New CEO will be cautiously bold - but brands still rule.

In his short tenure as CEO of Tiger Brands (JSE:TBS), Peter Matlare has been quite active - bidding unsuccessfully for AVI (JSE:AVI) and then successfully for Crosse & Blackwell mayonnaise and Chococam, a chocolate maker in Cameroon.

Matlare admits that a large part of growth in the future will be by acquisition - but there is nothing radical about his approach at SA's largest fast moving consumer goods firm. Indeed, most of those deals were brewing before he arrived. 

The strong emphasis on brands, the withdrawal from dairy, the reduction in fishing exposure and the unbundling of Astral Foods (JSE:ARL), Spar (JSE:SPP) and Adcock Ingram (JSE:AIP) have transformed the company and seriously enriched shareholders. Still, the credit for all that goes to Matlare's predecessor Nick Dennis.

Dennis, fell on his sword after a highly successful 12 years at the top following last year's bread price fixing scandal.

Matlare says there will not be major departures in the way Tiger is run.

Several of Nick Dennis's closest colleagues - Roy Smither, Haydn Franklin and Mike Norris - have moved on. But there is continuity - and that vital thing called organisational memory. That takes the form of three surviving executive directors, Neil Brimacombe, Clive Vaux and Michael Fleming, the new CFO, who has been with the company for 20 years. Most the divisional bosses also remain.

Matlare told me that although the bread cartel incident did grievous damage to Tiger's reputation, "this is a fundamentally sound business.

"In terms of the discipline, the quality of the brands and the people, this was far from a rotten business. Notwithstanding the things people say about Nick and his style, this business would be the envy of anyone taking over."

Matlare said that he and Dennis differed in style and approach but foresees no radical departures.

I put it to him that the Competition Tribunal's finding and the R98m fine had been much ado about very little.

"No, I wouldn't underplay it. We went through a torrid time. Our reputation took a smack. It upset our employees in particular. No one wants to feel soiled. Afterwards we opened every nook and cranny in the business to make sure there were no other abuses. Today we are more disciplined than ever about governance."

Matlare says impeccable corporate governance is a primary thing, not only because of the bread price incident - but also because of his experience as CEO of the SABC. (He ascribes that disaster to a politically appointed board that knew precious little about the SABC's business.)

Tiger hired Thulani Kunene, who was second in command at the Competition Commission, to scrutinise all its activities.

He said foreign investors, in particular, were upset about Tiger's lapse and the share price did weaken.

"It was not a storm in a teacup. Even today, it always pops up in media interviews."

Matlare is obliged to be polite about the Competition Commission, which is still investigating collusion in milling. Tiger is trying for corporate leniency by giving all assistance.

Did the dissolution of the bread cartel help bring bread prices down?

"Well, bread prices are largely a function of commodity and input prices. Last year wheat prices pushed up prices abnormally."

So what is Matlare's vision? Where is he steering this battleship?

"The growth story remains vital. We'll go on making acquisitions. The bid for AVI (JSE:AVI) is a case in point. We withdrew because it was important to be on the right side of management. We have a high regard for them and didn't want it to become hostile."

Tiger does not feel it has saturated growth opportunities in its home market. Returns on investment in its traditional grains, baking and milling operations remain attractive, hence investment in a new R561m wheat mill.

Even in milling and baking, it no longer takes a commodity approach. Tiger's Albany brand keeps taking a bigger slice of the bread market.

Most of Tiger's big brands, such as Black Cat peanut butter, All Gold and Koo bottled and tinned foods and, Ace maize meal and flour have been around for many years. You could say it is not a great brand creator. It prefers to buy existing brands and develop and extend them.

Energade, the energy drink, for example, has been extended into gums and jellies impregnated with carbohydrate to give kids and athletes a boost. Now a smaller Energade drink has been launched at kids in four different flavours. It is a low GI product that does not spike sugar levels as the senior product does.

Ace and Jungle have produced muesli and instant porridges, which are growing strongly. Purity is prospering by extending its products across the baby range.

The group is happy with its existing categories but sees new opportunities in home and personal care extending all the way into cosmetics.

With the exception of its Chilean fishing business, now sold, Tiger has been largely a single geography country. That will change.

The interest and the success of companies such as SABMiller (JSE:SAB) and Shoprite (JSE:SHP) in Africa is not lost on Matlare.

He concedes that African countries offer rising populations and rising GDP but has no illusions about how difficult business will be to the north.

"You can't arrive there and say ‘me Bwana. me got fire' and show them matches. We'll approach with humility. We don't know it all. Most of the world's multinationals are well represented in the most interesting African countries and often there are strong locals. Still, Africa is full of potential and we are very interested.

"We bought 70% of the Cameroon chocolate company called Chococam. We have installed a new CEO and financial director. They export into Gabon and Nigeria. We are foraging around Nigeria, which is a very exciting market.

"We bought Haco Industries in Kenya, which is in personal care and confectionery. We'll use that to learn more about that market.

"In short, we prefer brown fields to green fields developments. We like to buy into business, where we can become partners of existing management. It is vital that such partners have integrity.

"Our own exports to Africa rose 33% to R276m excluding deciduous fruit." A whole lot more exports go through Shoprite (JSE:SHP) and other SA retailers active to the north, east and west.

Matlare is a real gentleman, who shows no annoyance at my late arrival. He's pleasant and cool after presenting to analysts and getting ready to go on radio shows. It's hard to imagine him doing the Jack Welch thing and firing 10% of the staff routinely every year. He is so well spoken he might have stepped out of Oxford.

He was born in Durban and schooled in Botswana and Langley School in Norfolk, UK. He has a masters degree in politics from the University of York. He started work at the Urban Foundation, Johannesburg before moving to Citibank, gaining experience in Florida in the US and Johannesburg.

After consulting with Reuel Khoza, he worked with Bobby Godsell at Anglo American (JSE:AGL) before joining Minorco in Luxembourg, Portugal and Eastern Europe. He returned to the Chamber of Mines. His next step was to Primedia, where he became CEO of broadcasting and entertainment. Thence he moved as CEO of the SABC from 2001 to 2005. He became executive director and chief strategy officer. He joined Tiger as CEO on April 1 2008.

Matlare was quite startled when I told him I wasn't interested in the (prettygood) results published on Tuesday. I wanted to know where he was taking Tiger, whether he had ideas of his own, whether, like Phuthuma Nhleko of MTN, he would blast off into fields new. Well, you have part of an answer.

It seems that he will preserve Tiger's identity as a defensive stock, avoiding risk and accepting lower returns. The AVI (JSE:AVI) bid shows he will be bold but that he is unlikely to do anything without the consent of his entire top team.

Write to David Carte: davidcarte@moneyweb.co.za

For more on Tiger's bread saga, AVI (JSE:AVI) and the fall of Nick Dennis read:

Pioneer unafraid of a bigger Tiger
If Tiger devours AVI, supermarkets will love us more - Pioneer's Hanekom.

Nick Dennis did honourable thing - chairman
Shareholder wealth multiplied nearly eight times in 14 years.

Tiger in another investigation
 Board believes report that top executives were not implicated in bread price scandal.

Tiger's R98,8m fine upheld
 Elsewhere executives could have spent Christmas in jail - chairman Lewis.

No guarantees for Tiger boss
Chairman lets investigations run their course.

Letter accusing Tiger top brass inadmissible
But former director says Dennis should go.

I didn't know
Tiger Brands (JSE:TBS) CEO is shocked by price collusion.

Intraday

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Good Luck Keep flying the flag Peter until people realise that uptitude and excellency are virtues that even Africans posses. Clean the mess and continue with the team to steer another South African organisation into greater hights. by Gambu on November 27 2009, 09:45 Find this comment inappropriate? Report it

True Blue One of SA's truly great companies. Good to see such a competent gentleman at the helm! by Reader on November 27 2009, 10:04 Find this comment inappropriate? Report it

Yes sir! The impression is created that Nick Dennis did nothing wrong and everything right. 12 Years of good returns and then he gracefully "fell on his sword". Let there be no doubt, under Dennis the company culture was lacking and the lasting effects are . .more still evident in Tiger's poor showing in the "Best Company to Work For" survey. At least under Matlare we are participating - Dennis avoided it like the plague. I still remember how Nick would start his bi-annual feedback sessions to staff by doing the age old: "Good afternoon....I can't here you, let's try again....Good afternoon!" - and after the third try we would all shout GOOD AFTERNOON! No wonder people decided to give him his profit and nothing more. Matlare might be riding the Tiger but Dennis neglected it! . .less by White Tiger on November 27 2009, 11:40 Find this comment inappropriate? Report it

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