Costly lessons from Tiger Brands’ listeriosis outbreak
Tiger Brands’ handling of the 2018 listeriosis outbreak, which killed more than 200 people, has cost the company dearly – financially and reputationally
Sorry seems to be the hardest word for SA companies caught in major scandals. Tiger Brands, which owns well-known SA staples such as Tastic rice, Beacon chocolates, Gill shampoo and Enterprise, is no exception.
The company’s failure to acknowledge its role in the world’s largest listeriosis outbreak, which killed more than 200 people, has cost it plenty.
The matter was lamentably handled by a company whose products are eaten by 2-million people a day. It means that two years later, Tiger Brands remains mired in litigation, fighting the families of those who died of listeriosis.
Rather than settle, it has opted to fight to the death.
It’s a scandal that reveals how Tiger Brands broke numerous rules of crisis management: stop the harm, apologise if you’ve messed up, and be human in the face of a tragedy. While it hasn’t yet lost in court, it is losing in the court of public opinion.
As Dario Milo, a partner at law firm Webber Wentzel, says: "There is generally no point winning a battle in a court of law some time down the line but losing now in the court of public opinion."
The story began in February 2018, when an outbreak of listeriosis, a food-borne disease, had claimed more than 170 lives — including pregnant women and babies.
Initially, the National Institute for Communicable Diseases (NICD) wasn’t sure where it originated. Then, on March 4 2018, the health department said the deadly strain of listeria, ST6, had been isolated in 16 environmental samples collected from the Polokwane Enterprise facility.
Enterprise, which produced polony and processed meat, was owned by Tiger Brands.
From the outset, the company went out of its way to avoid responsibility.
That day, Tiger Brands released a statement showing a disconnect from reality. "[We] can confirm that we had found a low detection of a strain of listeria in some products on February 14, but the presence of the ST6 strain has not been confirmed by our tests," it said.
While trying to defend itself, Tiger Brands had just admitted it had found the presence of listeria weeks before. And, rather than issuing a recall when it was potentially involved in the outbreak, it had opted to send the same samples for further testing for ST6.
The next day, Tiger Brands held a press conference, at which then CEO Lawrence MacDougall bent over backwards to avoid taking responsibility. "There is no direct link with the deaths to our products that we’re aware of at this point. Nothing," he said.
MacDougall’s response raised more questions than answers: if the company had been testing "proactively", how had it not found the problem everyone else had?
The press conference was dotted with farcical moments.
MacDougall’s executives were asked when they had last eaten Enterprise polony. It was the perfect opportunity to say that eating Enterprise products was the last thing anyone should do. Instead, MacDougall smiled and another executive implied it was a sensible thing to do.
"Polony, I’m not sure," said MacDougall, pondering the question. "I’ve had sausages and viennas probably four or five weeks ago."
"Yesterday I had pizza with chopped ham," interjected chief corporate affairs officer Mary-Jane Morifi. "If you looked in my fridge right now you would see an eaten polony, [an] Enterprise polony."
When a journalist asked MacDougall if he had consulted lawyers ahead of the press conference, he said: "No — doing the right thing and saying the right thing doesn’t need legal prep."
It was good PR-speak, but it rang particularly hollow. To say MacDougall lacked empathy is a vast understatement.
A few days later, the Sunday Times reported that the health department had asked multiple food companies to send samples in November the year before, and Tiger Brands hadn’t complied. The newspaper revealed that Tiger Brands had recalled products from distributors without a public alert in mid-February, even as it continued to churn out tons of potentially dangerous products.
It turned out Tiger Brands had known its products were potentially harmful long before. In court papers in 2019, the company said it had collected samples as early as February 3 and the same day "swabs taken from two product casings … tested positive for [Listeria monocytogenes]".
But MacDougall again tried to spread the blame by mentioning other food producers, trying to distance Tiger Brands from the avoidable deaths.
Yet, as Dr Juno Thomas, head of the Centre for Enteric Diseases at the NICD, said: "From a scientific evidence point of view, there is no doubt" that products from the Polokwane Enterprise factory caused the outbreak.
Because Tiger Brands broke the first rule of crisis management — by not stopping the harm — the tone of reporting that emerged created new problems.
Reports soon emerged in which experts suggested the company had been sitting on a huge health problem for a long time, and had failed to act.
"This kind of thing doesn’t just suddenly spring up overnight," said SA Institute of Environmental Health president Selva Mudaly. "It’s not just in a meat-slicing machine, it’s in everything from the nuts and bolts, every part of the factory."
As communication academics Shari Veil, Tara Buehner and Michael Palenchar argue, once an organisation is seen as untrustworthy, it can no longer be the authoritative voice and control information around a crisis. The opportunity to lead from the front is lost.
Tiger Brands’ response, when it was sued by the families, only made things worse.
Presumably to try to share the blame or break the causal link between itself and the victims, the company tried to subpoena laboratory tests of other food producers.
The class action claimants have said this is irrelevant, as they fell ill after eating Tiger Brands’ products and no-one else’s.
But by refusing to accept that it was logically responsible for some, if not all, of the deaths, Tiger Brands shifted the burden of proof to the people who got sick.
It’s unclear how the victims can be expected to prove the "direct link" required — perhaps they should have taken blood tests before and after eating polony? Or saved the packets?
MacDougall has since retired, but Tiger Brands is still counting the cost of not apologising.
Thankfully, not all companies are this obtuse.
Woolworths was one of the first companies to issue a recall of products on its shelves linked to Enterprise factories. Customers walking into stores found a full list of viennas and other meat products that had been removed displayed at entrances.
Woolworths must have been tempted to run a mile from the crisis, as its brand is built around food quality. But instead of trying to hide this, it acted with complete transparency.
The criticism of Woolworths was limited: when companies do the right thing immediately, there is usually little left for commentators to say.
Yet Tiger Brands has been lashed. Not only did it not immediately tell people how to protect themselves — by, for example, throwing away polony — it also opted not to do a precautionary recall when it first found listeria in its products in February 2018. It was thinking about the bad press, rather than the people who would eat its product.
In court papers, Tiger Brands argues that it took all reasonable precautions to keep its products safe, and it says the presence of Listeria monocytogenes bacteria in small quantities in food products has been accepted by regulators.
Instead of admitting it had full control over the cleanliness of its facilities and the quality of its food, Tiger Brands acted like the helpless victim of invisible germs everywhere. It’s a cowardly strategy.
There is another way to do things. In 2008, there was an outbreak of listeriosis in Canada which led to 20 deaths. The Canadian Food Inspection Agency honed in on Maple Leaf Foods, and the company’s Sure Slice cold cuts tested positive.
Unlike Tiger Brands, Maple Leaf launched a huge recall. Quickly, company CEO Michael McCain issued a clear and unequivocal apology.
McCain took full responsibility. "Tragically, our products have been linked to illnesses and loss of life," he said. His position was that, regardless of whether inspectors did their job, Maple Leaf had breached its own standards and was solely to blame. "The buck stops here," he said.
He didn’t make excuses, and he didn’t try to find scapegoats.
Significantly, McCain said: "There are two advisers I’ve paid no attention to. The first are the lawyers, the second are the accountants."
Make no mistake, there were costs involved for Maple Leaf: the recall cost between $25m and $30m, while a class action lawsuit cost a further $25m. But it was settled quickly, avoiding years of acrimony.
At Tiger Brands, the costs are still stacking up. While the poor market affected Tiger Brands’ share price, its handling of the listeriosis case weighed heavily too. Before the crisis, Tiger Brands shares were trading at R394; by last November, they were at R216; today, they’re at R175.
In its November results presentation, neither MacDougall nor financial director Noel Doyle, who has since replaced MacDougall as CEO, even mentioned the listeriosis case. But the media did.
It’s impossible to know where Tiger Brands would be now if it had chosen a more responsible approach, but it would surely have been better off.
An early settlement with the victims would most probably have cost less than the R40bn it lost in market value in about a year and a half. As Maple Leaf showed, there’s a braver and better way than hiding behind lawyers and insurance companies, as Tiger Brands did.
*This is an edited extract from When Crisis Strikes: Ten Rules to Survive (and Avoid) a Reputation Disaster (Pan Macmillan), by veteran broadcaster Francis Herd and outgoing Gordon Institute of Business Science dean Prof Nicola Kleyn
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