On the back foot
Tiger Brands’ listeria outbreak cost it some R900m in the latest results and now it has to try and claw back consumer trust for the products. But there's another potential problem. Tiger Brands producers’ branded products are generally either first or second in their categories, but the under-pressure consumer has been shopping down to white-labelled products. The question is whether consumers will return back to the higher-priced brands. Many will, but white labels in South Africa are supported at lower overall levels than many other countries and I wonder if many of these customers will stay with white labels (and will therefore be lost to the brands for good). I’ve never been a fan of food-producing companies as they lack pricing power and have input cost risk. Even after losing almost half its value this year, I would not be a buyer of Tiger Brands shares.
Even after losing almost half its value this year, I would not be a buyer of Tiger Brands shares.
One of Tiger Brands’ factories in Germiston on Gauteng’s East Rand.