We take a closer look at Tiger Brands’ market shares over the medium-term and find a worrying trend across most categories in the group’s Grains and Consumer Brands business. We find that several of TBS’ heritage brands have shed significant market share and remain under pressure. Using our detailed pricing data, we estimated the average price premiums that a sample of TBS’ high volume Grains and Consumer Brands products maintained compared to their competition. The data suggests that Tiger Brands maintains significant price premiums in several categories but frequently uses promotional activity to remain competitive. We believe that TBS may need to adopt a more consistent pricing strategy to regain lost market share. We conduct a scenario analysis of TBS’ operating margins and estimate that in the absence of double-digit revenue growth and lower input costs, TBS would need to cut operating costs by as much as -26% y-y to restore operating margins to previous ‘normal’ levels. Given the unlikelihood of such cost cuts, we conclude that significant and concurrent interventions in pricing philosophy, supply chain management and operating costs are required to restore operating profitability.
