Tiger takes big listeria hit — and it could get a lot worse

Company’s apparent avoidance of blame could harm its image

● On Friday the noose seemed to tighten around Tiger Brands’s neck as the group conceded that the listeria bacteria responsible for the deaths of more than 180 people had been detected at its Polokwane factory.

But CEO Lawrence Mac Dougall, speaking to Business Times, insisted the factory wasn’t responsible for the deaths caused by the outbreak, saying, “What we are sure of at the moment is that we do have listeria in the plant and we have found a DNA of ST6”.

But “we haven’t yet had any evidence that’s linked to any illnesses or deaths. We don’t know that”, he added.

Mac Dougall said results were received from the Department of Health on Thursday afternoon confirming the detection of the ST6. This meant the company could start identifying the root causes and working on them while doing more work with the department to understand what they were and how to deal with them.

He said the company had no information on how the bacteria had entered the factory. “We are trying to update you as we move along.”

Mac Dougall denied distancing the company from the outbreak. “We are taking it very seriously and we are not distancing ourselves at all. In fact, I think it is going to take a multisectorial, multiparty initiative to eradicate this, or not eradicate but bring the bacteria level of this listeria down in the country overall. So I think we will have to play a big role, but we are not distancing ourselves at all,” he said.

Dr Juno Thomas, head of the Centre for Enteric Diseases at the National Institute for Communicable Diseases, said from a purely scientific perspective the centre was confident that it had traced the outbreak to the Enterprise Foods factory in Polokwane.

Thomas said staff from the centre had been testing thousands of other food specimens around the country for months and had not found the ST6. “Now we find it extensively in this one production facility.”

She said scientists had done more than 100 extensive food consumption interviews and 86% of those interviewed had distinctly remembered eating polony before falling ill.

“With all of that evidence it is conclusive that that factory was the source of the contaminated food that resulted in the outbreak, and this evidence is strong enough to make an epidemiological link,” said Thomas.

“The World Health Organisation is absolutely satisfied that we have made a sufficient link and have done the sufficient laboratory testing in order to be convinced that we have found the source of the outbreak.”

Scientists were led to the Enterprise Foods factory after a cluster of cases from a creche in Soweto were admitted for food poisoning at Chris Hani Baragwanath Hospital after they had been served Enterprise-brand polony that tested positive for ST6.

“We went to the factory, we found the outbreak strain not only in the environment but in the outside casing [of the polony product] and the inner portion and alongside the clip,” said Thomas.

Brad Preston, a portfolio manager at Mergence Investment Managers, said: “We see potential liability from class action suits, and all of those risks are weighing in on the share price.”

This week Tiger Brands shares fell more than 6%, but at some point in intra-day trade on Friday they were as much as 13% lower as news of the outbreak dominated headlines.

Preston said while the share price had eroded materially, the market was giving management reasonable “benefit of the doubt” to implement its strategy.

Since Mac Dougall’s appointment in May 2016, Tiger Brands shares are 7% higher. He is the fourth CEO in the past decade, a period in which the company has been mired in controversy related to bread price fixing and failed expansion efforts in both Nigeria and Kenya.

Some industry insiders have said that because Mac Dougall is relatively new in his position, he may be able to avoid some impact from the latest scandal.

“Looking at its last round with the bread issue, management has been there for a long time and it was complicit in its actions to have either supported it or not paying sufficient attention to it,” said an industry analyst who did not want to be named.

Asked how the management of the group would be held accountable, Mac Dougall said: “If my board feels that I haven’t acted appropriately, I suppose that’s for them to make those decisions. If we have information at our disposal that indicates that some of our individuals have acted inappropriately, I’ll have to deal with that once I have the information available.”

Mac Dougall expressed the board’s concern about the linking of Tiger Brands to the national outbreak. “The fact we’ve now found that we have listeria in our plant and that ST6 has been identified, they are obviously very concerned,” he said.

He added that over the next several days, management would have meetings with the board. “The board is giving us a serious review and living up to its oversight responsi- bilities, there’s no doubt about that.”

Solly Moeng, a brand reputation management adviser, thinks the mistake that Mac Dougall made was that he gave the impression that he was hiding something. He was not prepared to acknowledge anything wrong had happened. He kept reiterating that the company had investigated and was waiting to see what would come out of it.

“When you manage a brand you must never be in a crisis communication situation where you give the impression that you are hiding something or you are passing the responsibility to someone else,” said Moeng.

He maintained that while Tiger Brands may not have had all the facts at its disposal, “it’s safe to give them the opportunity to look at the facts, but you shouldn’t appear to be defensive”.

An analyst who follows the company closely said that the group would have to take a financial hit from the SADC and local recalls. All that inventory would have to be destroyed and the retailers would have to be compensated.

He said 2018 was going to be a very difficult year for Tiger Brands and for the Enterprise brand and that it could take almost three years for the brand to recover.

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You must never give the impression you are hiding or passing the responsibility to someone else Solly Moeng Brand reputation management adviser It is conclusive the factory was the source of contaminated food