While the recent deadly Listeriosis outbreak in South Africa, the biggest in global history, appears to be an isolated event tracked down to specific manufacturers of processed meats such as polony, there are far wider risk implications arising from this incident.
Anyone involved in the food manufacturing or hospitality industries should have health, hygiene and safety as their paramount focus. This extends not just from the control of raw materials used in manufacture, but to the manufacturing process itself, accurate labeling, storage, distribution and respect for expiry dates. Oversight negligence in respect of a health incident is not an acceptable legal defence. Everyone in the supply chain becomes responsible for the taking of reasonable precautions.
Early indications are that the seventy year old Enterprise brand name may not survive the tarnishing of its image and brand. This brand has enjoyed considerable strength and is a household name. The re-building of the brand will take considerable time and resources.
One of the key elements of protecting a brand is to be prepared for a disaster. As part of disaster planning, management and recovery where a brand is under threat, is the need for a comprehensive communications strategy and plan. This needs to deal honestly with the situation at hand, be fair to customers, convey a consistent message and use a wide range of appropriate media to communicate to customers.
The contagion effect on consumers who are now very wary of all processed meats is likely to have serious knock on effects for other similar brands and parties in the processed meat field. Polonies and viennas are likely to be hit particularly hard.
The potential legal claims against Enterprise could be significant and will most likely include a class action suit by the families of all 183 people who have died to date from the identified listeriosis outbreak. The legal process is likely to drag on for years and tie up both considerable financial and legal resources and more importantly, precious senior executive time.
The cash flow implications on the operations of Enterprise will be huge and will not only impact the manufacturer as a result of the loss of sales, lost production, overhead costs and refunds for returned product, but will extend to all parties along the food chain who rely on the sale of these products in their businesses. The parties currently distributing the products along the food chain will also lose out. Any products including white labeled products produced by Enterprise, will also be hit hard.
To date the parent company Tiger Brands shareholder value has shrunk around 20% as a result of this incident. The full impact of this is not known at this stage and there could well be a far higher financial impact on the group in due course.