbers, the company moved into two new African markets even as it spent to bolster its operations at home in its bid to win the battle of Africa’s cupboards and pantries.

In November, Tiger acquired Nigerian biscuit manufacturer Deli Foods and a 51 per cent stake in an Ethiopian personal care and food company reported to be East African Group. Tiger, the company behind brands like Jungle Oats, Energade and Tastic rice, also reached an agreement in principle to purchase 49 per cent of the food and beverage operations of UAC of Nigeria Plc.

“(UAC) has been a leading private enterprise champion in the economic advancement of Nigeria and holds food interests primarily in the branded savoury, snacks, dairy and beverage categories,” Tiger Brands CEO Peter Matlare said in a statement. “Tiger Brands believes that the proposed transaction with UAC will provide the two partners with a sound strategic platform in Nigeria, which will benefit from the respective parties’ experience, skill and expertise in the manufacture, marketing and distribution of branded food and beverage products in emerging markets.”

If these moves across the continent prove successful, Matlare said the new companies “will further increase our manufacturing and distribution footprint outside South Africa”—crucial to Tiger as the company eyes other new markets.

South Africa’s largest food manufacturer, Tiger saw R19.3 billion in sales from continuing operations in 2010—5 per cent below the year before. The Johannesburg-based company also saw profit for the year fall 14 per cent from last year to R2.2 billion.

“Given the difficult environment in which we operated during the 12 months in question, we regard the results as satisfactory,” Matlare said.

But Tiger and Matlare have reasons to be hungry for more—especially after Matlare saw his bonus fall to R855,000 in 2010, according to the company’s annual report, down from his R3.44 million bonus in 2009.

That’s why Tiger is reaching further into its pockets. Chairman Lex van Vught told

Business Day in January that the company has budgeted over R2.5 billion through the next five years to expand its domestic capacity after spending R1.8 billion in the last three years to beef up its South African clout.

That’s included spending millions to expand a flour mill and bakeries, the company said.

Tiger’s wise to stay sharp with those investments—Cape Town-based rival Pioneer Foods is spending R1.2 billion in capital expenditures in the next three years even as it pays off  R850 million in fines for anticompetitive behaviour, according to Business Day. 

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