Cost of listeriosis crisis mounts for Tiger Brands
By Michelle Gumede - Mar 20th 2018, 08:48
Tiger Brands is recalling yet another batch of products, a move that could cost it up to R800m, twice the R324m in operating profit generated by its snacks, treats and beverages division for the financial year to end-September.
Earlier this week, the food producer recalled all products manufactured at its Value Added Meat Products’s Pretoria facility, which includes the Snax range of meat products, due to the detection of listeria monocytogenes.
Tiger Brands was forced to recall its Enterprise polony and vienna products after Health Minister Aaron Motsoaledi announced on March 4 that an investigation had traced the ST6 type (LST6) of the listeria bacteria — believed to be behind the outbreak and responsible for 91% of all infections in SA — to Tiger Brands’s Polokwane factory.
Close competitor RCL Foods, the factories of which tested positive for contamination, attempted to deflect the government’s findings, stating that no LST6 monocytogenes had been found at its Wolwehoek factory.
But Motsoaledi stood his ground, saying the listeria found in that factory held a risk of product contamination.
Tiger Brands investor relations director Nikki Catrakilis-Wagner said the company was prioritising the health and safety of consumers. "Tiger Brands had only been asked to recall two products but has chosen to recall all meat products."
About R377m of the costs arising from the listeria crisis are attributable to the sales value of contaminated products and the destruction of the items returned. This includes the reimbursement for the recall of products produced at the Germiston, Clayville and Polokwane sites. The remainder of the costs could serve as a payout of an estimated R425m that could be sought in a looming class action case.
Tiger Brands said through its lawyers at Clyde and Co that it intended to claim R94m in insurance from its insurer in respect of recall costs.
Zain Lundell, the lead advocate on the proposed class-action lawsuit at LHL Attorneys, said that in terms of the Consumer Protection Act, the companies involved were liable for damages caused by the products supplied by food retailers and producers.
So far, about 1,000 individuals have come forward with complaints of falling ill after consuming contaminated products between May 2017 and the recall in February 2018. An estimated 200 deaths have been reported on the websites set up for consumer complaints.
While Tiger Brands remains adamant that the presence of LST6 may not necessarily have caused any illness or death, it has recalled all its Value Added Meat products and halted operations at three facilities and one abattoir.
Dr. Juno Thomas of the National Institute for Communicable Diseases said that while she was not aware of the listeria strain present in the Snax brand of food items, her team was confident the source was conclusively found at Tiger Brands’s Polokwane facility.
Thomas bemoaned the sluggish response from some food producers in September 2017, when her team tried to extract information for testing of listeria on their products. "The response was limited and disappointing," she said. Many had been fully aware that the outbreak was already in full swing at the time.
While no heads have rolled yet at Tiger Brands, it insists that a collaborative multisectoral approach is needed for a sustainable solution. Tiger Brands group communications and stakeholder manager Nevashnee Naicker said the board was prioritising the situation and had met frequently to remain abreast of developments and to provide management with guidance on the next immediate and medium-term steps.
"It is clear that what we thought was best practice is not," Naicker said. "We need regulation to strengthen and the company intends to be at the forefront of seeking this solution."
Thomas sought to emphasise that the outbreak illustrated the need for stakeholders to draft regulations on microbiological criteria tailored to local requirements for environmental food safety.
"The food industry has largely been self-regulated and perhaps a level of complacency has set in," Thomas said.
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