Safety still a concern for Tiger Brands going into 2023

Last year was a less than desirable safety year for Africa’s largest listed food producer Tiger Brands, which recorded worker fatalities, an uptick in manufacturing incidents, significantly high on-road incidents and yet another product recall.

Details of the fast-moving consumer goods (FMCG) manufacturer’s safety performance in 2022 can be found in a Sustainability report it released at the end of December, in which CEO Noel Doyle acknowledges the poor performance and admits that much still needs to be done to improve the company’s safety measures.

In the review he notes that the group reported three fatalities: two contractors (one in manufacturing and the other in logistics), and an employee who died in a route-to-market accident. “I deeply regret the three fatalities we recorded across the business this year, and my condolences go out again to the families.”

Manufacturing incidents also rose significantly – an increase the group says can be understood in the context of improved reporting of on-the-job injuries.

It reports that its lost-time injury frequency rate rose from 0.31 in 2021 to 0.45 in 2022.

Persistently high levels of route-to-market incidents are another threat. In 2022, there were 91 reported incidents of attacks on Albany delivery drivers. While slightly down from the 105 incidents reported in 2021, this remains concerningly high.

No lives were lost during these incidents, fortunately, but the group says losses of cash, bread and crates linked to the incidents cost it R466 000.

Loss of consumer trust

In the last few years Tiger Brands has had to douse several reputation-damaging flames related to the quality of its products, the latest being the recall of some of its talc-based baby powder products under the Purity and Elizabeth Anne brands.

The 2022 recall was announced after traces of asbestos, a known carcinogen, were detected in samples of the products. The action cost the company about R25 million in product write-offs and logistics costs.

In July 2021, the group recalled some 20 million cans of Koo and Hugo’s vegetable products after a defected side seam was found in a small batch. The recall – which was estimated to cost the company up to R650 million – amounted to about 9% of the group’s production for the year.

Probably the hardest blow to trust in the food producer was the listeriosis outbreak that peaked in 2018 and took over 200 lives in South Africa. The government found a Tiger Brands factory to be the source of the listeria bacteria outbreak, affecting the food producer’s then value-added meat business Enterprise.

Tiger Brands sold the business in 2020 in a two-separate-sales deal that saw pork producer Molare acquire its Olifantsfontein abattoir business for R100 million and chicken producer Country Bird Holdings acquire the the meat processing businesses (at Germiston, Polokwane and Pretoria) for over R300 million.

Board chair Geraldine Fraser-Moleketi notes in the report how damaging these recurring events have been, with the market dealing sobering lashes every time.

In the last five years, the group’s share price has plunged more than 50% and is now hovering above the R216 mark.

She says following the recall of canned food there is understandably “some concern in the market about the robustness of the company’s management of product quality and safety”.

“Although the recall has not had a material impact on Tiger Brands’ direct financial performance, it has undermined our reputation,” says Fraser-Moleketi.

“While this recall is disappointing, I remain confident that the management team is fully committed to instilling a culture of product safety and quality across the company, building on the robust internal management and review systems, critical control measures and new technologies that were introduced across its manufacturing facilities and externally managed warehouses.”

Listen to Simon Brown’s interview with FNB Wealth’s Wayne McCurrie about the Tiger Brands product recall:

You can also listen to this podcast on iono.fm here.