Tiger Brands’ new R300m peanut butter plant to reduce costs

Tiger Brands’ new R300m peanut butter plant to reduce costs

FOOD producer Tiger Brands vowed to meet consumers halfway by bringing down the price of Black Cat peanut butter as it officially launched its new R300 million manufacturing plant on Friday.

Peanut butter prices have escalated rapidly earlier this year as the dryer and hotter-than-usual weather in the main summer crop growing regions affected the peanuts harvest.

The recalls of a number of peanut butter brands by the National Consumer Commission due to excessive aflatoxins in February also added to supply shortages in the market and impacted prices.

Though Tiger Brands was not affected due to safety and quality assurance protocols in the production process, the price of a 800g jar of Black Cat peanut butter surged to an eye-popping R92.99 in February.

Tiger Brands CEO Tjaart Kruger on Friday said that the new facility would allow the company to run two lines for different-sized jars at the same time compared to just one line at the previous facility in Randfontein.

The 8 610 square metre manufacturing plant in Chamdor, Krugersdorp, produces an average of 1 million bottles of peanut butter a month.

Kruger said this would help bring down costs and deliver more innovation and affordability to consumers as peanut butter was an important staple in South Africa.

He said production costs were under pressure and food inflation was at double digits during the past two years, and though food inflation had come down to just below 7%, it was still very high.

“I know our consumers struggle a bit with affordability. Consumers are looking for affordable and healthier food options,” Kruger said.

“This new facility will introduce flexibility, improved efficiencies and reduce our cost profile, allowing us to retain our prominent position in the market and respond to consumer needs. The production process here is going to get our unit costs to come down.”

Black Cat peanut butter is one of the biggest in the market with 5 million kilograms of Black Cat sold per annum in formal retail stores.

Consumer research shows that the nearly 100-year-old brand is found in seven out of 10 South African households or in 10 million out of the 15 million households that purchase peanut butter.

The new production plant employs a total of 62 full-time employees, and produces between 10 000 tons and 20 000 tons of ground nuts from local and international markets every year.

Tiger Brands managing director for culinary Dumo Mfini said this was one of the largest investments of capital that the company has made in a single project, signalling the opportunity the peanut butter category presented for sustainable returns.

The South African peanut butter category accounts for 50% or R1.7 billion of the total domestic spreads market, excluding margarine, which is worth R3.4bn, but the global peanut butter market is forecast to reach R99bn in 2027.

Mfini said the packaging line upgrades at the new facility have introduced greater in-house flexibility for quicker innovations and new product offerings in line with consumer demands for value and affordability.

“It does give us the ability to move faster with our innovation. We didn’t have space [in Randfontein]. It was an old site where we were. We didn’t own the land. We were leasing the property. Now, we’ve got our own space. We’ve got the state-of-the-art equipment that allows us to innovate.

“By moving to this plant, we’ve been able to also retain all our employees, so no one was retrenched regardless of the challenges. As a country that strives for jobs and food security, that’s a very big win for Tiger Brands. With this plant, we strive to only procure local nuts.”

At least 70% peanuts are procured locally and 30% imported only because local farmers don’t have enough capacity.

The Deputy Minister of Trade, Industry and Competition, Nomalungelo Gina, praised Tiger Brands for their commitment to the economic transformation agenda and growing Small Micro and Medium Enterprises (SMME) through Enterprise Supplier Development (ESD).

“As government, we insist on this policy direction because we know that SMMEs contribute 34% to the national GDP and they are a largest employer,” Gina said.

“As the country, we are under pressure to maximize employment in this country as we are pursuing re-industrialization of the economy, SMMEs will remain an important aspect of growing our economic base. Big corporates have an obligation to use the ESD model effectively through empowerment measures such as ESD mechanisms.”

BUSINESS REPORT