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Horse meat scandal has had a lasting effect on food retailers

July 29th, 2014 - Posted by Claire Barker in Procurement And Supply Chain

meat aisleA number of big UK brands are still feeling the effects on consumer behaviour after last year’s horsemeat scandal (see our infographic). A Which? survey found more than half of UK consumers have since changed their shopping habits and the majority of respondents questioned are buying less processed meat. The survey also suggested that the scandal has caused a decline in public trust in the food industry in general. Similar effects will most likely follow the announcement by US food giant OSI Group that all products sold by its Asia subsidiary, Shanghai Husi Food, are to be withdrawn from shelves over a scandal involving the use of expired meat. The widespread concerns over tainted supplies have quickly spread from China to Hong Kong and Japan.

OSI Group has explained that it is conducting an internal investigation into possible failures on the part of current and former senior management at Husi Food after the company supplied out of date meat to nine companies including KFC, McDonald's, Burger King Starbucks and Papa John's. In Japan, more than 20% of all chicken nuggets sold came directly from Hushi Food, causing 500 stores to remove chicken items from their menus until it can be obtained confidently from alternative suppliers.

China is McDonald's third-biggest market in terms of the number of restaurants and the news of the supply chain scandal is expected to have a significant effect on sales. McDonald's and many other food companies rely on third parties to perform audits to check whether facilities are complying with food safety rules and other regulations. It is not uncommon for suppliers at the centre of food safety scandals to have received high marks on these audits.

With the drive for efficiency and profitability continually increasing the complexity of supply chains, companies can often lose sight over distant aspects of their business leaving them open to operational, and in some cases reputational, damage. Everyday, consumers, journalists and bloggers are voicing opinions. Opinions that can have a large impact on an organisation, either positively or negatively. Fortunately, there are steps business executives can take to mitigate reputational risks. Monitoring and tracking is key for a competitive edge or early warning system. By developing an early warning system and responding quickly to any negative coverage, companies can quickly react to conversations in a timely way. Monitoring news across all key media on high risk third-parties gives companies an extra step in anticipating and mitigating financial and reputational risks.

End notes

Influencers and word of mouth are powerful tools in forming brand reputations. But while you and your company endeavour to project one image, the perception might be something else entirely. LexisNexis Analytics combines innovative technology with premium content – including traditional and new media – to transform information into actionable intelligence. Monitor industry conversations to assess brand perception and keep track of what the press and internet say about your company.

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