Sales of Beacon chocolate shot up thanks to new wrappers

Business Insider SA
  • Tiger Brands reported lower profits for the past year, with SA's largest food company seeing a disappointing performance from its processed meat, as well as its pasta and rice businesses.
  • The company says shoppers, who face financial pressures, are seeking specials and buying in bulk.
  • One encouraging performance was from its Beacon chocolate business, which saw market share growth after a wrapper re-vamp.
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SA’s largest food company Tiger Brands on Friday reported a downbeat set of results, which saw its profit (headline earnings) fall 17% due to high costs and shrinking profit margins. Its revenue for the year to end-September was up 3% to R29.2 billion.

The company said consumer spending is under pressure, with wages not keeping up with inflation and the high cost of basic services and utilities hitting households.

Its processed meat sales continued to struggle after a deadly listeriosis outbreak in 2018. Tiger owns the Bokkie, Renown and Enterprise brands. Government found last year that the outbreak could be traced to an Enterprise factory in Polokwane. A large class action lawsuit has been launched against Tiger Brands.

The company says its processed meats unit’s performance was below expectations over the past year. Tiger Brands is currently in talks to sell the unit.

READ: Enterprise Polony is back on shelves after listeriosis – with ‘improved food safety’ and a price higher than the competition

Another poor performer was its pasta and rice business (which includes Tastic and Fatti’s & Moni’s), hit by “persistent aggressive promotional activity” among rice brands, and cheap pasta imports.

There was one highlight: Beacon chocolate, which saw its market share of chocolate units sold grow by 16%. This was thanks to new “contemporising” packaging “to win against competition and build relevance”.

In a results presentation, Tiger Brands says that the new wrappers “met the needs of today’s visually conscious insta-consumers”.

The new wrappers feature darker colours with more elaborate fonts.

Source: Tiger Brands

Similarly, the packaging of its Fatti’s & Moni’s pasta also features darker colours, and the packets are longer and thinner than in the past.

Source: Tiger Brands results presentation

Quoting research from Old Mutual, Tiger Brands says shoppers are increasingly price sensitive and seeking special, cheaper offers.

More than 90% of shoppers are now looking for discounts and specials and two-thirds have switched to a cheaper supermarket.

There was a sharp increase in those who buy in bulk to save money - now almost 70%.

 Tiger Brands’ share price was down 5% by lunchtime on Friday.

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