South Africa Listeria Outbreak: Tiger Brands scrambles to contain damage caused by deadly strain

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South Africa's Tiger Brands has been scrambling to contain the damage caused by the discovery of a deadly strain of Listeria at one of its food processing plants. According to the nation's department of health, the bacteria has been linked to the deaths of 183 people since January last year. Angelo Coppola has more from Johannesburg.

Its share price has tumbled 12 percent in the last four weeks as the company manages the clean up at its enterprise operations. But the problem has been around for more than a year.

MICHAEL TREHERNE PORTFOLIO MANAGER, VESTACT "The listeriosis outbreak has been going since early 2017, why didn't their internal tests find the levels that everyone else has found, with more extensive tests. I think that where the company has fallen short."

As far as the share price goes, it bounced up when Cyril Ramaphosa took over the ANC in December. And then the listeriosis crisis struck. It wiped out more than one billion dollars off the market cap of the business.

MICHAEL TREHERNE PORTFOLIO MANAGER, VESTACT "So Enterprise is relatively small in terms of the whole tiger offering. It's two percent of their profit, I think it's seven percent of their revenues. So yes, it's significant because it makes up two percent but two percent in the whole scheme of things isn't that huge."

The financial fallout is fairly significant. And there's likely to be at least one class action law suit and that's going to cost the company.

MICHAEL TREHERNE PORTFOLIO MANAGER, VESTACT "Considering that Tiger Brand is trading on about a 21 PE (price earning ratio) before this happened, you've got 21 times one billion (Rand) that you're going to be wiping off profits, you would say that the market reaction is sort of in line."

The company needs to still deal with the legal challenges and this will cause short term volatility.

MICHAEL TREHERNE PORTFOLIO MANAGER, VESTACT "Tiger looks attractive at these levels. This court case will be put behind them, those factories will reopen, but if you're buying now, you might spend two years and see no fruit."

ANGELO COPPOLA JOHANNESBURG, SOUTH AFRICA So if you're an investor and looking for some medium to long term exposure in that consolidated retail sector, Tiger Brands is probably the right place to be going. I'm Angelo Coppola for CGTN in Johannesburg, South Africa.