A mixed 2015 for Tiger Brands saw longstanding CEO Peter Matlare step down and Lawrence Mac Dougall hired as his replacement. While this is one of South Africa’s best companies to work for, the new man will certainly have his work cut out…
South Africa’s largest food company, Tiger Brands, has not been able to avoid the challenges faced by all companies operating in the retail/consumer goods market and has had to make tough decisions to ensure the company holds its position as the industry leader.
As we find each and every month, the economic climate right now isn’t conducive to large-scale business growth, the unemployment issue is ongoing, the problems with energy continue to disrupt operations and the recent droughts have added further pressure, especially to food businesses.
However, there are opportunities for companies like Tiger Brands that have a sound reputation and strong strategy. According to PWC and its South African retail and consumer products outlook 2012-2016 report: “with slow GDP growth, high unemployment and structural shortcomings in the economy persisting, overall growth for the forecast period is expected to be modest, if not fragile. However, significant growth opportunity exists for those companies eyeing Africa’s middle-class”.
Tiger Brands former CEO, Nick Dennis said in the PWC report that the industry’s people are also huge important.
“The retail market is very sophisticated and competitive. Sometimes, I think it’s overtraded, in terms of the way we see new shopping centres popping up all over. If it is not overtraded, it could get that way. But it’s run by really professional people and they exert significant influence. For most manufacturers, there are probably four organisations that could represent up to 40-50% of your business. So if you have brands that need the retail space, these retailers exert significant influence,” he said.
Importantly, Tiger Brands has displayed its commitment to people development and was awarded for this at the end of last year when it received certification as one of the country’s TOP Employers.
“People lie at the centre of the group’s performance, and we remain committed to developing talent along the depth and breadth of the organisation to build on existing strengths. Tiger Brands continues to outperform its peers according to industry surveys on staff performance,” said former CEO, Peter Matlare.
Certification from the TOP Employers Institute, a Netherlands-based HR research organisation, is only awarded to the best employers around the world: companies that demonstrate the highest standards of employee offerings. Certification indicates that a company is continuously optimising employee conditions and leading the way in the development of its people.
TOP EMPLOYER
On October 1st 2015, the TOP Employers Institute announced that “Tiger Brands provides exceptional employee conditions, nurtures and develops talent throughout all levels of the organisation and has demonstrated its leadership status in the HR environment, always striving to optimise its employment practices and to develop its employees”.
HR Executive, Tswelo Kodisang said: “This means we’ve got a good plan. Our plan has been benchmarked and can stand up to scrutiny in the marketplace. And it’s a very significant first step towards where we know we want to go.
“From that audit, we are compared against the average – the minimum standard that a company must have in place to be classified as a Top Employer. And Tiger met that minimum standard in the things we’re trying to do. Then they also compare our performance relative to what other organisations are doing – so we can assess ourselves against four or five other companies and really understand what others are doing in this space.
“We shared the HR people strategy we’ve put into place over the last 18 months, and our policies and practices – some of which are a work in progress and some that are already in place.
“Our people platform should then be significantly stronger, and the environment we create should be better, and the way we develop our people should be improved. As we create that right environment, we are able to leverage our people capability to perform better in the marketplace. And if we do that, we will up our performance, and if we up our performance, there will be better returns for the different stakeholders.
“Thank you to all Tiger employees, this recognition and certification shows that we’re all working towards a common goal of becoming the best company to work for.”
LEADERSHIP
In another people related move, following the announcement made in October that Peter Matlare would step down as CEO, Tiger Brands unveiled its new leader in March. Lawrence Mac Dougall will take the reins and look to lead the company to a brighter future after falling profits, a loss of market share, fallings in earnings per share and declining stocks.
Mac Dougall, who will starts on May 10th, said: “I am excited and energised about joining Tiger Brands. Tiger Brands is an iconic South African business with a strong heritage and great brands that resonate with consumers across many cultures and all income levels. The strength of our brands offers us a distinct competitive advantage that can be leveraged to create value for all stakeholders. I am proud to be leading the Tiger Brands team on this journey as we strengthen our position in the market and contribute positively to the South African economy.”
Having previously worked for Bromor Foods, Cadbury, Kraft Foods and Mondelez International, Mac Dougall is an expert in the FMCG industry and has more than 25 years’ experience in confectionery, beverages, snacks, groceries and biscuits.
“We are delighted with the appointment of Lawrence Mac Dougall and are confident of his abilities to lead the organisation and to deliver on the strategic objectives of Tiger Brands,” said Board Chairman, Andre Parker. “We have found an exceptional new CEO in Lawrence, who has sound commercial and strategic acumen, the demonstrated ability to lead extensive growth and business turnaround strategies and the leadership skills to develop strong integrated teams that deliver continuous sustainable performance.”
As soon as Mac Dougall walks through the doors on May 10th, he’ll be up against it as the company looks to improve performance and claw back market share from its competitors, which now include Walmart following its acquisition of Massmart.
Back in November, the company admitted that times have been tough but despite the trials it had still managed to innovate.
“Local demand continued to be constrained while competition intensified,” said Matlare before his departure.
“The group’s strategic focus in recent years has been to profitably defend and grow its market share, while expanding on the rest of the continent.
“We will continue to invest in innovative marketing initiatives to maintain the leadership position enjoyed by many of our household brands,” he added.
One element that will remain vital in the growth of the business will be the markets outside of SA – such as Nigeria, Kenya, Cameroon and Ethiopia – where Tiger Brands has already made significant moves.
Mac Dougall has experience dealing with pan-African operations and as soon as the announcement was made that he would take over, following a brief period where CEO Noel Doyle acted as CEO, the share price began to make gains – on March 10th, the price rose almost 4.5%.
Bheki Sibiya, Tiger Brands Deputy Board Chairman, told Business Day TV: “We are firmly anchored in South Africa because that is our dominant market. We also want to grow on the African continent and indeed in other developing markets. Lawrence has operated in Eastern Europe, the Middle East, Russia and the rest of Africa, so he brings that higher, helicopter view with a clarity in these geographies so he is going to lift the Tiger to where it belongs.
“He’s really experienced in FMCG, continentally and globally. His strategic acumen is not questionable, he has driven a number of acquisitions, he has conducted successful turnarounds and he has a track record of excellent delivery in the FMCG area. When he comes on board, he will need to adjust and tweak the strategy as he sees appropriate.”
It seems that Tiger Brands have made the perfect appointment in Mac Dougall. The company’s vision, ‘to be the world’s most admired branded consumer packaged goods company in emerging markets’ looks like it is set to become more of a reality, although navigating the complicated short-term will be the first hurdle for Mac Dougall in this new test.