4 times Tiger Brands made headlines for the wrong reasons

Johannesburg - The share price of Tiger Brands [JSE:TBS], the largest consumer food company in South Africa, fell 7.9% on Monday at 14:50 to R391.47, as panic spread after the Department of Health and the National Institute of Communicable Diseases announced a recall of its Enterprise processed meat products.

The company’s Enterprise facilities in Polokwane, Limpopo and Germiston, Gauteng were closed after a strain of the deadly listeria bacteria was found in one of their factories. According to a statement to shareholders, deep cleaning protocols started on Monday morning.

RCL Foods closed its Rainbow polony processing plant in Wolwehoek, Free State, also citing concerns about the listeriosis outbreak.

The disease has caused 180 deaths so far and authorities have been trying since December to locate the source.

The bacteria live in processed cold meats and pass through fridges, while heat kills them.

Tiger Brands in a statement sought to reassure investors and consumers, acknowledging that it is dealing with an “extremely serious issue that pertains to people’s personal health and wellbeing".

It added: "... we want to "assure all South Africans that we are dealing with this matter with the utmost urgency."

But this isn’t the first time the consumer foods giant has made waves. It’s previously had to recall certain rice products, face accounting fraud claims in Kenya and pay a massive fine for  bread price-fixing.

Bread price-fixing

In 2007, Tiger Brands was ordered to pay a R98.7m penalty by the Competition Commission after the company admitted to participating in bread and milling cartels.

Tiger Brands, which owns Albany Bread, also agreed to assist the commission in prosecuting remaining cartel members who had not admitted wrongdoing.

The issue was brought to the attention of competition authorities in 2006 by bread distributors in the Western Cape, who complained about alleged bread and milling collusion.

The subsequent investigation found that between1994 and 2006 Tiger, Premier, Pioneer and some independent bakeries increased bread prices "by similar amounts at or about the same time".

When the Tiger Brands fine was announced, the National Consumer Union believed it was too light, saying that price-fixing of bread products hit poor consumers the hardest.

Tastic Rice recall

Enterprise processed meats aren't the first product the company has had to withdraw from supermarket shelves. In 2014, Tiger Brands recalled some of its cooking sauces and rice products after tests found traces of potentially carcinogenic and toxic ingredients; 17 000 packs of its Tastic Simply Delicious line of instant rice and curry sauces were recalled.

The company said it found traces of the colourants methyl yellow and Sudan 1 in some of the products made in a factory in India between June and July 2014.

The World Health Organisation describes both substances as representing a possible risk to human health.They are banned in certain countries around the world, including South Africa.

Affected consumers who returned the Tastic Rice products to supermarkets were given a coupon to the value of the items, which they could exchange for any other merchandise in the shop.

Kenya fraud scandal

The accounting scandal in 2015 involving Haco Tiger Brands, the Kenyan subsidiary with a 51% South African Tiger Brands shareholding, left the company with large losses the following year.

Tiger Brands reported R50m in losses, after accounting fraud in the form of pulling forward sales and falsification of stock was allegedly committed by business tycoon and fellow owner Chris Kirubi and senior managers.

The company said in its annual report in 2016 that its Kenyan subsidiary pre-invoiced to the value of R106m, which had a negative impact on the firm’s operating profit.

Tiger Brands acquired a 51% stake in Haco from Kirubi in 2008 for an estimated R45.5m, leaving the Kenyan billionaire with a 49% interest in the company.

In February 2017, Tiger Brands announced it was exiting the Kenyan market, citing a difficult business environment.


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