Tiger Brands coronavirus closure may just be the first, chamber warns

Chamber of Baking executive director Geoff Penny said the closure of Tiger Brands’ Albany bakery in Durban – one of South Africa’s largest bread producers – may put pressure on food supply after Tiger Brands [JSE:TBS] found 12 employees at the bakery tested positive for Covid-19.

Tiger Brands said it made arrangements to use its other facilities in the country to ensure that supply of food remains stable, while the Durban bakery is temporarily closed as a precaution. Penny said while the closure will significantly affect capacity, closing the Albany bakery was the appropriate response. 

“They have capacity elsewhere in the province like the facility in Pietermartizburg and they will have to ensure they adjust work patterns and introduce shifts. I’ve spoken to the big players and they are concerned that people will worry that the virus will spread through food and that is simply not the case,” said Penny.

Tiger Brands’ website says its 12 bakeries deliver to 40 000 customers daily. According to the chamber’s figures, Tiger Brands – along with Pioneer Foods, Premier Foods and Foodcorp – held 70% of the bread market in 2017, worth R22 billion.

Penny said the Durban bakery was an “important” supplier, but that the company was doing the right thing by closing it.

“It’s only a temporary closure but it is something that we should consider in the food production market. Hopefully it won’t be too often, but a lot of this depends on how people conduct themselves in hygiene and social distancing,” said Penny.

On Thursday, Tiger Brands’ share price was down 0.75% to R177.48. Traces of listeriosis were found at the factory of Tiger Brans’ processed meats business, Enterprise. Listeriosis claimed 216 South African lives that year.

Efficient Group economist Francois Stofberg said demand could prove a challenge for food producers, especially producers of soft luxuries, as consumption is a function of income as well as certainty of income.

“If you doubt that you will be able to consistently earn an income then, of course, it’s going to impact your consumption.

“Unlike previous recessions where something was broken in the system, this was more a behavioural recession. With this recession, nothing is broken. Lockdown and the virus are what is changing how we consume and behave this time around,” said Stofberg.

The closure underscores the ease with which the coronavirus has spread, even in businesses deemed as essential services. South Africa and countries around the world are considering reopening their economies for business.

Mediclinic also had to close a facility when it emerged on Tuesday that 12 staff members tested positive for the coronavirus at its Morningside clinic in Sandton.

United States President Donald Trump has established an advisory team to assist the US government with reopening the economy. The pressure to reopen the South African economy may be all the more poignant, as the local economy was in a technical recession before the pandemic.

Stofberg said: “I’m not apathetic to the crisis but shutting down an economy can force people into poverty and poverty is a much greater killer than viruses. In South Africa, many people are already poor because of the contraction of the economy.”

Tiger Brands spokesperson Nevashnee Naicker said the company would have to consider keeping South Africa food secure as a priority along with the health and safety of its staff.

“Other facilities will support the Durban market. We have said that these facilities will be there. This is a temporary closure as a precaution because our commitment is to flatten the curve,” Naicker said.

Naicker said Tiger Brands took the pandemic and health precautions seriously, as it closed all except two of its beverage divisions.

She said much of the production at the bakery was automated and that the facility observed screening and hygiene standards at the beginning of the outbreak in the country.

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