Enterprise claws its way back after listeriosis outbreak
Two and a half months after the listeriosis outbreak was declared over, Enterprise Food products are making a slow comeback to the market, according to its parent company, Tiger Brands, despite speculation during the crisis that the brand might never recover from the fallout.
Although the Enterprise Polokwane processed meat factory remains closed, Tiger Brands reopened its Germiston plant last month and Enterprise bacon and pork sausages are once again making their way on-to retail shelves.
The Polokwane plant was identified as the source of the lethal ST-6 strain of the bacteria responsible for the outbreak, which killed 216 people and infected more than 1 000.
In September, Health Minister Aaron Motsoaledi declared the outbreak over after the number of infections declined to pre-outbreak levels. According to him, more than 5 800 tonnes of affected food had been recalled and destroyed in response to the outbreak.
Consumers have “enthusiastically” welcomed Enterprise sausages and bacon back, according to the company’s corporate communications director, Navashnee Naicker. But it is still early days — the products have only been back in trade for a week.
“Thus far … we’re already seeing good sales, with some stores already stocking out on product within the week,” Naicker said.
Enterprise viennas and polony are still not on the market as they are produced at the Polokwane plant.
But Naicker said there was “much excitement about the full range to come, particularly polony and viennas”.
The company is still expecting to declare profits that fall far short of what they did in the previous year when it publishes its annual financial results on November 22.
Last week, the company released an updated trading statement, which indicated that its headline earnings per share from continuing operations would be 25% to 30% lower than during the comparative period.
But the declines are a slight improvement on those forecast in a profit warning issued by Tiger Brands in August.
At the time, it expected headline earnings per share to be between 22% and 37%.
It attributed the declines to, among other things, the “significant impact of the recall of products and suspension of operations involving certain of the company’s value-added meats processing facilities”.
Other factors weighing on it included “the challenging consumer and competitive environment, with ongoing volume and pricing pressures”, as well as cost increases thanks to the movement of the rand, fuel price increases and labour settlements.
Naicker could not elaborate on the reasons for the changes, as the company is in a closed period. In March this year, the company estimated the cost of the recall would be up to R377-million, and it faces legal claims from consumers made ill by its food of R435-million.
Pick n Pay is among the retailers that have begun to stock Enterprise bacon and sausages on their shelves again. A spokesperson for Pick n Pay said: “Customers have very strong confidence in the safety and integrity of our products.” She added that Enterprise products only go back on the retailer’s shelves “if they have complied with our clear and rigorous processes and those set by the department of health”.
Other companies such as RCL Foods, which produces Rainbow chicken polony, were also affected by the recall. The company’s Wolwehoek plant was shut down as a precautionary measure after it tested positive for the Listeria monocytogenes bacteria, which causes listeriosis.
But the lethal ST-6 strain, which scientists pinpointed as the cause of the recent outbreak, was not found at its Wolwehoek plant, which reopened six weeks ago.
According to RCL Foods’ managing director for the consumer division, Scott Pitman, the factory is producing the same ranges it did before the outbreak. Nevertheless, the company has been negatively affected.
“It completely zeroed all ready-to-eat meats from RCL Foods … costing the company hundreds of millions in lost profit,” he said.
According to its most recent financials, it estimated that the cost of the outbreak to be about R158.2-million, of which R78.2-million related to once-off costs associated with the recall of its products and the “restoration of the brand”.
Pitman said that its polony category as a whole had lost about 30% of all volume since the outbreak but it had returned to selling more than half of what it used to before the outbreak.