JOHANNESBURG (Reuters) – South Africa’s biggest food producer Tiger Brands hopes its 300 million rand ($16 million) peanut butter manufacturing plant officially launched on Friday will help it bring down costs and deliver more innovation and affordability to consumers.
After cutting the ribbon on the plant, located at Krugersdorp west of Johannesburg and which will make the Black Cat brand, Dumo Mfini, managing director for culinary at Tiger Brands, told Reuters that the new facility will allow the company to run two lines for different-sized jars at the same time, instead of just one.
“We can produce faster now,” Mfini said, adding that the company – which in February flagged flat to lower operating income for the six months ended March 31 – was becoming more flexible in the introduction of new product offerings.
The South African peanut butter category accounts for 50% or 1.7 billion rand of the country’s total spreads market, excluding margarine, according to Tiger Brands, which also makes KOO baked beans, Albany bread and Jungle Oats.
The facility, which will be able to produce an average of one million bottles of peanut butter per month, will also reduce the group’s cost profile, allowing it to respond to consumer needs around affordability amid the high cost of living, Tjaart Kruger, CEO of Tiger Brands, said.
“The production process here is going to get our unit costs to come down,” Kruger told Reuters.
In addition to glass jars, the plant will also produce more plastic tubs and tubes, which are cheaper packaging alternatives, Kruger added.
Consumer goods producers globally have been grappling with surging costs for almost all raw materials, energy and packaging after Russia’s invasion of Ukraine compounded pandemic-related supply chain logjams.
Companies have responded by hiking prices, but these increases are hitting consumers’ wallets, forcing shoppers to trade out of premium-branded products to cheaper alternatives.
To maintain brand loyalty, food producers like Tiger Brands are taking measures such as introducing different pack sizes in plastic bottles and jars.
($1 = 18.8591 rand)
(Reporting by Nqobile Dludla; Editing by David Holmes)
