JOHANNESBURG (Reuters) - South Africa said on Monday producers of cold meat products were to blame for delays in tracing the cause of the world’s worst listeria outbreak, which has killed 180 people in the past year.
As shoppers queued up to return processed meat items and demand refunds, shares in the biggest food firm in Africa’s most industrialised economy, Tiger Brands (TBSJ.J), tumbled because of its link to the outbreak that has spread since January 2017.
The government, which has been criticised for taking too long to find the cause, had on Sunday linked the outbreak to a meat product known as “polony” made by Tiger’s Enterprise Food.
It also said it was investigating a plant owned by RCL Foods (RCLJ.J) that makes a similar product, whose shares also slid on Monday before recovering.
Both companies, which say they are cooperating with the authorities, suspended processed meat production at their plants after health authorities ordered a recall of cold meats associated with the outbreak from outlets at home and abroad.
The U.N. World Health Organization called the outbreak the largest ever recorded globally, after 948 cases were reported since January 2017. Listeria causes flu-like symptoms, nausea, diarrhoea and infection of the blood stream and brain.
South Africa’s Health Ministry said the source was found after pre-school children fell ill from eating polony products traced to processed meat producers.
“The meat processing industry was not cooperating for months. They did not bring the samples as requested. We had long suspected that listeria can be found in these products,” the ministry’s communications director, Popo Maja, told Reuters.
“It is not that we are incompetent, or that we have inadequate resources,” Maja said when asked why it had taken more than a year to find the cause of listeria.
He said all firms in the industry were being examined.
South Africa’s processed meat market grew about 8 percent in 2017 to a retail value of $412 million, according to Euromonitor International. Tiger Brands has a 35.7 percent market share, followed by Eskort Bacon Co-Operative with 21.8 percent. Rhodes Food, RCL Foods and Astral Foods each have less than 5 percent.
Tiger Brands, Eskort, RCL Foods, Rhodes and Astral said they had complied with all requests from the health authorities.
Lawrence McDougall, the CEO of Tiger Brands, said there was no direct link between the deaths and its cold meat products. “We are unaware of any direct link,” he told a media briefing.
Health Minister Aaron Motsoaledi had said on Sunday the outbreak had been traced to a Tiger Brands factory in the northern city of Polokwane.
The authorities are also examining a second Tiger Brands factory and have not said when they could conclude tests on RCL Foods, which has a plant under investigation.
Rhodes said it produced processed canned meat, different from the cold processed meat made by rivals. Astral said it produced fresh and frozen chicken, not polonies and items linked to the outbreak. Both those firms said their products were safe.
Fast food chain owner Famous Brands (FBRJ.J) said it was recalling ready-to-eat meat products from its retail outlets.
The minister told South Africans not to consume any ready-to-eat processed meat due to the risk of cross-contamination.
The announcement prompted a frenzied clearing and cleaning of the shelves by local supermarkets chains Shoprite (SHPJ.J), Pick n Pay (PIKJ.J), Spar (SPPJ.J) and Woolworths (WHLJ.J), which also urged consumers to return the meats for refunds.
Neighbouring states acted swiftly. Zambia banned imports of South African processed meat, dairy products, vegetables and fruit. Mozambique and Namibia halted imports of the processed meat items and Botswana said it was recalling them. Malawi stepped up screening of South African food imports.
Shares in Tiger Brands sank as much as 13 percent, before recouping some losses to close 7.4 percent lower at 393.38 rand. RCL Foods fell more than 6 percent but later recovered to trade down just 0.5 percent at 17.11 rand.
Dozens of customers lined up outside a Tiger Brands outlet with bags of cold meat products and demanding their money back.
“I lost trust with Enterprise. I’ll be scared even if they say this problem is solved. I would rather go back to peanut butter and jam,” said call centre agent Tshepo Makhura, 37.
Deline Smith, a 57-year-old housewife with three full bags, said: “I hope my grandchildren are going to be okay because we gave them food over the weekend from these parcels.”
Analysts said profits at the two firms were unlikely to be hit hard. Standard Bank analyst Sumil Seeraj estimated the recall would cut operating profit at Tiger Brand’s value added foods division by 6 percent at most.
“The big hit is going to come with inventory write-offs because they are recalling all these products. That’s most likely where they will lose because the inventory write-off will affect operating profit from that division,” Seeraj said.
The Enterprise unit of Tiger Brands had “a very strong brand in meat”, he said, adding: “In the short term consumers will switch to other forms of protein.”
Additional reporting by Tiisetso Motsoeneng, Nqobile Dludla and Mfuneko Toyana in Johannesburg and Chris Mfula in Lusaka and Manuel Mucari in Maputo and Nyasha Nyaungwa in Windhoek and Frank Phiri in Blantyre and Martinne Geller in London; Writing by James Macharia; Editing by Edmund Blair