Koo owner defends possible plant closure after an 'exhaustive' hunt for buyers

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Tiger Brands owns the Koo brand which also produces canned fruit.
Tiger Brands owns the Koo brand which also produces canned fruit.
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  • Tiger Brands' Langeberg & Ashton Foods canning facility is the largest in South Africa.
  • It is also is one of two of the country's fruit canners, producing fruit and purees that mainly exported to markets such as Europe, Japan, China and Australia.
  • Agri SA has slammed Tiger Brands' decision to move forward with its plant closure process.

Food producer Tiger Brands says it is engaging with government in a bid to stop the closure of its Langeberg & Ashton Foods (L&AF) plant in the Western Cape after a prospective buyer failed to raise the necessary funding in time. 

The plant has been in production for more than 70 years, producing fruit and purees that mainly exported to markets such as Europe, Japan, China and Australia. According to Tiger Brands' website, it processes 100 000 tons of fruit each year.  

Tiger brands said the deciduous business operates in an industry impacted by trade barriers that affects the competitiveness of local produce. It further pointed out that exchange rate fluctuations and global crop yields bring more volatility into the business.

In 2020, Tiger Brands decided to exit the business as part of its strategic review, and a consortium of 160 growers approached it with a non-binding offer in the same year.

READ | Tiger Brands whips up a new strategy for its Albany bread business

However, the consortium’s efforts to raise the required funds of between R200 million and R300 million by the 31 March 2022 deadline, failed. 

"As at the date of commencement of the consultation process in June 2022 the Growers Consortium have still not been able to show or present to Tiger Brands any commitment of funding in support of their non-binding indicative offer so as to be able to operate the L&AF business as a going concern," said Tiger Brands. 

The food producer added that the consultation process is a result of it being unable to find a viable way to dispose of the business.

"In a parallel process, the company is also engaging with relevant provincial and national government departments in attempts to explore available and sustainable commercial solutions to protect the South African deciduous fruit canning industry and support the growers," Tiger Brands explained.

Tiger Brands’ response came after it was slammed by agricultural federation Agri SA, which said the plant's closure would have a "catastrophic" impact.

READ Tiger Brands fund invests in vegan food company

"Coming so soon after the signing of the Agriculture and Agro-Processing Masterplan, the decision will have a devastating impact on more than 4 500 workers in the sector, and on the surrounding community," said Agri SA in a statement.

L&AF sources most of its peaches, Bulida apricots and Bon Chretien pears from 2 250 ha of canning fruit orchards in the Klein-Karoo, Ashton, Robertson, Bonnievale, Breë River, Wolseley and Ceres areas. 

Agri SA said the farmers now have to raise the funds in less than 60 days, without help from the government or Tiger Brands.

The agricultural representative group also bemoaned Langeberg municipality’s loss of its biggest single source of income when the plant closes, asking the government to intervene as the consortium’s investment partner.

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