JOHANNEBSURG - The reputational damage suffered by Tiger Brands following the outbreak of listeriosis that has claimed 180 lives in South Africa since last year is likely to hurt the diversified food giant’s balance sheet over the short to medium term only, analysts said yesterday.
Ron Kiplin, a portfolio manager at Cratos Wealth, said yesterday it would take Tiger Brands some time to turn operations around after Health Minister Aaron Motsoaledi identified its Enterprise Foods factory in Polokwane as the source of the food-borne disease.
“They (Tiger Brands) appear not to have had the right controls in place, and it is an indictment on operational management,” he said, adding that operational management at the factory had to be held accountable, although the buck stopped with top management.
“They need to hold a proper inquiry to be able to tell their customers they have the right controls in place, otherwise the reputational damage will continue for longer,” he said.
Kiplin said the company’s processed foods division was likely to take a knock, but it would not have a major impact on group profits, because Tiger Brands was highly diversified.
Recover
Chris Moerdyk, a corporate marketing analyst, said although the immediate damage to the brand was enormous, it was likely that it would recover.
Moerdyk said wealthy people would start moving away from processed meats.
“The bulk of their market is people in the lower economic group,” Moerdyk said. “This group of people buy processed meat because it is cheaper. Polony is almost a staple food for many poor South Africans. They do not have alternatives.”
He said the damage to the brand would be limited to the medium term.
“Not long ago, Ford Kuga cars burnt and killed people. Ford is now back to sales of before that period. People thought that the Ford Kuga would not sell again, but people continue to buy the cars,” said Moerdyk.
Tiger Brands recalled its processed food products and halted production at its factories in Polokwane and Germiston after the report by Motsoaledi.
The move prompted Mozambique, Zambia, Malawi and Botswana to ban cold meat imports from South Africa.
Bomikazi Molapo, a spokesperson for the Department of Agriculture, Forestry and Fisheries (Daff), said the department would not be involved in the disposal of the processed meat products.
“The recall was instituted by the National Consumer Commission, and the suspension by the Department of Health. Therefore, the Daff will not be involved in the disposal of the products,” said Molapo.