Tiger Brands denials are poison to its reputation

South African companies are starting to get a reputation for making great case studies at business schools. Local management consultancy Trillian and global business McKinsey are already a case study at Harvard Business School, according to a Reuters report.

The outbreak of listeriosis and the role Tiger Brands played in it will likely be another. The assignment could read like this: write 5 000 words on how Tiger Brands could have better handled the fallout from the listeriosis contamination at its Enterprise factories (marks: 100). To answer that question, it’s worth looking back at another corporate debacle that has long been part of the course work at business schools.

In May 2003, Pick n Pay received a call from an extortionist who said that unless a ransom was paid he would poison products in its stores. He warned the company not to go to the press or the police.

According to Ethics: The Leadership Edge by Laurance Kuper, coded classified adverts were placed in newspapers to co-ordinate the payoff. “The company’s agent was sent from venue to venue, collecting a paper trail of instructions, but the ransom was never collected,” the book says.

Next, as the extortionist had warned, the company found three marked products in its stores, and, as it was planning to withdraw these products, a customer said she had taken ill after eating a tin of no-name brand sardines. When she looked at the package it said: “Poisoned, do not consume, contact Pick n Pay immediately.”

After seven nerve-racking weeks during which the company tried to resolve the crisis behind closed doors, it went public.

As I recall, the CEO at the time, Sean Summers, took viewers into his confidence in a TV interview with his warm and earnest demeanour. We lapped it up, and, at the year-end, a consumer poll ranked Pick n Pay the most trustworthy company in South Africa.

Of course, that was before social media gave consumers a loud voice, which can shred a company’s reputation in hours. I can’t see Tiger Brands ending 2018 as a beloved brand. Its approach so far to the listeriosis contamination at its Enterprise factories shows symptoms of lawyering up. CEO Lawrence MacDougall said this week:

“There is no direct link to the deaths and our product at the moment.”

This was despite the National Institute for Communicable Diseases confirming the source as a Tiger Brands factory.

Tiger Brands seems to have poor management in its genes. This is the third food scandal in 10 years. But unlike the bread price-fixing scandal — a deliberate ploy by Tiger and others to hoodwink consumers — this one has had fatal consequences. Its handling of the issue has lacked compassion and, more important, the willingness to take responsibility.

Whichever way you want to slice this, Tiger Brands is facing substantial claims for compensation. Corporate South Africa is quick to point the finger when the government shirks its responsibilities. Now is the time to step up, Tiger Brands.

Unlike the bread pricefixing scandal . . . this one has had fatal consequences