Wednesday, February 25, 2015

Frozen berries recall crisis and Hepatitis A

An Australian company, Patties Foods, has been hit with a serious product recall of Nanna’s Frozen Berries and Creative Gourmet Mixed Berries after the Victorian Health Department advised them of a potential Hepatitis A virus contamination. These products originate from China and are distributed by Patties to major supermarkets – Woolworths, Coles and IGA. The outcome of this recall and public outrage over the source of the products and their labelling could have serious ramifications for the business and has led to a large sell off in Patties shares.

The recall has also created a crisis in confidence regarding the Nanna’s brand of frozen berries. The Chief Executive, Steven Chaur, went public early with a well-structured statement: “While our quality control testing to date has not revealed any concerns with the food safety of either product, further detailed testing is being done and the recall is an important step to ensure public safety and confidence. We have decided that all our frozen berries should be recalled until such time as we receive the results of further laboratory tests.”

While consumers have expressed their concern regarding the frozen berries products through social media and talk radio, the company has been on the front foot with the general and financial media.  The ABC’s Peter Ryan on the current affairs program “The World Today” asked Steven Chaur – “in terms of managing the situation or, some would say crisis management, how many hours of the day is this taking for you as Chief Executive?” Steven Chaur said - “it’s something we’re taking very seriously: we’re all working around the clock to work with the departments and working with our suppliers and indeed our customers to manage the situation.  We are fielding lots of consumer enquiries: we were taking nearly up to 8,000 calls a day last week on our consumer hotline.”

Not planning for a product recall escalating to crisis leaves a business, its brand and reputation extremely vulnerable.

Globally, there is a tightening of product safety controls although product labelling is still sadly lacking in detail in terms of product origin. Regulators are looking for a more thorough, fast response to recalling a faulty or contaminated product in terms of consumer contact and recovery of products. The fact is incidents of product recalls escalating to crisis are occurring with greater frequency than ever before.

Corporations need to establish crisis teams that can respond fast to a critical product recall. Threats need to be identified well in advance. Product recall processes need to include a crisis trigger.

Running regular product recall and integrated crisis/risk exercises will anticipate and deflect or reduce the impact of the worst case scenario.