JOHANNESBURG (REUTERS) - South Africa's government on Monday (March 5) blamed a lack of cooperation by producers of cold meats for a delay in finding the cause of a listeria outbreak that has killed 180 people in the past year.
As shoppers queued up to return processed meat items and demand refunds, shares in food firms Tiger Brands and RCL Foods slid on Monday over their links to the outbreak, that began in January 2017, before staging a recovery.
The government, which has been criticised for taking too long to find the source of the disease, on Sunday (March 4) linked the outbreak to a meat product known as "polony" made by Tiger unit Enterprise Food. It also said it was investigating an RCL plant.
Both firms, which have said they are fully 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.
South Africa's Health Ministry said the source of the outbreak 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 per cent in 2017 to a retail value of US$412 million (S$543 million), according to Euromonitor International. Tiger Brands has a 35.7 per cent market share, followed by Eskort Bacon Co-Operative with 21.8 per cent. Rhodes Food, RCL Foods and Astral Foods each have less than 5 per cent.
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 investigating 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, which it said was more closely regulated and different from the cold processed meat manufactured by its rivals.
Astral said it produced fresh and frozen chicken and not polonies and other items implicated in the listeria outbreak.
Both Rhodes and Astral said their products were safe.
Fast food chain owner Famous Brands 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, a directive that will hit a popular food segment in Africa's most industrialised economy.
The announcement prompted a frenzied clearing and cleaning of the shelves by local supermarkets chains Shoprite, Pick n Pay, Spar and Woolworths, which also urged consumers to return the meats for refunds.
Zambia's high commissioner to South Africa, Emmanuel Mwamba, urged South African retail chain stores operating in Zambia to recall ready-to-eat meat products imported from that country following the confirmation of the source of listeria bacteria.
Mozambique said it was suspending imports of South African processed meat. Botswana said it would recall all processed meat from its southern neighbour, while Malawi said it had intensified screening of imported meat, vegetables and fruits.
Shares in Tiger Brands sank as much as 13 percent, before recouping some losses to close 7.4 per cent lower at 393.38 rand. RCL Foods fell more than 6 per cent but later recovered to trade down 0.5 per cent at 17.11 rand.
There have been 948 cases of listeria reported since January 2017. The disease causes flu-like symptoms, nausea, diarrhoea and infection of the blood stream and brain.
Dozens of customers lined up outside a Tiger Brands outlet, carrying bags of cold meat products and demanding refunds.
"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 per cent 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."