Canned food recall cost estimated at R500m to R650m
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Cape Town - The financial impact of the recall of certain KOO and Hugo’s canned vegetable products is estimated at between R500 million and R650 million.
Tiger Brands on Monday recalled certain canned vegetable products including baked beans, produced from May 1, 2019 to May 5, 2021 due to a number of defective cans by a packaging supplier.
The cans may have a defective side seam weld that could cause the can to leak.
Tiger Brands spokesperson Werna Oberholzer on Thursday said while they were yet to quantify the number of recalled products that have been returned to date, the financial impact was estimated between R500 million and R650 million including the cost of the potentially affected stock to be written off, transport and storage costs, as well as the loss of margin on the returned stock.
“Tiger Brands has product recall insurance for the logistics of recalling the products. The company’s claim under the contract with the third-party supplier is yet to be assessed.”
Pick n Pay on Thursday said: “The recall is going well and customers have begun returning products to stores.”
In a shareholder communication this week, Tiger Brands said the recall was expected to be concluded in about four months.
“Shareholders are referred to the interim results announcement of 20 May 2021, which included disclosure in respect of defective packaging materials identified at one of the company’s sites. This related specifically to.... (18) leaking food cans which had been identified... as part of its internal quality assurance processes.”
These defective cans were identified prior to the final labelling of the finished products and were traced back to three different batches of cans which had been purchased from one of the division´s key packaging suppliers.
Shortly after, Tiger Brands was notified by the supplier that a further three batches of cans could have presented the same defect.
Affected finished products manufactured using these six defective batches of cans were placed in quarantine for further investigation.
Thereafter a full investigation of all cans sourced from the supplier was initiated and in June, the investigation identified a further small quantity of leaking cans in the finished goods warehouse.
These defective cans were traced back to a seventh batch of cans purchased from the packaging supplier and, therefore, was not part of the defective batches of packaging material identified in May.
“Unlike the defective cans identified in May, it was established that a portion of the cans from this seventh defective batch had been released to the trade in the form of finished product.”
The company initiated a rigorous transport and handling test from warehouses in Johannesburg to facilities in the Western Cape.
Out of 287 040 cans inspected after the transport and handling test, a side seam leak had developed in two cans.