Arson suspected in blaze that gutted Denny Mushroom’s warehouse in KZN

Social media lit up with speculation that a handful of workers dissatisfied with the 7% annual pay increase that was accepted by the majority of their Denny Mushrooms colleagues decided to vent their frustration by burning down the Shongweni plant in KwaZulu-Natal on Friday last week (9 September).

It was reportedly the second fire at the plant in little over a week.

The first one, in late August, was extinguished by fire fighters before it was able to cause much damage, according to The Mercury.

Denny is SA’s largest producer of fresh mushrooms and operates from three plants in Gauteng, Western Cape and KwaZulu-Natal.

The extent of the damage and the cost of returning the plant to full production are not known.

The company is owned by JSE-listed Libstar, owner of other well-known food brands such as Cook ‘n Bake, Goldcrest and Cartwrights. It also the SA representative for international brands such as Tabasco, Kiri and Robertsons.

The company issued a statement to Moneyweb on Monday confirming the fire on Friday 9 September at Denny Mushrooms’ Shongweni farm, believed to have started at 16h45.

Read: Libstar share price jumps on news of Cape Foods acquisition

“We are currently working with the authorities to investigate the cause of the fire as well as assess the damage. We are unable to comment further at this stage as to the cause, extent or estimated cost of the damage. The safety of our people remains a key priority and we are thankful that none of our 319 employees were injured. We remain focused on servicing the needs of our customers from our plants in Gauteng and the Western Cape,” says the statement.

The company did not elaborate on whether it believes disgruntled workers were behind the fire.

A case of malicious damage to property has been opened at the nearby Mariannhill Police Station after offices and a large part of the Denny warehouse were destroyed, before the fire was extinguished by local fire fighters from nearby stations.

Denny Mushrooms plant in Shongweni KZN gutted by a fire. Reports say some disgruntled employees started the blaze over a wage dispute. pic.twitter.com/Z4kgnZ5Q0y

— Yusuf Abramjee (@Abramjee) September 11, 2022

The response on Twitter was furious: “So they went from disgruntled (workers) to fully unemployed and made many other unemployed,” said one. “Cool. What will be their wages now,” said another. “I won’t rebuild, not in this country…finish n klaar,” said another.

“Only five people did not agree to the wage increase. They did the damage. Does that make sense? Now all are without work. Very clever move.”

Denny Mushrooms has had a run of bad luck, going back to the riots in KwaZulu-Natal and Gauteng in July 2021, resulting in production stoppages at the Shongweni plant for one week and the Deodar plant in Gauteng for three days.

The company’s latest annual report for the year to March 2022 details how it has been impacted by lower cost recoveries and the closure of customer retail outlets caused by Covid. The Shongweni plant was most severely affected, but managed to claw its way back to historic production levels by September 2021.

Read:

Denny is part of a vegan meat replacement strategy being rolled out in collaboration with another Libstar brand, Ambassador Foods.

The impact of the lower mushroom sales volumes on the high fixed-cost nature of Denny Mushrooms’ farming operations had a negative impact on its profitability in the latest financial year.

“Corrective actions taken by the group have included increased mushroom price realisation, the containment of costs and the significant recovery of its retail channel market share from previous lows. Despite these efforts, the prevailing competitive market conditions, high operating cost structure and declining sale volumes have interrupted Denny Mushrooms’ recovery. Considering these factors, the Group has applied a conservative downward revision of Denny Mushrooms’ five-year growth forecasts.”

An impairment loss of R198 million was recognised in the prior year in relation to goodwill attributable to Libstar’s investment in Denny Mushrooms.

It remains to be seen whether a further impairment can be expected in the six months to September financial statements.

“I sincerely hope that the responsible people are found and brought to justice swiftly. This kind of behaviour is going to trash this country,” writes one commentator on Twitter.

It’s a sentiment echoed by hundreds of others, just as KwaZulu-Natal appeared to be clawing its way back from the horrors and job losses of last year’s riots.