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Perception is everything

Food recalls can be a nightmare if handled incorrectly

Oysters, often consumed raw, are prone to foodborne
    illness-related recalls.
By Lauren Kramer
April 01, 2008

A food recall can devastate a seafood company, especially if there is a rush to judgment by the media. If recalling a product from the marketplace becomes a high profile news event, it can seriously impact a company's sales and even deliver a knockout punch.

"A lot of companies have disappeared within a month or two of a recall event, because they've become a pariah," says John Keane, president of Capital Risk Concepts in White Plains, N.Y. "The impact from the real or imagined cause of the recall can kill you."

There were two industry recalls just in the past month: Frozen fillets from Gorton's of Gloucester, Mass., due to what turned out to be product tampering at the consumer level (see Newsline, p. 10), and frozen langostinos from Slade Gorton in Boston due to possible Listeria contamination.

Sometimes the difference between surviving a recall and going under is recall insurance, a service readily available from companies like Capital Risk Concepts. But, says Keane, the majority of seafood companies likely don't have it.

"It's a matter of their financial capacity to absorb a loss and withstand the rigors of an event like that," says Keane.

The five risks involved in a food recall are the impact from the real or perceived cause of the recall, such as bad press; the cost of retrieving products from the marketplace; the attendant costs related to that, such as advertising and laboratory tests; the loss of gross earnings; and the public relations cost of ensuring consultants are on hand to assist in handling the recall.

"Bad press can kill you," says Keane. "Oftentimes there's a rush to judgment. When the company conducting the recall has to retrieve its product from the marketplace, that process causes a high profile manifestation of what has occurred, which can have a serious impact on sales.

"Public perception and reality are quite different, and there's a lot of misconception out there," he adds. "If something gets recalled, even if it didn't cause anyone any harm at all, people can get the wrong idea very quickly."

Austin Docter, plant manager at Taylor Shellfish in Shelton, Wash., can testify to that. When the U.S. Food and Drug Administration issued a consumer warning to avoid the consumption of raw oysters harvested from Washington's Hood Canal due to an outbreak of Vibrio parahaemolyticus last August, Taylor Shellfish was keenly affected.

"We have dozens of growing areas in the state, but in the FDA's press release, which was poorly written, it stated only in the small print that it was only Hood Canal oysters that were unsafe. There were 97 other growing areas that were approved and whose oysters were safe for consumption."

That's not what Taylor Shellfish's customers heard. The company was deluged with calls from customers worldwide who were afraid to sell the product based on the FDA press release.

"A lot of them threw product away and refused to pay for it," Docter recalls. "It was unfortunate because, in fact, our recall of the Hood Canal oysters had worked, and that product was under control as best it could be at the time. The FDA, at the time the agency wrote the release, was unaware how many of our customers had been contacted and how successful the recall had already been."

Taylor Shellfish has a written recall procedure, and within a couple of hours of notification of the foodborne illness, the company had contacted all its customers who had that particular product.

"We have a very extensive computer tracking system sorted by customer growing area and location," says Docter.

Despite the effectiveness of Taylor's recall, the FDA release threw everything off.

"Foreign customers read this press release a couple of weeks later, and due to poor communication between the FDA and foreign food ministries, they believed all product from Washington state was banned, obviously not understanding that it was just one singular growing area," he says.

Docter estimates that the recall cost between $50,000 and $75,000, "due to a combination of the FDA's press release and the recall itself," he says. "Customers didn't place their regular orders, and our sales records for that time are down significantly."

The company's public relations staff helped by contacting customers and explaining the situation of a singular closed area, and the State of Washington's Department of Shellfish and Water Protection provided assistance, too.

"[The state of] Washington sent faxes to the foreign ministries and to our customers, explaining that there was no reason to ban state-wide product, only product from one particular growing area," says Docter.

After meeting with Taylor Shellfish, the FDA promised to be more cautious in the future and to give the state of Washington more time to see if its own process was working before stepping in. Despite this, Docter is not optimistic.

"I don't think this wouldn't happen again," he says.

To gauge whether or not your company needs recall insurance, you have to examine your product line species by species, says Keane, and make a decision what the impact would be in the event of a recall.

"The limiting factor in seafood compared to other types of food production is that generally it's produced in comparatively small batches," he says. "So when you're thinking about pathogens and the introduction of cross contaminant, you're not contaminating a whole lot of seafood in the first place."

Whether the batch in question is big or small, having a recall plan in place could be the difference between sinking or swimming for some seafood manufacturers.

Contributing Editor Lauren Kramer lives in British Columbia

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