Bug strips shelves, and brands, bare
● A heavy reliance on Tiger Brands manufactured products has put South African retailers under fire following the recall of their house brands as the listeriosis outbreak raised safety concerns.
Woolworths suffered collateral damage as customers took to social media this week to complain bitterly — or gloat — that higherpriced cold meats at the upper-end retailer were made by Tiger Brands.
Tiger Brands recalled its own products in the Enterprise range this week.
“Woolworths posting all those products to show that we are all eating the same food. U ain’t living better than us by buying from them. The jig is up,” said @wayneharper on Twitter.
This was one response to Woolworths pulling 33 of its ham, vienna, salami and other cold-meat products.
The retailer stocks ready-to-eat products that are sliced and packed at a dedicated production facility at Enterprise’s Polokwane and Germiston factories. It was at the Polokwane factory that a deadly strain of the listeria bacteria was found. More than 900 people have fallen ill and 180 people have died of listeriosis.
Susie Squire, head of communications at Woolworths Group, said Woolworths’ range of sliced and processed meats was strictly made to its own unique formulations and recipes.
“The raw materials, formulations and processes used in the production of our products are clearly specified by Woolworths and are required to adhere to the highest standards of quality and safety,” she said.
Squire said Woolworths would not discuss its supplier agreements, saying only that “we do not stock any Enterprise products”.
Tiger Brands and RCL Foods produce brands such as Enterprise and Rainbow Chicken respectively as well as house brands for retailers, many of which removed these products this week, leaving empty fridges and shelves.
Mike Prentice, group marketing executive of Spar Group, said while none of its house brands were manufactured by Tiger Brands, it had recalled some of its products.
“We use two different suppliers, both of whom have tested completely clean. But we don’t want to be seen to be profiteering at somebody else’s expense.”
Prentice said the recall may have an impact on the retailer’s margins, but this would be minimal.
“There’s a cost of time, effort and energy. The actual physical cost of the product gets taken by the supplier.”
He added: “In a situation like this when the product is unavailable, consumers will be substituting for other products. So it’s very difficult to say that because of the recall we lose a certain amount of sales, and it’s impossible to quantify because consumers would have bought other brands instead of Enterprise.”
David North, the group executive for strategy and corporate affairs at Pick n Pay, said: “Any financial consequences are secondary, although we would expect the financial implications for Pick n Pay to be small.”
He added that “discussions with the relevant manufacturers have focused on ensuring that the affected products were withdrawn as quickly and safely as possible”.
Tarryn Butler, a senior retail analyst at Trade Intelligence, said: “There will not be a significant direct impact on the national retailers margins, the impact is on the loss of sales across processed meats and related categories.”
Prentice said there were no contracts between the retailer and Tiger Brands, as the purchasing of goods from suppliers is often determined by consumer demand.
However, while Spar does not have a specific contract with Tiger Brands, it does have trading agreements and contracts for the purchasing of products.
It is trade agreements that determine “the various allowances that they [suppliers] pay”, which means there will be no penalties for the recall on products, as the suppliers will often take up the cost.
On whether retailers will continue trading agreements with Tiger Brands, Prentice said: “Tiger Brands have got some huge brands — Koo, All Gold — all significant brands across huge categories and many categories that are not as high-risk as processed meats are.
“This is also one manufacturing facility, and at this stage I don’t think we should paint the whole of Tiger Brands with a brush from one Enterprise facility.”
Tiger Brands contributes at least 5% to a Spar consumer’s basket.
Spar and Enterprise also have a longstanding relationship.
In 2004, the Spar group was unbundled from the Tiger Brands stable, to list separately on the JSE.
It was one of the three companies that was spun out of the food manufacturing giant, including Adcock Ingram and Astral Foods.
Retailers conduct their own safety checks on house brands, but not on branded products from suppliers.
North said Pick n Pay regularly conducted its own checks on branded products that are packed by manufacturers, and “any findings that might raise any concerns are followed up immediately with our suppliers”.
Squire said Woolworths had a team of food scientists and technologists who proactively managed food safety “in addition to our independent food safety testing and auditing, to prevent microbial contamination of food”.