Tiger Brands coronavirus closure may just be the first, chamber warns

Chamber
of Baking executive director Geoff Penny said the closure of Tiger Brands’
Albany bakery in Durban – one of South Africa’s largest bread producers –
may put pressure on food supply after Tiger Brands [JSE:TBS] found 12 employees
at the bakery tested positive for Covid-19.

Tiger
Brands said it made arrangements to use its other facilities in the country to
ensure that supply of food remains stable, while the Durban bakery is
temporarily closed as a precaution. Penny said while the closure will
significantly affect capacity, closing the Albany bakery was the appropriate
response. 

“They
have capacity elsewhere in the province like the facility in Pietermartizburg
and they will have to ensure they adjust work patterns and introduce shifts.
I’ve spoken to the big players and they are concerned that people will worry
that the virus will spread through food and that is simply not the case,” said
Penny.

Tiger
Brands’ website says its 12 bakeries deliver to 40 000 customers daily.
According to the chamber’s figures, Tiger Brands – along with Pioneer Foods,
Premier Foods and Foodcorp – held 70{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of the bread market in 2017, worth R22
billion.

Penny
said the Durban bakery was an “important” supplier, but that the company was
doing the right thing by closing it.

“It’s
only a temporary closure but it is something that we should consider in the
food production market. Hopefully it won’t be too often, but a lot of this
depends on how people conduct themselves in hygiene and social distancing,”
said Penny.

On
Thursday, Tiger Brands’ share price was down 0.75{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to R177.48. Traces of
listeriosis were found at the factory of Tiger Brans’ processed meats business,
Enterprise. Listeriosis claimed 216 South African lives that year.

Efficient
Group economist Francois Stofberg said demand could prove a challenge for food
producers, especially producers of soft luxuries, as consumption is a function
of income as well as certainty of income.

“If
you doubt that you will be able to consistently earn an income then, of course,
it’s going to impact your consumption.

“Unlike
previous recessions where something was broken in the system, this was more a
behavioural recession. With this recession, nothing is broken. Lockdown and the
virus are what is changing how we consume and behave this time around,” said
Stofberg.

The
closure underscores the ease with which the coronavirus has spread, even in
businesses deemed as essential services. South Africa and countries around the
world are considering reopening their economies for business.

Mediclinic
also had to close a facility when it emerged on Tuesday that 12 staff members
tested positive for the coronavirus at its Morningside clinic in Sandton.

United
States President Donald Trump has established an advisory team to assist the US
government with reopening the economy. The pressure to reopen the South African
economy may be all the more poignant, as the local economy was in a technical
recession before the pandemic.

Stofberg
said: “I’m not apathetic to the crisis but shutting down an economy can force
people into poverty and poverty is a much greater killer than viruses. In South
Africa, many people are already poor because of the contraction of the economy.”

Tiger
Brands spokesperson Nevashnee Naicker said the company would have to consider
keeping South Africa food secure as a priority along with the health and safety
of its staff.

“Other
facilities will support the Durban market. We have said that these facilities
will be there. This is a temporary closure as a precaution because our
commitment is to flatten the curve,” Naicker said.

Naicker
said Tiger Brands took the pandemic and health precautions seriously, as it
closed all except two of its beverage divisions.

She
said much of the production at the bakery was automated and that the facility
observed screening and hygiene standards at the beginning of the outbreak in
the country.