Wrap Text
Withdrawal of canned vegetable products
TIGER BRANDS LIMITED
(“Tiger Brands” or “the Company”)
(Incorporated in the Republic of South Africa)
(Registration number 1944/017881/06)
Share code: TBS
ISIN: ZAE000071080
WITHDRAWAL OF CANNED VEGETABLE PRODUCTS
Shareholders are referred to the interim results announcement of
20 May 2021, which included disclosure in respect of defective
packaging materials identified at one of the Company’s sites.
This related specifically to a small number (18) of leaking food
cans which had been identified by Tiger Brands’ Groceries
division during May 2021, as part of its internal quality
assurance processes.
These defective cans were identified prior to the final labelling
of the finished products and were traced back to three different
batches of cans which had been purchased from one of the
division’s key packaging suppliers. This incident was immediately
reported to the packaging supplier.
Shortly after reporting this incident to the packaging supplier,
we were notified by the supplier that a further three batches of
cans could have presented the same defect, which was a deficient
side seam weld that could cause the cans to leak.
The six defective batches referred to above were the subject of
the disclosure made by the Company on 20 May 2021. It is
important to note that all the affected finished products
manufactured, using these six defective batches of cans, were
never released to the trade and were placed in quarantine for
further investigation, with the knowledge and agreement of the
packaging supplier.
After the initial identification of the six batches containing
defective cans, a full investigation of all cans sourced from
this supplier was initiated. In the early part of June 2021, the
investigation identified a further small quantity of leaking cans
in the finished goods warehouse. These were unlabelled finished
product and, as a result, had not yet passed through the
Company’s final quality control and inspection procedures. These
defective cans were traced back to a seventh batch of cans
purchased from the packaging supplier and, therefore, was not
part of the defective batches of packaging material identified in
May.
Unlike the defective cans identified in May (which had been
isolated), it was established that a portion of the cans from
this seventh defective batch had been released to the trade in
the form of finished product. This release to the trade was after
following the normal quality assurance processes which did not
yield evidence of leaking cans.
Despite the Company having found no evidence of any leaking cans
in the trade or with consumers, and with the agreement of the
packaging supplier, it immediately initiated a rigorous transport
and handling test. This entailed transporting both labelled and
unlabelled product from our warehouses in Johannesburg to our
facilities in the Western Cape. The purpose of this test was to
assess whether the leaks could manifest after the finished
product had passed through Tiger Brands’ quality assurance
processes and left Tiger Brands’ custody. Out of 287,040 cans
inspected after the transport and handling test, a side seam leak
had developed in two cans. These two defective cans formed part
of the first six defective batches received from the packaging
supplier.
A leak in a can presents a risk of secondary microbial
contamination after the canned products are dispatched into the
marketplace. Where such contamination occurs, it will present a
low probability of illness and injury if the contaminated product
is consumed. Notwithstanding that only two side seam leaks had
been detected as a result of the transport test, with consumer
safety as an absolute priority, Tiger Brands considers it
appropriate that it institutes an immediate recall of all
products that could potentially be affected. This involves the
withdrawal of specific canned vegetable products manufactured
under the KOO and Hugo’s brands between 1 May 2019 and 5 May 2021
(both dates inclusive), amounting to approximately 20 million
cans, which is ~9% of annual production. A full list of the
potentially affected products can be found on the Company’s
website at www.tigerbrands.com.
KOO canned fruit, which is produced using a different can from a
different can manufacturing plant, is not impacted by this defect
and does not form part of the recall. In addition, KOO canned
pilchards are also not impacted as the cans are supplied by a
different supplier.
Tiger Brands has engaged with the National Consumer Commission on
this matter and will, with immediate effect, roll out an
appropriate consumer and customer communication plan in respect
of the recall. The recall is expected to be concluded in
approximately 120 days.
The financial impact of the recall, including the cost of the
potentially affected stock that may be written off, transport and
storage costs, as well as the loss of margin on the returned
stock, is estimated at between R500 million and R650 million.
Tiger Brands has product recall insurance for the logistics of
recalling the products. The Company’s claim under the contract
with the third-party supplier is yet to be assessed.
Shareholders will be updated as appropriate.
The financial information contained in this announcement has not
been reviewed or reported on by Tiger Brands’ auditors.
Bryanston
26 July 2021
Sponsor
JP Morgan Equities South Africa Proprietary Limited
Date: 26-07-2021 07:30:00
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