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Food Poisoning Scandals Erode Consumer Confidence and Food Industry Profits

Sep 5, 2007 | Parker Waichman LLP, LLP

Food poisoning scares have made most Americans far less trusting of the US food supply.  According to two recent surveys of American attitudes on food safety, recent outbreaks of Salmonella, E. coli and other food borne illnesses tied to peanut butter, snack foods, meat and fresh spinach have raised concerns among consumers that the food they eat might be dangerous. And now, those fears are being reflected in the bottom lines of the country’s largest food producers.

National Pasteurized Eggs surveyed 2,500 Americans about their attitudes regarding food safety and found that 93-percent are more concerned about food borne illness this year than they have been in previous years.  Ninety-six percent said that media reports of food poisoning outbreaks had influenced their perceptions of food safety issues.  A second study by the Food Marketing Institute found that only 66-percent of American shoppers are confident that the food they buy is safe.  Thirty-eight percent of those surveyed said they had stopped buying items that had been linked to food poisoning outbreaks.  

These findings are not surprising, considering the number of food poisoning scandals US consumers have endured in the last year.  According to the Centers for Disease Control (CDC), there are 76 million cases of food borne illnesses every year in the US, 5,000 of which result in fatalities.  In the past year, large scale food poisoning outbreaks have been in the news almost constantly.  Last summer, E. coli-tainted fresh spinach sickened more than 200 people and killed three.   In February, Con Agra’s Peter Pan and Great Value Peanut Butters left more than 600 people ill with Salmonella poisoning.    An outbreak of botulism this summer was traced to contaminated hot dog chili sauces produced by the Castleberry's Food Company.  Other outbreaks of both E. coli and Salmonella have been linked to meats, snack mixes, pet food, tomatoes and lettuce.  In this light, it’s easy to see why consumers are feeling a little queasy when it comes to their food.

And that lack of confidence is hurting profits at some of the nation’s biggest food producers.  ConAgra saw its profits drop substantially after the peanut butter Salmonella debacle.  Last week, Proctor & Gamble blamed recalls of its pet foods for low quarterly profits posted by its snacks, coffee and pet care unit.   Even companies not implicated in a food poisoning outbreak still suffer because of them.  Chiquita Brands, Inc. has said that sales of its Fresh Express bagged salads have yet to recover from last year’s spinach E. coli outbreak because consumers are now less trusting of any bagged greens.

Now, the food industry is scrambling to restore consumer confidence, but it could be a tough sell, as reports of tainted foods make it into the news every day.  Just last week, more bagged fresh spinach was recalled after it was found to be contaminated with Salmonella.  And an outbreak of E. coli in the Pacific Northwest resulted in the recall of tons of ground beef distributed by Interstate Meats of Oregon.  Companies have increased inspections and added to their food safety research budgets, but until the recalls and outbreak stops, these steps will have little effect on consumer confidence.


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