How transparency can impact recalls
Consumers and manufacturers alike benefit from knowing more about why a product was taken off the shelves
In July, the FDA stunned the food industry and consumers when the agency protected the name of a sugar supplier at the heart of a massive recall. That recall has continued to expand, but the FDA remains tightlipped on the subject.
Transparency has been at the heart of many major company announcements lately, from GMO ingredient labeling to animal welfare practices. And if there’s anything a company should be transparent about, it’s product recalls, which could lead to sick consumers, lost sales and a damaged reputation.
Timeline of the mysterious sugar recall
In standard recall procedures, the FDA or manufacturer itself releases details about the contaminated product, ranging from brands to batch numbers. But in the recent case of an ongoing sugar recall, neither the sugar supplier nor the FDA has identified the original source.
In July, ConAgra recalled its P.F. Chang’s brand frozen chicken and beef entree products — first nearly 4,000 pounds, then almost another 192,000 pounds two weeks later. An employee observed metal fragments during processing while dispensing sugar from a supplier into the entrees’ sauce.
The PF Chang recall is exclusive to frozen meal products sold by ConAgra & in no way affects PF Chang's restaurants pic.twitter.com/IrCrCdQJ14— FDA FOOD (@FDAfood) July 21, 2016
A few days later, retailer Weis Markets recalled about 30 bakery products, also due to potential metal fragments in the sugar from an unnamed supplier. Both ConAgra and Weis’ recall notices identified the metal fragments as in the same size range, which suggested the sugar from both recalls came from the same supplier.
Still, neither the sugar supplier nor the FDA came forward with the name of the producer. The agency said at the end of July that it was working with the company directly but would not disclose its name, citing federal laws protecting corporate confidentiality.
Days later, a Shoprite employee noticed metal fragments in the retailer’s cookies, which individual stores bake onsite using premixed ingredients. A Shoprite spokesperson told Food Safety News that she was not aware of the sugar recall. Shoprite then expanded the recall about two weeks later to include another more than two dozen varieties of the store’s cookies.
How to, versus how not to, handle a recall
While these third-party retailers and manufacturers have promptly notified the FDA and consumers about their contaminated products, the supplier has not been revealed. The similarities among the recalls suggest that supplier could be the same.
This raises concerns about other products that employees or consumers have yet to discover are also contaminated. As in the Shoprite case, manufacturers and retailers may not realize it is their sugar supplier that produced the problematic ingredient. Yet their own brands and company reputation could take a hit in the interim — all due to a lack of transparency further down their supply chain.
But Kevin Pollack, SVP of marketing, inside sales and commercial operations at Stericycle, assures that even when recalls are large, manufacturers that embrace complete transparency from the get-go can often experience much better outcomes in the long and short term.
“Generally for recalls channeled well, consumers can be quite forgiving, and you'll see the sales back bounce relatively quickly,” said Pollack. “If they feel like it was handled poorly, then that can extend for quite a long time as consumers decide to pursue other alternatives.”
Because the exact sugar supplier and batch numbers remain unknown to the general public, it’s difficult for either manufacturers or consumers to know if this recall is over yet. That secretiveness could signal a massive recall that could potentially shut down production for the company. It may be why the supplier called for protection under corporate confidentiality laws.
But this company’s executives might have alleviated the outcome they’re concerned about simply by being more transparent. Pollack recommends sharing information about what happened, what products the recall impacts and what the company is doing to remedy the situation.
“The characteristics of a recall handled well are going to be very open and transparent with the consumers and with the public, to take any challenge head on and be very forthright,” said Pollack.
What to do when recalls don’t seem to end
General Mills is one of the latest companies to know firsthand how unwieldy recalls can be over time. It began in late May as a recall of its own flour brands because of possible E. coli contamination. The recall has since expanded to other companies, other countries and more production dates because other brands used the flour in their own products. Consumers have fallen ill after eating raw cookie dough made from contaminated raw flour, though baking usually kills the bacteria.
“If there's any thought that there could be other potential affected products, is to just take as much action as early as possible, in order to get out ahead of it,” said Pollack. “Then to work very aggressively and very quickly to manage that problem, communicate with consumers, get that product pulled from the shelves and demonstrate that the problem has in fact been fixed and been identified.”
General Mills has been vocal about the initial and consecutive recalls despite having now recalled 45 million pounds of its flour, about 2% of its annual output. The company has launched a dedicated website with links to media releases and blog posts detailing its work with the FDA to ameliorate the situation. The site also lists all affected brands with their photos and identification information, including UPC codes and better-if-used-by dates involved in the recalls.
“By doing that in a very open and transparent way, very quickly, and taking a very aggressive approach to identifying and fixing the problem, consumers will continue to have trust in that brand and in that company,” said Pollack. “They can see the level of diligence that's being provided by the management to try to address the problem.”
Can transparency preserve a brand’s reputation following a recall?
It’s too soon to tell if or how much this recall will impact General Mills’ flour sales. And without knowing the supplier or extent of the contaminated batches, the ongoing sugar recall’s effects are even more opaque.
Eventually, these companies will release more information surrounding the recalls and the earnings reports that follow. Once they do, manufacturers may be able to see a clear comparison of just how much transparency can influence consumer perceptions and product sales following major recalls.
“(The outcome) varies based on how the recalls are handled,” said Pollack. “We've looked at some market data and we've seen certain companies have had their sales bounce back within a quarter, and been right back on track, based on that consumers didn't feel that the recall was handled poorly. They felt like it was addressed very well. The company was on top of it and they still trusted that company, and valued the products it was providing.”
This sugar supplier could be under the protection of corporate confidentiality laws for now. But when its name and the extent of this recall eventually surface, the company could be worse off than if it had handled the recall differently from the outset.
“In other cases, if (consumers) feel like (the recall) was handled poorly, (the impact) could stretch into multiple quarters or even several years,” said Pollack. “Then there are some products that may never come back, depending on its severity. It may do enough damage in lost sales to where the company struggles to recover at all.”