The Impact of Food Recalls

On April 3rd, PepsiCo announced its decision to permanently close the Quaker Oats plant which was the centre of the Dec 2023- Jan 2024 recall. The release from the company stated, “to meet future manufacturing needs the plant would require an extended closure to facilitate extensive modernisation and enhancements and to timely deliver the product, production will need to permanently shift to other facilities.”

I have had multiple thoughts about this recall and its impact, but I just thought I’d share three of the most prominent.

1. A recall of this magnitude is not an overnight occurrence. There could have been multiple indicators that may have been ignored in favour of production. I dare say if there were no indicators, the process/system in place was not what it should be.

a. I lean toward the former school of thought as a focal point in the company’s press release was - timely delivery. This may just be semantics however my mind immediately questions how many times a critical step may have been omitted in favour of meeting production deadlines and targets. If we are honest, most cases of salmonella contamination can be traced to poor hygiene or sanitation practices or manufacturing shortcuts. While timely delivery is very important – it's more important to deliver safe quality products within the determined timeframe. In other words, safety and quality should not be compromised in efforts “to get the product off the production floor and through the door.”

2. Food safety and quality are investments. Either you invest gradually, or you’re forced to invest immediately. A balloon investment can be more than an organization can afford or it can be more than an organization is willing to sacrifice at the given time. When this happens difficult decisions have to be made, there is no getting around that.

a. Simple investments that can aid a company are staff training and education, keeping current on equipment and technological advances, ensuring that there is a budget set aside for such activities, keeping abreast on industry best practices, sticking to scheduled activities as much as practicable, doing studies related to changeover impacts and the list can go on. I thought it pertinent to mention budgetary considerations as I have been told in many instances by some heads in organizations “we do not have enough allocated in our budget for this,” or “there is no room in the budget for that.” I have even observed training being constantly placed on the back burner as the mindset that develops is “what if I invest in this person and they leave?” or we have been muddling along so far so this is not high on the list of priorities.

The Return On Investment will be worth it.

3. Product recalls can have significant brand/ reputational and financial impacts. As highlighted in this article, PepsiCo, in its financial report for 2023, said “sales volumes for Quaker Foods North America dropped 5 percent compared to the previous year. The financial report also said that the division’s revenue dropped by 2 percent to $3.1 billion. Operating profit fell by 19 percent, which the company said was because of the impact of the recall.”

a. Brand is instrumental in purchasing habits. When I speak of "brand", I do not refer to the logo. The logo represents recognizability- consumers can differentiate between your product and a similar one based on the logo. Brand refers to trust, confidence, and reliability – all those wholesome words that consumers associate with your product and result in them purchasing it over another. After a recall, consumers begin to question whether they can trust the product and by extension, sales can decline, the bottom line is impacted, and there are shifts in operational habits for example production targets are decreased. And for a recall as massive as this, the impact can be devastating.

What are your thoughts??

Recall Information: https://www.fda.gov/safety/recalls-market-withdrawals-safety-alerts/update-quaker-issues-revised-recall-notice-additional-products-due-possible-health-risk

Plant Closure Information: https://www.foodsafetynews.com/2024/04/officials-confirm-planned-closure-of-quaker-oats-plant-behind-recall-of-dozens-of-products/