Tiger Brands should settle, says minister

● Tiger Brands’s difficult year is set to get worse, with the outlook remaining “challenging” in the wake of the listeriosis outbreak.

Earlier this year, the company — one of South Africa’s biggest food producers — had to suspend operations at its factories in Polokwane, Germiston and Pretoria after the Department of Health linked them to the food-contamination crisis that has killed more than 200 people so far and made more than 1 000 ill. The company had to recall all its Enterprise products.

The fallout has seen the company’s share price fall more than 15%.

Speaking at Tiger Brands’ results presentation this week — where the group reported a 4% decline in interim revenue — CEO Lawrence MacDougall said the recall had cost R365-million net of initial insurance claims. Tiger Brands had recalled 4 000 tons of product which it was in the process of incinerating.

MacDougall declined to estimate how much it would cost to relaunch the Enterprise brand, or the total cost to the group of the disease outbreak. He said the company was still investigating the “true extent of damage”.

The group is facing a threatened class action suit from consumers.

MacDougall said Tiger Brands had adequate insurance to meet any costs that might arise from such a suit.

At the results presentation this week, MacDougall addressed criticism of the way Tiger Brands had responded to the initial reports that the Department of Health had traced the listeriosis outbreak to its products.

At the time the company was reluctant to acknowledge any link, and only apologised after an independent laboratory confirmed the government findings weeks later.

“There is lots of criticism that I was not as sensitive as I potentially could have been,” MacDougall said.

“If I was not I apologise, for that was not my intention. A few hours after the national announcement, maybe the heat and the extent of what was being brought on us did not allow me to be as sensitive as I might have needed to be.”

MacDougall said he had no plans to resign as a result of the listeriosis outbreak but would leave the question of his future to the board and the group’s nomination committee.

MacDougall has been CEO since March 2016.

Health Minister Aaron Motsoaledi told Business Times that he had advised Tiger Brands chairman Khotso Mokhele to settle the proposed class action.

Motsoaledi said the ball was in Tiger Brands’s court but the government would try to help the victims in whatever way it could.

Maybe I wasn’t as sensitive as I might have needed to be