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Tiger Brands - Enterprise shutdown

As you were probably made aware of over the weekend, the listeria outbreak in South Africa has been partially traced back to facilities owned by Enterprise, a division of Tiger Brands. The stock is getting beaten down a bit this morning, currently down 8%. Here is the SENS announcement from the company - Tiger Brands To Recall Identified Enterprise Products. This is an extract from the company statement:

    "Since the confirmed outbreak of Listeriosis by the Department of Health in December 2017, the company proactively amplified its testing for Listeria of raw materials and finished goods and also introduced additional hygiene monitoring of our processes, equipment, storage and waste areas at our facilities. Although our testing had detected listeria at low levels (<10 Colony Forming Units (CFUs)), which is well within the current industry guidelines (SANS 885), in a batch of one product on 14 February 2018, the presence of the ST6 strain had not been confirmed by our tests. The relevant samples have been sent to an external laboratory for the identification of the strain, and results are expected back on 5 March 2018."


This sounds like something that is going to be expensive for Tiger Brands? Apart from the cost of product recalls and brand damage, there have been 180 deaths linked to the listeria outbreak. There may be legal claims from the families of the deceased? Tiger isn't the only company mentioned as a source of the outbreak, but they may have to foot part of the bill if some some kind of restitution settlement is agreed.

The Value Added Meat Products division contributes about 7% of revenue and only 2.2% of group profits. The Tiger Brands market cap loss this morning is about R7 billion.

We will monitor this situation and keep you posted. For now, we are holders of Tiger Brands shares.


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