The man running South Africa’s largest food producer

Tiger Brands has been around for over a century and houses some of South Africa’s most iconic brands. However, the company now faces challenges that require an experienced hand to fix – specifically, those of its rival’s former CEO, Tjaart Kruger.

Tiger Brands was established in 1921 when Jacob Frankel and Joffe Marks founded a company called Tiger Oats Limited.

It began as a family business, with its first product being a breakfast oatmeal brand called Jungle Oats, which launched in 1925.

The product was a massive success, and the high demand required the company to open a second mill just five years after its launch.

This initial success set Tiger Brands up for rapid growth in the 1990s. During this period, it bought out other large companies like the Imperial Cold Storage and Supply Company.

It expanded beyond the food sector and bought pharmaceutical company Adcock Ingram for R3.4 billion in 1999. In 2008, the company was unbundled.

After this period of rapid expansion and acquisitions, Tiger Oats was renamed Tiger Brands and became the powerhouse South Africans know it as today.

Tiger Brands continued to grow from strength to strength, and today, the company still produces Jungle Oats but has added over 150 other brands to its staple, including beloved names like Tastic, Albany, Doom, All Gold, Jelly Tots, Black Cat, Oros, Koo, and Twinkies.

From humble beginnings, Tiger Brands has grown to the largest food producer in South Africa, with over 44 manufacturing facilities and operations in over 20 countries.

However, the company’s expansion did not stop in the 1990s. Having outgrown its home market, Tiger Brands launched an aggressive expansion campaign into the rest of Africa in 2008.

As part of its campaign, the company bought a controlling stake in several food processing businesses in Nigeria, Kenya, Ethiopia, and Cameroon.

However, this expansion strategy was not as successful as the previous one, as many of the company’s investments in Africa proved costly and unproductive. 

One of Tiger Brands’ biggest blunders was its R1.5 billion purchase of 65.7% of Dangote Flour Mills, Nigeria’s second-largest milling operation, in 2012.

What appeared to be a good investment quickly turned sour when overcapacity in the Nigerian market led to an operating loss of around R2.7 billion.

Less than two years after making the acquisition, Tiger Brands wrote off about half of its investment in Dangote Flour Mills. One year later, Tiger Brands sold its stake back to Dangote for a token $1.

Unfortunately, this blunder marks the first in a series of bad strategies Tiger Brands has employed in its Rest of Africa operations.

In 2020, Tiger Brands faced a trademark dispute over brands in the country: Jolly Jus drink and Benny seasoning.

“We had an ownership dispute that was tied up in litigation in court, and we couldn’t export our product to Nigeria,” former Tiger Brands CEO Noel Doyle told CNBC Africa. 

“That litigation was going to go on for years, so we had to make a commercial decision.” 

“The settlement was agreed in principle and we are taking it to court. The settlement was R71 million, and the profits at stake were worth more than that.”

However, this was not the biggest challenge that hit Tiger Brands in 2020, as the Covid-19 pandemic proved to be one of the most trying times in the company’s history.

In the first half of its 2020 financial year, Tiger Brands saw its operating income drop by 29% to R1.1 billion and experienced a significant squeeze on profit margins.

Tiger Brands has struggled to recover from the pandemic’s impact ever since, with load-shedding and South Africa’s depressed consumer environment also hammering the company’s operations in recent years.

This downward trajectory reached a boiling point in October last year when the company announced that its CEO, Noel Doyle, would be leaving.

“Following the board’s annual review of the company’s strategy, the board concluded that new leadership was required to respond to the challenges currently facing the company,” the company said.

Doyle – a 20-year veteran at the company – oversaw several challenges at Tiger Brands since he took over in February 2020.

That included a recall of 20 million cans of food, opposition to its plans to shut its fruit canning unit in the Western Cape, and a recall of baby powder products suspected to be tainted by asbestos. 

This was after the company was hit by a deadly outbreak of listeriosis in 2018.

Many believed Doyle was at least partially responsible for Tiger Brands’ decline in recent years, and the company’s share price surged as much as 16% following the announcement that he would be replaced.

While this share price surge was partly fuelled by relief at Doyle’s departure from the company, another reason for the rally was the announcement of Doyle’s successor, industry veteran Tjaart Kruger, who was charged with turning the company around.

Tjaart Kruger

Kruger has had an extensive career in South Africa’s fast-moving consumer goods industry, making him one of the best candidates for the task of turning Tiger Brands around.

Armed with a PMD from Harvard and a CA qualification, Kruger has successfully led several FMCG companies in South Africa.

He obtained a commerce degree from the University of Johannesburg and started his career in 1997 at Country Bird Holdings, where he worked as a managing director until 2001.

He left the company to work at Tiger Brands as the Managing Executive of its Grains division until 2006. 

At Adcock Ingram, he served as the managing executive for only a few months before taking the helm at Afrox.

He was the company’s CEO for four years, from 2007 to 2011, and has been largely credited with turning Afrox around.

During his tenure, Afrox achieved a record capital expenditure programme, which saw the upgrade of its Gases Operations Centre in Germiston and the commissioning of a new CO2 plant in Sasolburg.

In one year, the company also realised savings of R200 million following a streamlining of its operations.

Following his good work at Afrox, Kruger became the CEO of Premier Foods, one of South Africa’s largest FMCG companies and Tiger Brands’ biggest rival.

At Premier, Kruger again showcased his turnaround abilities. He led the company in a return to profit and successfully oversaw its expansion and growth strategy for over a decade.

Under Kruger, Premier became a business with an annual turnover of over R18 billion that employs over 8,600 employees. 

Premier operates 13 bakeries, 7 wheat mills, 3 maize mills, and manufacturing plants across the region that produce products which are distributed via 28 distribution depots situated in South Africa, Eswatini, Mozambique and Lesotho. 

The company houses some of South Africa’s most well-known brands, including Blue Ribbon, Impala, Iwisa, Manhattan, Snowflake, Super C and Mister Sweet.

While his 30 years of industry experience is impressive in itself, many believe Kruger is the right man for Tiger Brands’ top job because of his specific experience turning struggling companies around. 

When Kruger’s appointment was first announced, Tiger Brands explained that he was only signed on for a 26-month contract.

However, his tenure has since been extended, with the company recently announcing that he would stay on for a further three years to the end of 2028.

Tiger Brands explained that this decision was premised on Kruger’s positive progress to date with the group’s long-term strategic turnaround plan.

Tiger Brands has undergone a significant transformation under Kruger’s guidance, fueled by a revamped distribution network and leadership changes.

Business Day reported that, under Kruger’s stewardship, Tiger Brands has had a robust recovery. The company’s market capitalisation has soared by about R11.6 billion as its share price rose nearly 40%, showing investor confidence in Kruger’s turnaround abilities.

His leadership has been credited with stabilising the company’s underlying operating profit and providing stakeholders with direction and certainty.

His progress to date has included the appointment of new executive MDs for the company’s six operating divisions and the implementation of a new operating model.

The company said the decision for Kruger to stay on another three years would provide certainty to Tiger Brands’ multiple stakeholders and the necessary runway for the company’s succession plans.