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ConAgra estimates peanut butter recall will cost $60m

By George Reynolds , 20-Feb-2007

ConAgra's recall of peanut butter products linked with the recent salmonella outbreak will cost the company up to $60m, the company said today.

The amount demonstrates the huge sums food companies incur when hygiene controls in the plant go awry. The estimates do not account for loss of brand loyalty and customer trust, nor for the possible cost of defending suits arising from the outbreak.

 

 

 

The company is in the process of recalling all Peter Pan and Great Value branded peanut butter products with the code 2111 printed on the lid after outbreaks of salmonella across the US were linked to them.

 

 

 

The contaminated products have so far been linked Center for Disease Control and Prevention to nearly 300 human illnesses, some of which date back to August last year.

 

 

 

ConAgra is destroying all affected product still under its control, while its manufacturing plant in Georgia - the sole producer of ConAgra peanut butter - has remained shut since February 14 while investigations continue.

 

 

 

Media reports that the outbreak was due to contaminated jars and not the manufacture of peanut butter were neither confirmed or denied by ConAgra today, as company press contacts did not return phone calls.

 

 

 

One US family has launched a suit against ConAgra, claiming that members developed gastrointestinal illnesses after eating Great Value peanut butter, which the company makes on behalf of Wal-Mart.

 

 

 

Settlements, damages and legal costs can run into several millions of dollars in food poisoning cases. If additional parties affected by salmonella contamination decide to take legal action, the company's $50-$60m preliminary estimate could be grossly undervalued.

 

 

 

The damage inflicted to the brand and consumer trust in peanut butter may add to ConAgra's woes and last for considerably longer.

 

 

 

According to NPD Group's Food Safety Monitor, a survey conducted from January 17 to January 24 showed that 78 per cent of those responding were aware and concerned about salmonella.

 

 

 

While 19 per cent were aware and unconcerned, four per cent were unaware.

 

 

 

Awareness and concern about salmonella has increased in the past three years according to the market researchers.

 

 

 

This is hardly surprising following the nationwide outbreaks of human illness following consumption of contaminated produce in recent years.

 

 

 

Last year witnessed large scale pathogen-related outbreaks of illness connected with lettuce, spinach and tomatoes.

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