From a safety perspective, recent cases
of contaminated food products and
widespread recalls have resulted in a
growing awareness of the foods that
reach America’s tables.1 Increased media
attention associated with recalls related
to foodborne illness outbreaks has consumers more sensitized. As a result, food
safety has become a critical area of concern for consumers, regulators and the
companies whose success depends on
consumer confidence. From increased
“... focusing on food safety programs
that protect your brand and your
consumers is not an option; it is a key
to survival.”
regulations and heightened public awareness to growing consumer unease with
threats against the food supply and
everyday products, companies cannot
risk ignoring this important challenge.
2
Companies are seizing the opportunity to turn this concern into a competitive advantage by adopting a risk
intelligent culture across the extended
enterprise and marketing this approach
to enhance consumer brand loyalty and
product visibility. For many companies,
there is a growing urgency to do all they
can to address the problem head-on.
The risk of today’s consumers dropping a product if they believe the company is not doing what it takes to protect
them and their families is not something
to take lightly. The challenge is clear—
focusing on food safety programs that protect your brand and your consumers is
not an option; it is a key to survival.
Corporate culture is extremely important when it comes to food safety. Leading food companies work continuously
to ensure their food safety culture extends from the CEO all the way down to
the production line worker. The culture
must be evident everyday and be
“known and practiced” thoroughly by
ALL members of the company. It must
be reinforced through continuous training and reassessment of current food
safety practices to capture and institutionalize the culture throughout the
company’s supply chain.
The risk is too high to “assume” an ingredient from a supplier is always safe or that
the supplier to the supplier of his supplier has an effective, verified and validated food
safety system in place. A leading company must know to what degree its people are
consistently executing the company’s food safety policies, from procurement
through final distribution.
The food industry must continue to take responsibility for what it can control and
not rely on, or expect, regulators to find the gaps in the process—be it one’s company
or that of a supplier, distributor or retailer.
The key question for any CEO engaged in producing food is “Am I prepared to
feed this product to my children every day?”
A leading company will be proactive, empower its people and employ an active
management and continuous improvement process throughout all parts of its supply
chain to ensure that safe, high-quality
products reach the marketplace while
meeting consumer expectations.
With the advent of the new 2011 Food
Safety Modernization Act (FSMA), the
cost of producing safe product is increas-
ing for each stakeholder in the food indus-
try. However, that incremental cost is small
compared to the value of one individual made ill or lost due to unsafe food or han-
dling practices. Increased consumer confidence and repeat business is paramount and
provides the catalyst for new business and products.
Regulators play an instrumental role to ensure industry compliance with existing
food safety regulations. As new laws are anticipated, regulators must be prepared to
enforce existing regulations in a swift and decisive manner. They must preclude purveyors of unsafe product from jeopardizing the health of the American public.
Motivating Factors for Food Safety Investment
William D. Marler, Esq., a well-known foodborne illness litigation lawyer, addressed the House of Lords in London in May of 2009.3 An excerpt from his recollection of the recent Peanut Corporation of America recall was quite telling and provides
an economic motivation for focusing on food safety. Mr. Marler quickly captures key
economic parameters that are associated with this recall and are now quite apparent to
most CEOs.
“...Let’s start with the human toll, which is what I know best. My firm represents over 100
people who were sickened by the Salmonella and two families who lost a family member to it.
“...Recalling tainted food is the right thing to do—for legal and ethical reasons as well as basic
public relations. But recalls come with astounding costs. One of my good friends in the food processing industry estimates that the peanut recall will cost well over $500 million. It’s impossible to
assign precise numbers, but you can start with the costs of tracking down, retrieving and transporting millions of items, most of which have already found their way onto retail shelves and
kitchen cabinets.
“... Then there are the lost sales—not just of the tainted products themselves, but also of related
peanut products that may be completely safe. The tomato-Salmonella recall last year resulted in
$100 million in lost tomato sales—even though the real culprit proved to be peppers. In 2006, E.
coli-tainted spinach cost that industry over $175 million—even though the outbreak was linked to
just one 50-acre farm in California.
“...Let’s not forget the costs of advertising and public relations aimed at restoring consumer
confidence.
“...And, then there are the losses to stock prices. One major food processor lost $1 billion in
stock value following an E. coli outbreak.
“...Is anyone keeping track of the math? Let’s call it $1.5 billion—just because of the actions of
one small player in the peanut industry. The likely costs of compensating their sickened customers
are a tiny part of that number; virtually none of the rest of that $1.5 billion will be covered by
insurance.”
