Bad pluck


COUN­TRY BIRD HOLD­INGS – a promis­ing poul­try house on the radar screens of many small cap spe­cial­ists – greeted 2011 with a tainted im­age it un­doubt­edly will strug­gle to re­pair… at least in the near fu­ture. Its share price took a hard dive on rev­e­la­tions sub­sidiary Supreme Poul­try “re­works” frozen chicken for hu­man con­sump­tion be­fore some pla­ca­tory re­marks saw the share drift­ing back to its cur­rent 325c lev­els.

The ghastly ex­posé by an al­legedly dis­grun­tled for­mer em­ployee caused much dis­sention in the poul­try in­dus­try. Com­peti­tors and re­tail­ers quickly dis­tanced them­selves from such a prac­tice and re­as­sured con­sumers of the qual­ity of their chicken.

De­vel­op­ments couldn’t have come at a worse time. South Africa’s poul­try pro­duc­ers are bat­tling with im­ports, largely from South Amer­ica, aided by a strong rand. It re­mains to be seen how the stain will spill over to other poul­try pro­duc­ers. It’s also still un­clear if Coun­try Bird it­self has fully ab­sorbed the rep­u­ta­tional dam­age.

As a com­pany, Coun­try Bird has been a feisty player in the poul­try in­dus­try. Its failed bid in 2009 to ac­quire East­ern Cape-based ri­val Sov­er­eign Foods sug­gested it has some am­bi­tious strate­gic plans un­der its wing. Of late, Coun­try Bird has been beef­ing up its op­er­a­tions to at­tain greater ef­fi­cien­cies.

So where does the scan­dal put it as an in­vest­ment des­ti­na­tion, at least over the short term? Gut feel: there’s plenty of fish else­where in the in­vest­ment sea. Rep­u­ta­tion is ev­ery­thing when it comes to com­pa­nies. Of course, all com­pa­nies have skele­tons in their cupboards. But the trick is al­ways to en­sure your skele­tons don’t get dan­gled in pub­lic. It will take a great deal of ef­fort and money for Coun­try Bird to undo the rep­u­ta­tional dam­age caused by the story.

As such, we’d rather be pluck­ing for one of the more es­tab­lished poul­try coun­ters – Rain­bow or As­tral.

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