THE BOTTOM LINE
Broke consumers add to Tiger Brands’ listeriosis woes
The deadly outbreak only aggravated a difficult trading environment for SA’s biggest food producer
Chances that consumer goods group Tiger Brands – with a portfolio that includes Tastic, Koo, All Gold and Enterprise – would come out of the 2018 financial year unscathed were slim to nonexistent.
That the company was at the centre of the fatal listeriosis outbreak was always going to hit its 2018 financial results. But the outbreak, which killed more than 200 people, only aggravated what was a difficult trading environment for SA’s biggest food producer and its peers.
Even without the deadly outbreak, which cost the company R1.4bn in the year to end-September, Tiger Brands was always up against it, as consumer demand had taken strain from the VAT increase and rising transport costs.
Tiger Brands is, however, not alone. Most companies in the food producers’ index are not having the best of times. The index consistently underperformed in 2018, compared with the JSE's all share index (Alsi).
At midday on Monday, the food producers’ index was down 28.28% for 2018, compared with the Alsi’s decline of 13.2%. In the same period, Tiger Brands was down 38.43%.
On the macroeconomic front, Tiger Brands and its peers are bracing themselves for prolonged suffering as 2019 does not promise much in terms of economic growth.
While putting the listeriosis saga behind it is great for Tiger Brands and its shareholders, it does not herald the end of company’s problems, not when the economy is projected to grow at a mere 0.6% in 2018.
On the day that Tiger Brands released its results last week, the Reserve Bank’s monetary policy committee hiked the repo rate by 25 basis points. So consumers will have to buckle their belts one notch tighter.