Morning, everyone. I'd like to formally welcome you all to the Tiger Brands full-year results presentation for the year ended 30 September 2024. Before I hand over to our CEO, Tjaart Kruger, as well as our CFO, Thushen Govender, I'd like to bring your attention to our forward-looking statement, and with that, I'll hand over to our CEO, Tjaart Kruger.
Thanks, Barati. Good morning, everyone. It's a pleasure to talk to you again after a year of very hard work. We've got a couple of sections. I'm going to cover two sections, then Thushen will talk to you about, and maybe we can just look at the agenda. So highlights, strategic updates I'll cover with you. Thushen will do the operational performance, and then I'll conclude with a bit of an outlook for the period going forward. So if you look at our highlights for this past year, of which there's plenty, but a couple that we're showing here is changing the operating model or evolving the operating model a bit forward. Remember, we're at six MDs. We've got five now. We changed the export effort from a business to a channel, and we moved all of that into the businesses, and that managing director structure then became redundant.
A real highlight was our milled baking grains business that really had a good turnover or a good turnaround from the first half to the second half. That business has really struggled in the first half of the year, and the turnaround has really been encouraging. In the Culinary business, we've seen continuous improvement initiatives, and we've seen really good improvements in margins in that business and also in volumes in later months, so great performance there. We've done quite well with selling non-core brands. We'll pick that up a bit later again, but working on the portfolio, selling non-core brands, I think we've made great progress in that area, and then in working capital and cash conversion, we've done a great job.
And if you look at the numbers, you'll see that our cash conversion for the year. We've really put a major effort into managing our stock better, working capital better, stock debtors and creditors, and the guys have really done a good job in that area. And then driving the business over the longer term, driving the culture into being agile, have agility in the business, and be consumer-centric so that we drive the right behavior in the business and give the consumer really what they want and doing it properly and doing it quickly. The new operating segments, as you've seen, we told you earlier on the different MDs for different businesses. So now the segmental reporting will happen accordingly, and those will be the segments that we're operating on now and that we're reporting on now. So Milling and Baking, which is bakeries and wheat milling.
Maize is in Grains, maize, rice, King Korn, pasta, and Jungle. Culinary has got those subcategories, as you can see, Snacks, Treats, and Beverages doesn't change, and then Home and Personal Care & B aby, obviously Baby Wellbeing is in the process of moving out, and international is Chococam and Langeberg & Ashton Foods that we've got left, so all those other exports in this segmentation is reported under these businesses where the production is coming from, but we will disclose this as well, that 20% of our revenue just about is outside of South Africa, but 81% of our business is within the Republic of South Africa, and I think that's important for us to know that. These other markets are very important.
You can see there we're disclosing the different countries and significant at 19% in my view and very strategic in each one of these regions what we're trying to do there and how we're growing those businesses. I think non-financial stuff is very important to us. We've had a few marketplace wins over the last year, so we didn't just focus on cutting costs and restructuring and stuff like that. We've had quite a few very nice marketplace wins. E-commerce delivers 54% growth. We've hit the 91,000 stores in that GT exercise that we started about two years ago of getting into the general trade where we create pull by putting technology and people on the ground to go to the SPAR stores and create the pull out of the wholesalers. Going quite well.
We won the award at Consumer Goods Council for the GS1 standards, which I think from a food safety point of view is extremely important to do these things better and better. So we're very proud of that recognition. Best in Class with the SAP planning system that we've put into the business, and that is starting to work for us. That whole SAP IBP planning system that we've got across the business. Obviously, in certain of these businesses, it's more relevant than in others, and we recognize that and we know that, but it's really starting to work for us, and it's quite encouraging to see the owners of SAP in Germany recognize us for implementing it properly.
Tiger Brands, recognized through very difficult times, I would think, we recognize as Top Employer in South Africa, and that's a good measurement for us to know that our people are with us in the business because we know we can't run this business without directly 10,000 people, indirectly probably closer to 20,000 people if they're not aligned. We're proud of those. If you look at the achievements around the sustainability area, we must have sustainability in the business in all the areas, in our people, in what we do, in sustainability in terms of driving agriculture, but there's a few points. We've got S'ne appointed as CHRO of the Year. We're very proud of S'ne, and she's not even here, so she's probably working, which is a good sign.
Rising Star of the Year, I think it's Lydia that won that award, and we're very proud of her, and that's great. Employer of Choice, manufacturing company in the country, very proud of that. If you look at Most Valued Brands, and we've got a couple of brands in that list, we want more. We want all our identified strategic brands and core brands in that list, but as we sit here, these brands are on that list. Silver Loerie Award to Fatti's & Moni's think he's got an award, and then if you look at the sustainability area, we drive very hard in using less water, using less electricity. Now, the nice thing about that is that we drive sustainability, but we also reduce your cost, obviously, but we're doing a lot of work in that area, and the guys are good with it.
Our BEE suppliers, that number has been big for a while, and we're working on that. Then we're very proud of the Tiger Brands Foundation and the number of meals that they serve to learners in schools in the less privileged areas. These areas, we've really given a lot of attention over the past year as well, and we didn't forget about this, and I think it's pretty important that we recognize that. A strong recovery in the second half of the year. There you can see in the first half of the year, numbers didn't look so well, and when we stood here six months ago, we were probably sweating a little bit. I really think the business has turned around quite nicely in the second half, and you can see there our numbers improved in the second half of the year.
You look at our ROIC number, improving, driving very hard at cash conversion. And as I mentioned earlier here, you can see how we really drove the cash conversion, managing working capital better. And the portfolio optimization, which we will come back to again a bit later, really making very good progress in that. So if I can give you a strategic update, with the backdrop over the past year and where we sit now, and I do think we've got an economic environment going forward in the country that is certainly better than the last couple of years. And if you look at some of the stats, consumer confidence is the highest it's been in like 15 years.
So I do think we've got some positive things coming, but we still sit in an environment with 65, 70 million consumers out there that's under pressure from a food inflation point of view, from a poverty point of view, from an unemployment point of view. So it's an environment that's not necessarily conducive for premium products. House brands are doing quite well, private label is doing quite well, and we will have to be good at serving that market to get the volumes that we are going to talk about to you today. A few changes that we've made to our strategy in the business that I think it's important to share with you. So what's new is our vision, and if you look at that vision, you'll see a few key things. The first key thing is Southern Africa.
So we're driving the business much more to focus on Southern Africa. And don't be too worried about which countries are included. The principle is that we want to bring it back home and focus on the core and run that well and get the returns there that we're looking for. I think the second core thing that you'll see there is consumer-focused. We really have to put the consumer, all our products are used by consumers, all of them. And we really must make sure that the consumer prefers our product. And very important, they must be able to afford it. So the execution of what I've just said is through people and through our brands. So that's the next two key comments: there's our people and our brands. And accessibility of our brands must be available. They must be affordable.
So it's not just a sentence that we wrote. There's real meaning in what we say there in our vision, and it's very, very important for us to execute on that. Affordable brands that's available, people that can really execute and that's agile, and the consumer must love us, and we're going to focus closer to them. And then very focused on our brands. Those are probably the brands that we are going to focus on going forward. And you've seen the process of disposing of tail brands and disposing of businesses that's not core to us. And then very important, the execution process. Are we driving it?
We've got our strategic thrusts, and you'll hear Thushen mentioning a few things of that later on, but it's really around cost leadership, the portfolio of the future, having the right brands in the right places, putting the right amount of investment behind those brands, executing our growth platforms, and we cover what it is later, but it's snackification and convenience and affordability, and then superior channel presence. We cannot sit here and say that we're going to be good in general trade or that we're going to be good with wholesalers or that we're going to be good with the retailers. We must be pretty good everywhere. We've got a big basket of product, high volumes. All the consumers in this country consume our products, and they shop in all the channels, and we must be good in all those channels.
So we've got lots of activity to do that well. And then it's enabled by a couple of things. Maybe I just mentioned two there that we've added. I think something that we must give a lot of attention to in the future is sustainable agricultural sourcing. And I think you've heard us standing on this stage before saying that we've run out of eggs, we've run out of tomatoes, the bean crop is small, we can't find peanuts for our peanut butter, and all those things were real, and it happens all the time. And we must just become better and much closer to where that stuff comes from so that we can make sure we don't run out and that the cost of those products stay within an affordable level for our consumers.
So we will get much more involved at a strategic level with government, agricultural organizations, wherever you source this stuff from. And then added in that debate is food security. If we import all our raw materials, I think the country's in trouble. We cannot be a net importer of food in South Africa. I think from a food security point of view, that's a problem. So we're very happy to be part of a solution with policymakers and governments and regional organizations and agricultural organizations to play our role in strategic sourcing for agricultural products. And we haven't done much yet, but we will start doing a lot. The other thing that we've added here was competitive manufacturing. We haven't had our manufacturing capability at a high level on our strategic thinking, and we are by and large agro processors.
So we must be the best manufacturing people that this country has ever seen. They must all sit in Tiger. And we put much more strategic focus behind that. And then we will deliver the targets that we have. So we've got deliberate volume targets and volume recovery targets for the period going forward. Growth in our revenue. We want to get our EBIT margins to double digits. We want to get our ROIC way ahead of our WACC net working capital days. I think we've done quite a good job. We want to maintain that. And then we want to simplify the business. Let me give you a bit of an update on what we've been talking about the last year of what we're doing and how we are doing on that. And as the numbers are getting smaller, I must look over there with my eyesight.
I think if you look at when we started talking about the operating model and how we're going to optimize the business and reduce the size of the head office, there's quite a few things that we spoke about. Let's update on some of those. If you look at the first thing we did is said we've got these focus businesses, and they must go and sit at their businesses and run the business. That process is in place. Some of the businesses are gone out of the head office. They're at their operations. Other businesses, we must fit offices and get them going, but we call it the office optimization project. That's well in place, and it will probably be done middle of next year sometime.
The one promise I made to people of a big platform like this is that I will never expect anybody to sit in an environment that's worse than where I'm prepared to sit. When we started doing the work, we did actually find that some of our people shared services sitting in our factories. The offices are actually not in great shape, so we're fixing that, and then we will have that done. To have a decentralized organization where people sit at their factories, at their operations, really see the day-to-day stuff, what's going on, and run the businesses properly, and a very small agile head office. We have spoken about our cost leadership. We have identified a lot of numbers. We have identified a lot of projects.
We've delivered quite a bit in the last year, and we've got quite a few projects identified, lots of them in the logistics area, but we also took a lot of costs out of IT. We took a lot of costs out of all the businesses. So well on track, and it's going quite well in that area. Supply chain optimization, Thushen is working on that with the supply chain team. We've done a lot of work building that Control Tower. That will probably be done next year sometime, and we see a lot of opportunity and a lot of cost-saving opportunities in that area. Procurement optimization, we took procurement, which was very centralized, and we put the relevant stuff into the businesses. So agricultural procurement, for instance, must walk, the guy's feet must be dirty. He must walk the farms.
He must walk the places where the stuff comes from so that he understands what's going on. Our people must tell us before Grain South Africa that we've got a weak crop coming. That's how close we must be to the action. So we've done that. We moved the relevant stuff into the businesses, and there where there's real proper synergies to utilize the group muscle, we kept that at the center. So that's obviously a give and take all the time. We'll move around all the time, but I think we got it right to get procurement where it should be and get synergized stuff at the center where it works well. We've simplified the portfolio. I think, in my view, in my personal planning, I think we're ahead of where we wanted to be by now. So you've seen the announcement. We've sold some HPC brands last year.
The year before, we actually sold Status. This past year, we sold a couple of more brands. The Baby Wellbeing, you've seen the announcement. That is in process. It must go through authorities, but that's happened. Multiple disposal processes are in play. We're looking at quite a few things. We've got quite a few potential deals that will pan out in the next while whenever it happens. Really good work. Again, the finance team and the M&A team really worked day and night over the last six, seven months on these things, and I think the guys have done a great job. To simplify the portfolio, we're well on track to get that done in the proper way. The operating model, moving the managing director, streamlining the organization. I spoke about the TBI and Food Services that we moved into the businesses.
So, working well, and I think it will give us much better focused operations than what we had. And then SKU realization. Most of the businesses are ahead of where they plan to be. Remember, we said 20% reduction, and it will take time. I think if you look at Grains and if you look at the bread business they've done. They've cut out all the SKUs that they wanted to cut out. So that's all in place, and it's all going quite well. A few specific feedbacks on where probably there were some real problems if you go back to the beginning of the year. So in bakeries, we shared with you earlier in the year what the issues were. And yes, just a couple of feedbacks on how it's going.
So we've been talking quite a bit about we must change the philosophy of our bakeries from to have plenty of small bakeries and to have big bakeries that can give you better scale. So I'm very proud almost to say that we've got yesterday at the Board approval for our first Super Bakery. So the guys started after the SMS out of the Board meeting, and they started planning half an hour later. So we're very keen to do that. That is one of the major drivers to get our bakery business to the level where we want it to be. Now, I know if you've got one-on-ones, you're all going to ask me about what is this bakery and how are you going to do. We are trying to have a bit of a state secret here.
We do think we've cracked the next level of what big bakeries are. It's not a copy of what I've done before. It is something different, and it will come out, but as late as possible, please. So if you look at route to market, a lot of work has been done in route to market, where so we had a lot, and I told you in the past, we had to cut out a lot of routes because they were unprofitable. We had to change a lot on the discounting system, and that discipline has been brought into the business. So if you look at just route to market, route to market simplification, we've got a self-funded performance-based incentive scheme in there. We've done a lot of work on the depots. What do we close? How do we open a depot? What's the profitability level of a depot?
How do they do the routing out of the depot? So that work is really going well. If you look at price volumes, that's probably where there were a big job to be done. In some areas, we were a little bit out of control on our discounting structures. And it is a big risk in bakeries and all bakeries in the industry is. It is a volume business. The more volumes you've got through the plant, the lower your costs. So people tend to try and drive volumes by discounting too much. And it's getting the balance right. And we didn't have it right. I think we've got it right now, and we walked away from volumes, as we told you. We walked away from volumes to get that equation right. And I think we've got it right now. Big operational excellence.
So obviously, we can't wait for the Super Bakery to be built, and that's the silver bullet to save us. We have to run the other bakeries while we still have them open. We have to run them well. And by the way, there's big Super Bakeries in the inland. So the coastal bakeries, no change. We must run them better. But those bakeries are actually not too bad. So lots of work has been done. Damages are down. Returns are down. Our OEEs are up, and the bakeries are really running at a significantly better level than what they ran 12 months ago, even six months ago. And SKU rationalization, I've told you about that. In Culinary, a similar story. We've had lots of challenges in Culinary, but the guys have done a super job there.
So if you look at what we've achieved this past year, so if you can still buy Black Cat in glass, that is stuff that's been in the trade. We haven't packed glass Black Cat for about two months now. We've converted to PET, and that's it. And it's really working quite well. Mayonnaise with the egg shortage, we reformulated it. You've probably eaten that mayonnaise by now because you wouldn't know because it's a good product. It's nice. That's in the market. We'll get mayonnaise into PET soon. We must have got some CapEx to do that. Cool packaging change and degrammage. That's been done months ago. And the jam, All Gold jam as well. Warehousing project. We've got a bit of an issue in that we're short of warehousing, but it's how do we spend the CapEx, and we have to make that decision. So that's in progress.
SKU rationalization, the guys are where they should be. And then pack formats and consumption occasions, that's in progress. But that's also a never-ending job. We're never going to stop. I guess you could link that to innovation, to get the pack sizes right, get the offerings right. So that's good. And if you look at our gross margin improvement in this business, the second half has really been a good performance. It's really been a good turnaround in this business. The guys are really running a good show. Brand renovation. We've really got Crosse & Blackwell, we've got some nice innovation that came out of that. Nice work behind the brand, and the same with All Gold.
And I do think if you're going to look at our price points in this business particularly, if you're going to look at our price points at the moment compared to six months ago, eight months ago, you'll see we're achieving that goal of getting much closer and putting our competitors under much more pressure in terms of affordability. And that game's continuing. And as we get into the reformulations, the packaging changes to PET, we will just become much, much more able to get that equation of affordability in our favor. So very excited about this business and some really good work happening here. I think in Grains, so as we've said before, our two biggest challenges in the last year from a turnaround point of view was probably Grains and bakeries.
So in Grains, really, and if you look at the current performance in Grains, it's actually quite good. So that was also a very good turnaround. And what we had to really put a lot of focus on in Grains to get our pricing right. But remember last year in rice, we told you that we ran out of rice. We had a quality problem, and I had to abandon all shipment. Then we ran out of rice. Then rice went from ZAR 7,000 a ton to ZAR 12,000 a ton. And the only rice we had was ZAR 12,000 a ton, and all our competitors sat at ZAR 7,000. So it was quite challenging. But we've got all of that right. The Indian ports have opened. We can get Indian rice. There's deflation in the rice price.
I think our team have got the equation on how to trade with a commodity, with rising and lowering pricing, how to do that. I think we've got that sorted out, and I really think the team is running well. Jungle had a bit of an issue with affordability. That has also changed a lot. We've got also, I think, some imports that's not declared properly. We're working on that, and that business is also turning around nicely. The SKU rationalization, no problem. Liezel took that out very quickly. Continuous improvement in a business like pasta, looking at the recipe, looking at what type of wheat you use. That's quite important that we get that right in the business because we run the risk of just buying the most expensive wheat you can find because we've got this perception of quality, and this is not only pasta.
Wherever we use wheat, bread is probably a better example. But we must get that equation right. We must get the right quality of wheat at the right price, and then have the right recipes to make sure we bake a quality bread or make a quality pasta that the consumer loves at the right price point. And we're getting those equations right. And the pasta game here is quite exciting on what they're doing there. We've identified, as we all know, we've been trying to sell maize and King Korn, and that's ongoing. We are in processes, so we will see how it goes. And then driving affordability, it is really, if you look at some of these commodity categories, and it's well-branded commodity categories, but if you look at rice, it's a commodity food. The biggest SKU is 10 kg.
It's obviously food people buy as a basic staple. You can't sell it at a 30% premium. You must be competitive, and people must prefer your brand at the right price. And that's what we're starting to get right in the business. So there's the portfolio that I've referred to a few times. So Status, we sold earlier. We actually sold it the previous year. We got the money in the first half of this year. And those other brands, we sold in the second half of this year. So a good job done there. Baby Wellbeing has been sold since, and that's in the process of authority approvals. And then the rest of the work is on the go. And I think we've referred to a lot of those and referred to it quite a bit.
But we're really looking at the portfolio with care and in detail, and those processes are really going well. I think it's your turn.
Thanks.
Sure .
Good morning, everyone. I'm not sure how Tjaart manages to read that from. I'm going to focus on the laptop. So Tjaart took you through some of our cost leadership initiatives, and that's an important phase one in order to lay the foundation for the future growth platforms. And we've made good progress on that. The other thing he spoke to you about was portfolio optimization. And obviously, with a finely tuned portfolio, we're able to direct our capital where we can achieve the required return on invested capital. At the H1, we explained our capital allocation model to you, our priorities, and this was the progress against that commitment we made to you.
Another critical enabler to creating a competitive advantage is investing behind technology, in particular when you have a group that has the breadth and depth of Tiger's categories as well as the complexity. We referred to the SAP integrated business planning model earlier, and you have to appreciate across over a thousand SKUs that results in hundreds of thousands of procurement items from packaging to ingredients. You can't use an Excel spreadsheet to run the forecasting. With the SAP tool, we're able to optimize our stock levels as well as, and most importantly, improve our service levels to our customers. The second phase of SAP that we invest in will bring some AI capability to us. It looks at historic trends, brings in predictive demand, and dynamic buffer stock levels.
As you can see with some of the work we've done on our working capital reduction, that's a key enabler to our future ambition and improving that base even further. I spoke about the procurement tool at H1, Zycus. Since the implementation of that tool, we've launched quite a few e-auctions with various big contracts. That's allowed us to achieve two or three things. Firstly, the best possible price because it's an auction. Also, it allows us to have the right governance process in place because it's a proper tender process with the right quality credentials being assessed. Debtors management, we invested in a tool earlier this year, and it's had a phenomenal success rate. Considering how little we paid for that software and how quickly it was implemented, we were able to reduce our claims by 20%. You see that coming through. This tool has cloud-based technology.
It's able to match delivery notes, POs, and invoices much sooner. Historically, this was a manual process and took us long to resolve a customer query. Tjaart spoke about quality management. Here again, we've invested in a software which allows us to improve our monitoring, but equally monitor our suppliers and get them onto the platform so we can be ensured that whatever we supplied is of the appropriate quality. What this tool also does is help us predict trends across the organization and be a lot more proactive in dealing with food safety matters. The logistics supply chain control tower is one of the big game changers for Tiger and one of the big drivers of the CI program that we referred to earlier in the presentation. Historically, Tiger has outsourced various aspects of its logistics chain, whether it's the raw materials, packaging, secondary warehousing, primary warehousing, and logistics.
We didn't have a full end-to-end view of the movement across our supply chain. With this software, we're able to follow all the way from the point the raw material enters the factory to when the finished goods ends up at our customer and assess the efficiency of that execution, but also benefit from our own backhaul optimization opportunities. What do I mean by that? If I have a truck taking glass jars to Boksburg for mayonnaise, that truck shouldn't be coming back empty. It should be filled with tomato sauce and finished goods and other finished goods. So this software that's been tailor-built for Tiger will allow us to achieve those benefits. Moving on to the financial highlights. As Tjaart mentioned, it was an exceptional second half. You would recall in the first half, we exited operating income being approximately 3% down and revenue 1% down.
In the second half, all business units showed revenue growth besides MillBake. There we said to you the first phase was about margin correction, and both MillBake and Culinary delivered an exceptional operating margin improvement to result in a flat operating margin for the full year despite the challenges we experienced in H1. The EPS that you see there is as a result of the disposals that we referred to, the non-core brands from HPC as well as the Status brand that was concluded in H1. As you can see on working capital, it was an exceptional result, and I'll talk to some of those initiatives that we looked at a little later. The operating income that you see there is before the disposals. As has been the historic practice, any investment behind LAF from a capital investment perspective is written off.
So that's also before that write-off. The associates delivered an excellent result. Carozzi, approximately 18% up on the prior year. All business units performing well as well as export markets. It's probably worth pointing out that this business has a very similar division to LAF that sells fruit purees and tomato paste as well. We are, however, experiencing a softening of that result as the fruit puree prices came off. So in the last few months, you've seen those results come off quite drastically. But on a full-year basis, it was a good set of results. You would recall with national brands in the prior year, we moved to the Victoria Falls Stock Exchange, and the base was increased by ZAR 120 million as a consequence of changing the reporting currency. If I remove that adjustment from the base, we're probably up about 20% within the core operations.
So a really good set of results from our associates. We're pleased to note that the dividend cover will remain at 1.75. And obviously, as we make progress on our portfolio optimization initiatives, there's opportunities to look at special dividends, share buybacks, or the dividend cover itself. This really supports the story that Tjaart and myself have been presenting. If you look at what the first half volumes looked like, 9% regression, price inflation of 8%. With some of our cost leadership initiatives, we invested behind price, brought that price inflation down in the second half, and the volume regression wasn't as deep. And as I mentioned, Culinary saw some volume growth in the second half, which supported that, and so did Snacks, Treats, and Beverages.
If you consider market inflation on a 12-month moving average basis, if you remove rice and milling because the weighted average of rice in the Tiger basket is much higher than the market. So if you remove that to normalize the market inflation as well as Tiger's inflation, we probably experienced a 6% inflation versus 5% of the market. So as you can see, that investment behind price to trade harder is certainly delivering results. That's the cash generated from operations due to the initiatives I mentioned on debtors management. We've also been quite strict with our customers. If they haven't paid us on time, the truck isn't leaving. It helps when you're in charge of logistics as well as the treasury function so you can intervene when required.
We also had a few bad practices in the past where customers were claiming settlement discounts, yet they were paying late. So we pulled back on that as well. So you see that improvement coming through. And on the creditors and stock management side, I spoke about SAP IBP assisting us. And it's been a particularly tough year to manage your inventory levels down given where the commodity prices were and given the agricultural cost push. However, where we had those sort of challenges, we renegotiated with our suppliers to ensure that our payment terms were aligned as much as possible with the stock days. And that certainly yielded results. And you'll see us closing on a net cash position of ZAR 305 million versus a net debt position in the prior year. Before I move on, I just want to make one more point on the ROIC lines.
You'll see there's two ROICs, the ones that we have two ROIC lines, one that you'll find reported in our financials, and the other one is the revised ROIC computation that we will be using going forward. So let me just explain what that means. Historically, we added back all previously written off operations, intangibles, and tangibles, and said this was as a consequence of bad management decisions, and there was approximately ZAR 2.5 billion added back to our asset base to work out our ROIC. When we look at the competitor set, that really there wasn't much consistency on how they treated this, and we thought we were penalizing ourselves and, in fact, presenting the wrong number or a version of a number that was slightly too bearish.
Going forward, any write-off that relates to a disposed entity, call it what's the Nigerian entity, Deli, or the Dangote business, that's no longer relevant. It's been disposed. We've exited. It seems pointless writing back those assets. So we've removed that from the computation now so that ZAR 2.5 billion add back will be reduced to about ZAR 1.4 billion moving forward. And as I said, we've looked at our competitor set, and we think this is quite appropriate. Capital investments, some strategic investments that were commissioned, the peanut butter facility, which allows us to fill in PET, the Jungle flaking plant was replaced, and the new aerosol line at Isando. There was also quite a bit of rebalancing of the CapEx to direct maintenance in areas that required it, such as the bakeries business. Looking ahead, this ambition is much higher, obviously. Tjaart referred to the bakery project that was approved.
We plan to get to about a ZAR 1.5 billion spend, obviously subject to lead times from equipment suppliers and then the general commissioning exercise. Milling and Baking, the operating margin that Tjaart referred to, the improvement in the second half, you can see the 9.4%, and it's really about driving those production efficiencies as well as ensuring we're focusing on the profitable routes. Here as well, we invested in a route planning software tool, which allows us to geomap the various general trade locations and monitor whether driver has delivered there, monitor whether the driver has delivered there on time, and also monitor the driver behavior to ensure that it's fuel efficient and not impacting the wear and tear of the vehicle in any shape or form, and this is a key enabler to expanding our general trade presence. With quality, we found some inconsistency across our various bakeries.
We partnered with a technology partner, and we bring in a lot more consistency to our product, and we've improved that recipe so that it underpins the brand credentials of Albany as the market-leading brand. That spoke to Grains, and I think you see that prior year, the 0.4% margin was as a consequence of the deep discounting on rice. And in the current year, you saw that rice being sold off that didn't meet the quality standards. This business is really about those three things, about three things here. Driving down the cost across the value chain, including logistics, investing behind price, trading harder. And the other key point to achieve is optimizing the stock levels. We need to have a healthy balance between margin, buying commodities at the right price, but making sure we're not holding too long a position and impacting our return on invested capital.
Culinary, exceptional result. We had a head start on some of the value engineering initiatives, whether it's recipes or packaging, and you've seen that second half margin lift. Just to remind you, this includes exports as well as the Davita's business, and that business also did quite well. You would recall we spoke about the key distributor model in export markets, where it moves away from trading to brand building, consumer insights, and we managing or we are experiencing the benefit of that focus. Tjaart spoke about the agricultural issues, and here again, we're working with growers, trying to offer them longer-term contracts, not just a year, two to three years, which will allow them to fund the expansion of their plantings.
Snacks, Treats, and Beverages, exceptional volume recovery in the second half, and it held margin quite nicely considering the cost push we saw in cocoa, north of 30-odd%. The cost push we saw on orange concentrate, north of 20%, and I think the team did very well to hold margins, and looking ahead, it's about how we formulate those recipes to make sure we're mitigating that cost push. We've had great benefits from the conversion costs. You would recall in the prior year, we went on to an entire time and motion assessment across the facilities, and that's delivering in terms of labor optimization and mitigating the raw material cost push. Building the brands in this category is quite critical, and the availability is also quite important because this is an impulse purchase.
When someone wants to buy an Energade, they want to buy it today, they want to buy it now, and they want to buy it when it's cold. So we're working with our F ood Services team to make sure in restaurants, hotels, we have cold availability of our product, which is also going to go a long way to drive volumes and brand credibility. The HPC business was tougher than we anticipated. We had the seasonal challenges on pesticide, and we've been speaking about this for some time now. So there's two or three things we're doing differently here, looking at neighboring markets, trying to drive penetration into those markets where the summer is a lot more consistent. And then secondly, looking at the entire profile of insects that you experience during the year. We have solutions not just for mosquitoes.
There's solutions for various insects, ants, moths, whatever you want to call it, across the year, and we must make sure our product activation and our marketing tactics is aligned with those life cycles. On the personal care side, we came up with some deep discounting activities from our competitors. We held prices to protect margin. Here again, this is a seasonal range. The Camphor Cream range is a winter product. We're focusing on activating our non-seasonal products, the functional range that drives skin nutrition, skin moisture, so that we can reduce the dependency on the core Ingram's product. The Chococam business delivered a really good set of results. It was up about 10% year on year. The work that we were doing on value engineering around recipe modification, degrammage, price-pack architecture, the solutions to make our products more affordable.
Mohamedou and the team in Cameroon had a head start on that. So they've done a really good job. The drag that you see in this results is the LAF business. I spoke about the fruit puree pricing coming off, and that's impacting Carozzi, and that's really what you see coming to the fore and bringing down the international performance. But if I look at this holistically, Cameroon really delivered an exceptional result to hold up the margin as well as grow the profit. Thank you. I'll hand over to Tjaart now. There you go.
Thanks to Thushen. So just two or three slides to conclude with. If you look at our targets, short to medium targets that we're looking at delivering as we go forward. So if we look at volume growth, you can see this past year we declined by 6%.
Most of that, I wouldn't say all of that, but most of that was planned. We walked away from bad businesses in quite a few places. We had to fix our disciplines in quite a few places. Thushen referred to some of it, this whole thing of late payments, giving discounts, giving the settlement discount, selling everything in the last week of the month, and then we give them extended terms because they overstocked. Those were all practices, probably industry practices, not Tiger practices, but we stopped all of that. And obviously, in the shorter term, that had an impact on your volumes. But that's what we're planning and what we're aiming going forward. Certainly want to get to 1%-3% very, very quickly, and then we want to get to the higher number as we go forward.
Operating margin, for sure, we must get that to 10%, and then we must get it above that. Whether that will happen this year, next year, or the year after, I'm not too sure, but it will happen in the next couple of years. ROIC has become a very important number for us. I think our ROIC number historically has been quite low, mostly because of working capital, but we understand that now we're managing working capital appropriately, and we aim to get ROIC to 20%, not too far into the future. Net working capital days, I think we got it to 67 days. Can we get it better? Maybe a bit, but I don't think that that would be the big drive. The big drive is to keep it there and make sure that it doesn't go out again because it was over 100 days not too long ago.
And then portfolio optimization. We're really working hard in getting the portfolio where we want it to be. So we're working on a lot of things. We've referred to quite a few of them. We've got all these things on processes, all these various potential disposals on processes, and we're working very hard to get to a point within the next two, three years where we've got the portfolio of the future. And SKU rationalization, I think we've spoken about that quite a bit. So if you look at guidance, maybe I should first just refer you to that picture. That is proper innovation. If you look at that picture, if you look at those little sweets in that packet, that is proper technology to make that. You just don't make it in a 100-year-old machine. That's proper technology. Now, we don't have it. We import this.
But this is innovation in those businesses to get this type of technology into our factory and drive it. But there's some of it outside. You must try it. But there's our guidance going forward in terms of what we want to achieve. Thushen referred to the CapEx. Obviously, the issue with the CapEx, and we always get accused that we're not executing on CapEx, but if you look at the Super Bakery, you must get the order in for an oven, and that oven takes a year to build. So these things take time, and we must do it properly. I'm not concerned about our execution capability. I'm concerned that we do it properly. And if it's six months later, it doesn't really bother me too much. We must just do it properly.
Thushen mentioned that capital allocation model, but that is the question we will have to deal with in the next year or two. What do we do with the surplus cash? I think it's a lovely problem to have, and we're going to have to decide. Special dividends, share buybacks, increase the dividend cover, and we will do that based on proper analysis of the capital allocation model and make proper strategic, well-informed decisions. If I can conclude with this slide, I think we've covered this quite a bit, but it is really the pillars of where we're focusing on to get Tiger to roll again, and I don't think we're far away from that. Before we take questions, I just want to, I should probably have done it when we started. Welcome, everybody, but welcome our Tiger people. Our chairs arrived. Geraldine, welcome.
Our executive team, we've got Jo sitting there. We've got Praveen sitting over here, Mary-Jane, and in the front here , Thabani Maree. And we've got Zayd sitting in the back there. And then we've got two MDs here. It's Mr. Sweet and Mrs. Grains, Liezel and Grant. Welcome to all of the others. The others are working. But welcome to those guys, and it really is, I think, I really have to thank all of these people for, I mean, if you look at these guys, they're all younger than 40, but they look about 60. It was 10 years' work in the last year. And I'm not joking. The guys have done an enormous amount of work in this past year. And I think it's appropriate publicly to thank them for that. And thank the board for the support, which was exactly what we needed.
Thank you very much for that. And maybe my last thank you is to Thushen and his finance team. You won't believe it. Thushen's first job as CFO. He's been M&A and all sorts of fancy things before that, but it's his first proper job as CFO. And we've had the numbers two weeks ago. It was so cool. And his team sitting around here. So well done. Thank you very much to Team Tiger. It was a great effort and a great year. We're going to do the questions. So questions from the floor, I will handle, but Barati will come and operate the computer for calls being called in. I don't know if there's someone who wants to ask me if I've got shares in Premier. I don't. I've sold it all. I've got lots of shares in Tiger, though.
Okay, shall we open the floor for questions? Yes.
Good morning. Thank you for that. Shaun Chauke from Nedbank. Two questions on my side. Can you please speak about the challenges in the general trade in terms of shifting the sales mix quicker than you like? What would need to happen for this to accelerate? So that's the first question. Should I move on to the second one?
Okay, but you want to answer that first. You're scared I'm going to forget it. So the challenge in the general trade is, right at the moment, it's the food safety issues with scores of stores being closed down. And obviously, with that happening, there's a bit of criminality creeping in. People are closing them down to steal the stock and so on. So that's all happening.
But from a Tiger point of view, our focus on all channels, and you're asking about general trade in particular. So in the bread business, we should have significantly more than 50% of our sales into the general trade. We don't. We're less than 50%. We were probably 40%. We're closer to 50% now. To do that, you don't just sell into the general trade. You must really be good at distribution. You must really be good at routing. You must really be good at, and your drivers must be salespeople. So you don't fix that overnight. We've got all those processes in place. We've got DRM in place where you can, because you can lose your boots quickly if you don't do it properly.
You just drive up and down, and drivers drive like this, and the same driver goes down the same road to service the same stable of stores. So you must really get stuff planned properly, and that's in progress. We can see the improvement as we go along. When will we be where we want to be? Probably never. But we should get towards 60% of our sales into general trade, certainly within 18 months or so. So that's in place. What we've done for the rest of the basket of Tiger, the guys started about a year ago, two years ago, what we call the GT program, where we put people on the ground with technologies. They've got on their phones; they've got apps where they can place an order from a wholesaler or a mid seller.
They can place an order on, or they can place an order on them from a customer. They help the customer, the spaza store. They load the app for him. He can place the order. He's got a wallet. He can make the payment. It goes through, and these wholesalers have got township people that's got cars or bakkies or whatever they have, and they do the deliveries, and it works quite well, and that's the 91,000 stores I'm talking about. What we're trying to do in addition to that now is merge these bakery efforts and the 91,000 GT program without losing focus in either, so they're starting to share technology because they can certainly share customers. Because remember, the bakeries deliver directly. These deliveries are going through third parties, and it's just a technology fit.
On top of that, we must be aware that the retailers are actually encroaching on the general trade area. I mean, Usave, Boxer, you saw them listing last week. Their market is in this market. That's where the market is. You won't find a Boxer around here. You'll find a Boxer in the GT market. Usave is in the GT market, and most Shoprite are in the GT market. And a lot of SPAR, certainly in KZN, is in the GT market, and they're growing. So that's also happening, and we're comfortable with that. We sell to them. But the big drive in the general trade is these activities that are, but it is really about, and if I can make a cynical remark, it's really about being in that market and understanding the market and not sitting on your cell phone in Bryanston.
I'm sorry I said that. Your second question?
Yeah, thanks for that. With regards to the super bakeries, I see there's expectations of reducing your conversion costs by 50%. Can you please maybe talk us through the differences of this type of bakeries? Is this 50% reduction sort of due to Tiger's cost structure at the moment, or it's a general sort of typical uplift as a result of investments in this type of bakeries? Thanks.
It's all about scale and technology. So if you've got a super bakery, you've got one bakery manager replacing seven bakeries. It's got seven bakery managers. So you've got seven management teams versus one management team, and the management team is the same for the seven bakeries and for a one bakery. If you look at the staffing of the whole plant, it's very mechanized, so obviously much less staff.
And again, if you've got seven mixer operators, you've got one now. So it's just from a management cost and an operator and a labor cost point of view, significantly lower. And then if you look at the technology, so if you look at a modern, and I'm not going to give you the real numbers, but if you look at a modern 5,000 loaf plant versus an older 2,000-hour loaf plant, the efficiencies of that plant in using fuel and getting retention of water and getting all those things is just on a different planet. And then if you look at scaling weights, so I mean, if all these technologies don't work properly, you'll find in an old-school bakery, they scale the dough 810 grams to get a 700-gram loaf. In a modern bakery like this, you scale it 770 grams to get to 700 grams.
You can see that difference is just a huge saving. Those are the type of things. Don't try and work these numbers out because they're not the correct numbers. I can't give you the correct numbers. It's just a different planet. Just the efficiency of a bakery, of these big bakeries, using the technology, getting the throughputs, getting the efficiencies, and then getting the quality because your quality is better. You get the right quality, the evenness of the bake, the cooling down of the product. The quality is just very, very different. Your costs are also just very different. I think you've attended enough presentations of our competitors to see those numbers. You can work on those numbers. That was the second question, huh?
Yeah.
Morning. It's Sumil Seeraj from Standard Bank. Tjaart, it seems that you're quite positive on FY 2025.
How has it started in October, November? Because recent data from Black Friday seems very supportive. Could you just comment on trading so far?
Yeah, we're trading well. Yeah, we're trading very well. And if you look at the ambitions that I shared with you there, we're on track with those. And what gives us more comfort, you know, and you don't trade in a day or in a week. You must look at it over time, and we will really fly the flag after the first quarter, really. So we're very hesitant up to now because it's only two months. But we're trading where we want to trade. And I think what we've got right is we've got this operating model right where our different businesses focus on the right things now.
Liezel behind you there knows exactly what needs to be done 50 times a day in terms of selling rice or Jungle or maize or wheat. It doesn't get lost in a matrix somewhere where we give it some attention at some stage. That goes for cannery, and that goes for snacks and treats, for beverages. Our teams are on top of what needs to be done on a daily basis. What we're giving a lot of attention to is to our customers. Almost every morning, I haven't sent notes to this. Oh, I did. Almost every morning, I would send notes to the MDs asking stuff on service levels, why is this customer lower than last year or whatever, whatever. It's just creating that culture. I'm not trying to micromanage.
That's certainly not my style, but trying to create that culture that, you know, what we don't do today is not going to happen. Can't do it tomorrow. We must do today what we must do today, and I think we're there. I think by and large, the organization is there, so the execution capability is significantly better, the focus on the detail, and then the disciplines. You know, there's one thing that happened in the industry, so especially with the wholesalers, they won't place an order on you. Simple example, so they won't place an order on you. Maize meal, 10 kg, 50 trucks. We don't know nothing, and then they wait for the last week of the month. We're under pressure for volumes. We're not making our targets. We'll give you a deal. Wait for the deal.
And then a week later, yeah, but I still put a lot of stock in the informal. "I can't pay you 30 days. For this last week, I must pay you 60 days." And we fell into that trap for a long time. So we fixed it. And it's fixed. So if you don't want to pay 30 days, don't order in the last week of the month. And if we lose the order, and this is what happened in the past year, and that's where you've seen some of these adjustments, that's cool. We'll walk away from it. We'll park the poor performance for the month, and we'll sell it next month. So that volume declines in your Grains business. You don't see that happening going forward? No, no. We'll be back into growth. We're fixed, and we're back into growth, yeah.
Then the last question was around this mega bakery. What would the CapEx spend be, roughly? Because you're very confident on your cash flows improving significantly, and you're talking about share buybacks and special dividends, so. But you know the benefit. How much cash do you think we have available to spend?
I don't know. We're analyzing over time. No, we can build the bakery out of our cash resources, and with the disposals, we'll get more. And we'll still have to pay special dividends or buyback shares. But the CapEx is big. It's big.
So what would you estimate that bakery at?
We've got a CapEx approved. It's touching ZAR 1 billion.
Okay. Thanks.
With lots of spare cash.
Can we take it online?
Have you got a question there?
I do. I do. We'll just go online, and then we'll come back into the room.
So the question coming from Umthombo Wealth is, given that South Africans tend to downtrade to private label, which signals that they are more price-sensitive than they are brand loyal, how does Tiger Brands plan to compete? And are you willing to cut margins to drive volumes?
Margin cut and volumes is a balancing act. It's not cutting it. I mean, there's also a financial thing that we're happy to sacrifice volumes to protect margin, and some of our competitors say that publicly. I think it's a balancing act. The thing with most of our products, if not all of them, we must be competitive with private label. The whole thing with private label, and I have these discussions with our big customers all the time. There's two things here, and I'm going to mention the second one, and maybe someone will be cross with me, but I'll mention it.
The first thing is, if you put baked beans in a can, and the regulation says to call it choice baked beans, it can't be lower than the specification, then nobody can get it cheaper than what we can get it because we've got scale nobody else has. So private label can't get close to us from a cost point of view. But they sell it 30% lower than us. Why? Because they don't conform to the regulation. They don't pack the choice grade. It's not dangerous. It's just a poorer quality. And we've got a problem with that. And we're addressing it through various ways. But that is the one issue that we have to deal with. I think there's a few things we can do. We must just take choice off the can because nobody knows what it means anyway. But there's some other things too.
We must get our regulators to actually apply the rules. Rice is another example. If you want the quality long-grain rice, it must be 6.2 millimeters each grain. All our competitors pack less than that because it's cheaper, and then they call it long-grain rice. All the private label does it. So that's an issue that we are busy addressing, and we're working hard on addressing that, but park that issue. If we sit on most of our products, where a private label makes really sense, if you can pack a much lower specification, and we've got this argument with bread all the time, so if you want to pack a private label in bread and you want to sell it 30% cheaper, the customer wants us to fund the 30% because you can't bake the bread 30% cheaper.
Your cheapest bread is actually this high-quality bread because technology makes it cheaper. And if you want to bake cheaper bread, you can fiddle with the recipe, and you can probably take 30 cents out of the cost. And I'm not even so sure it is 30 cents. I think it's less. So you can give the customer 30 cents, and he can sell his cheap private label bread 30 cents cheaper, and everybody makes the margins they want to make unless someone except if someone funds it. So that's the issue you have with private label. But the work we're doing in all our products, when we get our mayonnaise sorted out, and you'll see we'll have variants, Kasi mayonnaise, which is a different formulation. It's got a different taste. It's much cheaper raw materials or recipes.
If we get those price points right, we will be very able to compete with private label. Maybe not as cheap as them, but if a private label baked bean is ZAR 12, and we sell it ZAR 13, they sell nothing. We sell everything. The consumer is prepared to pay that premium, but only that premium, not more. That's the challenge we've had in the past. Our premiums were too high. But we're fixing that. We're very respectful of private label. It's a formidable competitor, but we're happy to compete. Quinton has got this good saying. We're very conscious of it, but we're not scared. Any other questions?
Okay, I've got a couple more online. So this question.
Did you have one for Thushen?
Oh, of course.
Give me a marketing question.
This question comes from Matrix Fund Managers, and it's around the guidance we've provided on CapEx. So the question is, your guidance for FY 2025 is between ZAR 1.2 billion- ZAR 1.5 billion. Can you give a little bit more color on this? And is this inclusive of super bakeries?
Okay. So it is inclusive of super bakeries. There's quite a bit of investment planned in the beverages sector or segment as well. There is some investment planned in Culinary where we want to insource some of our production, which brings down our unit cost. So in essence, looking ahead, the capital investment plan is about growth, efficiency, and optimization. There is some maintenance spend coming through as well, but optimization and growth is going to be critical to achieving the margin ambition that we put out there.
As Tjaart said, with the long lead times, and I mentioned that as well, with these big projects, we may get the approvals ahead of ZAR 1.5 billion in this year. That's the likelihood. It's just about when does the equipment arrive? When do we start commissioning? So we're confident that we have a plan that is well laid out by business segment. It's now about ensuring execution.
Thank you, Thushen.
The bakery CapEx over two years, one phase in one year. Yeah.
Thank you. Before I come back into the room, we've got a question from Fairtree around marketing investment. So the question is, how do you provide guidance in terms of how we should look at marketing as a percentage of revenue going forward as this has trended down and we suspect that there is some catch-up spend to do?
Can I answer that?
You can add.
Okay, good.
It's my favorite topic. So we've got the best brands in our business. In our categories where we operate, we've got the best brands. In most of our categories, we've got the number one brand. I think if you accuse us of neglecting those brands, I would accept that criticism. I think we have neglected those brands over the last number of years. Over this past year, we've been busy with a reset, and we have pulled back a bit of marketing spend because if your service levels are too low, your price point is wrong, I think you're wasting your money that you spend on marketing. So you must get all the P's right before the whole thing works efficiently.
I think the second point I would like to make is to express a percentage of turnover as a marketing spend in all our businesses, a particular number, you are for sure going to waste a lot of money. The percentage spent in rice is much lower than the percentage spent in snacks and treats. Because it's a commodity product, it's a basic foodstuff, it's massive turnovers. When snacks and treats, it's an impulse buy, it's a treat, and you must really tell people about it. So to have a flat number to say in Tiger, we must spend 2% of our turnover on marketing, that is the first step of wasting a lot of money. So it's business-specific that we have to spend money. And what we're putting a lot of focus on is to take our marketing spend and break it down.
I don't think if you spend half your marketing spend on research, you've achieved too much. You must spend the appropriate money on forward-facing, consumer-facing activities, overheads, research, and R&D. So you must get the balance right. And we've done a lot of work in the last four, five months on that. It will probably take us two years to get good at it. But we must spend the bulk of our money on consumer-facing activity. That's where most of the money must go, to convince the consumer to buy our product. Now, obviously, the activities must be well-planned. It can't just be activities. It must be behind a strategy. There must be a brand blueprint. We must analyze what we want to tell the consumer properly. We must research it. All that stuff, we must do it.
We must just get the balance right on getting, not research ourselves to death, but make up our minds quite quickly on what we want to do, and then execute it properly and get the bulk of the money into consumer-facing activity. We used to call it above the line and below the line. If you want to look at that, more below the line than above the line. I think activity like in the bread business, we must own all the township schools. We must own all the SPAR stores. Paint them. They must be loyal to us rather than making a TV ad. Now, I'm not saying it's either or, it's both, but where does your focus lie and where does most of the activity lie? It's in that way. I don't know if you want to. Perfect. Okay. Did I get it right?
100%.
Are there any questions in the room?
Thanks. It's Andrew Moses from MIBFA. If I look at the business, maybe 10, 15 years ago, there was a real drive to internationalize the business and to have a big, diversified, global business. That strategy obviously has run its course. And now I kind of wonder what is the advantage for a Carozzi or a Chococam to having Tiger Brands as its parent? And what do they bring to Tiger Brands? And does it make sense longer term? I mean, obviously, while they're performing and you own them, you own them, but does this actually make sense over time?
Your short answer. I agree with you.
Yeah. Okay.
No, that's very true. And I think lots of companies, and Unilever had huge ambitions into Africa, and they all pull back. Because to operate in African countries is not easy.
I mean, we've got how many countries where we've got garnishee orders with cash sitting there we can't get it out. You're dead right with the investment in South America. What's the strategy behind that? We're dealing with all of those. We're working. You can appreciate the sensitivities, but we are pulling Tiger back. The other thing, when I speak to investors in America, specifically in North America, but even in Europe, they all tell me they invest in Tiger for the South African play. They don't invest in Tiger because Tiger's got businesses in Chile. They'll go and buy a business in Chile if they want one there. I think from that point of view, it also makes sense for us to focus.
But it's also on top of that, I think we must just pull the whole thing back and make it efficient and make it work again. I'm not saying that never forever we will have ambitions that go beyond Southern Africa. You can never say that. We look at strategy all the time. The world environment changes. But right now, the opportunity in Southern Africa and the opportunity in South Africa in the next two, three years, I think if you exploit it well, you won't even have time to go anywhere else because the opportunities here in the next two years, I think, is massive. But we'll have to be competitive if we want to do that. We'll have to be slick.
Okay. All right. I'm just conscious of time. So just one more question online. Apologies if we don't get your questions. We will respond via email.
So the last question online, it's actually coming from a couple of the companies attending online. And it's around the informal sector. What is Tiger Brands' strategy? Can you just build on that a little bit more in terms of the informal sector, building on the achievement of 91,000 stores in GT?
Yeah, the ambition is obviously the 91 was a target. The target going forward is I think it's 150,000. We want to get 150,000 this year or next year. I'm not too sure exactly. Next year. Next year, yeah. So the ambition is obviously to grow that out. We first want to make sure that model works. So we will periodically, every three months or so, we will sit down and strategically really review is it working? Is the cost to serve at a number where it makes sense?
Is our margins in that channel, the way we run it, is it acceptable? Are we getting the four chairs we're looking for? Are we making the profitability, the volume growth, all that stuff? We have to look at that every three months, six months to make sure that we're building something here that works. So far, so good. But the ambition is in the next year or two, 150,000 stores. And obviously, if it works, that thing will explode. It will be, I don't know, how many SPAR stores there are in the country. The number I've heard is 250 or 300 to 50,000. But whatever the number is, the ambition would be to keep on growing with that. In the bakeries, it will always be a separate effort with dovetailing where it's required.
But in the bakeries, it is all around serving the markets that we choose to serve well. We don't want to necessarily go with bread everywhere. You can't. Because you deliver every day. You can't deliver twice a week and drive to Windhoek with bread. So in bread, the focus is a bit different, but we are looking at a very effective depot structure, especially as you move into these big bakeries, you'll have a depot structure. And then you've got a very efficient logistic system between the big bakeries and the depots, and then the depots with very well-planned and managed routing into chosen areas. But there it's a bit more selective, but we must get much bigger than what we are at the moment.
Thank you so much. Thank you, Tjaart. Thank you, Thushen.
Thank you to everyone who's here with us at the JSE and those who are joining online. You would have seen the bags on your chairs. Please, as you leave, you would have seen our amazing Tiger store outside. Thank you so much to the team that put that together. Do feel free to put a couple of samples inside your bag, and we hope you enjoy. Thank you so much.