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Jeno's and Totino's Pizza Recall Hits General Mills Profits

Dec 26, 2007 | Parker Waichman LLP

November’s Jeno’s and Totino’s frozen meat pizza recall has taken a toll on General Mills' bottom line.   According to the company, its Pillsbury USA  division that made the E. coli tainted Jeno’s and Totino’s pizzas was hit particularly hard, as net sales for the division fell two percent.  According to General Mills, the Jeno’s and Totino’s pizza recall knocked $20 million off its second quarter operating profit. Overall, the E. coli pizza recall helped to increase the cost of sales to $2.3 billion, a 7.8 per cent increase from the same period in 2006.

On November 1st, General Mills recalled Totino’s and Jeno’s frozen pizza due to E coli O157:H7 contamination. The Totino’s and Jeno’s pizza recall involved some 414,000 cases of frozen pizzas (nearly 5 million individual pizza pies) already shipped to stores. At least 21 people contracted the same E. coli 0157:H7 strain linked to the General Mills Jeno’s and Totino’s frozen meat pizzas, and nine of those victims have reported eating the E. coli-tainted pizzas prior to becoming ill. The outbreak  spanned 10 states, including Illinois (1), Kentucky (3), Missouri (2), New York (2), Ohio (1), Pennsylvania (1), South Dakota (1), Tennessee (8), Virginia (1), and Wisconsin (1). While all of the victims of the General Mills E. coli outbreak have fortunately recovered so far, at least half of them did require hospitalization. But the General Mills Jeno’s and Totino’s frozen meat pizza E. coli outbreak could be more extensive because according to the Center for Disease Control (CDC), for every case of E. coli that is reported, two go unreported.

According to the CDC, E. coli 0157:H7 is responsible for sickening 73,000 people every year, and of those, 60 will die from the disease. E. coli is a bacterium that occurs naturally in the intestines of most animals, including humans, but the E. coli 0157:H7 strain can be particularly dangerous to people. The symptoms of E. coli poisoning usually occur within 3 to 9 days after a victim eats contaminated foods. E. coli 0157:H7 causes the sudden onset of stomach pain and severe cramps, followed by diarrhea that is watery and bloody. While most people will recover completely within a week, E. coli poisoning can be very dangerous for children, the elderly and anyone with a weak immune system. In some cases, E. coli 0157:H7 will cause a disorder called hemolytic uremic syndrome, which can be life-threatening.

Despite the hit profits took from the Jeno’s and Totino’s pizza recall, General Mills is still in pretty good shape overall.  The company said it was optimistic about future growth, as total net sales for the quarter hit $3.7 billion, 6.7 per cent more than in 2006. Operating profit also increased 1.7 per cent to $687 million


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