• Home
  • About Us
  • Our Services
  • Tools, Templates and Training
  • Learn about food fraud
  • Report a food crime
  • News
You are here: Home / Archives for cost of recall

25th October 2020 by foodfraudadvisors

The Cost of Deception (the not-so-sweet-story of an ice cream company’s food fraud)

Food fraud takes many forms.  When a food company makes deceptive claims about its products to gain an economic advantage, that is food fraud.  The American company Blue Bell Creameries created a deadly food fraud incident in 2015.  Now the former president is facing a grand jury and potential jail time over his role in the affair.

At a glance:

  • Blue Bell and its former president have been accused of covering up food safety problems.
  • Three people died and at least 10 more were sickened by dangerous bacteria after eating Blue Bell ice cream.
  • After authorities stepped in, the company had to shut down production, lay off a third of its workforce and risked liquidation.
  • The former president of the company is facing a grand jury on fraud charges and, if found guilty, could be jailed.
  • The company has already paid fines and penalties totaling more than $19 million.

Blue Bell Creameries is one of America’s largest ice cream manufacturers.  Early in 2015, Texan authorities notified Blue Bell that two of its products contained a dangerous bacterium: Listeria monocytogenes. Listeria isn’t your average run-of-the-mill food poisoning bacterium; it has a high mortality rate in vulnerable populations, affects pregnant mothers and older people severely, causes miscarriages, stillbirths and deaths.  The other scary thing about Listeria is that it survives – even thrives – in low temperatures.  Like in ice cream.

For an ice cream company, finding Listeria in your product is a terrible thing.  Your consumers are in danger and should be protected at all costs.  All the affected product should be immediately recalled from the marketplace, customers should be informed of the problems, consumers should be told to discard the food, more testing should be done to see how many other products are affected and manufacturing should be halted until the source of the contamination has been found and eliminated.  As you might imagine, the costs to the company can be astronomical.  Worse still, the damage to a brand from having to tell consumers that there is a dangerous pathogen in your food can be severe.

In February 2015, Blue Bell knew there was Listeria in its products.  Yet it did not tell its customers.  Instead, it’s alleged that Blue Bell’s president, Paul Kruse, chose to cover up the Listeria problem.  He allegedly directed that the Listeria testing program be discontinued. He did not immediately initiate a recall, despite supposedly telling authorities that one was underway.   He put consumers at risk.  Three people died and at least 10 became ill from the Blue Bell outbreak.  Paul Kruse has been charged with seven counts of wire fraud and conspiracy to commit wire fraud and will be appearing before a grand jury in Texas next week.  If found guilty he could be jailed.

A recall did eventually get underway, in April 2015.  Consumers were alerted, the company had to shut down production, resulting in mass lay offs and causing liquidity problems.

The company has already pleaded guilty to distributing adulterated food products.  It was sentenced to pay criminal penalties of $17.25 million.  Separate civil claims have been paid out by Blue Bell after shareholders and customers, including the American military, alleged that the ice cream was manufactured in unsanitary conditions and that management paid little regard to food safety ‘red flags’.  The total monies paid in fines, forfeits and civil settlements amount to $19.35 million, the second largest amount paid for a food safety matter.

Often, when people talk about food fraud, they focus on adulteration, like ‘fake’ honey made from sugar water.  But food fraud takes many forms.  In the case of the deadly Blue Bell Listeria Outbreak, it can come at a high cost to the perpetrators and an even higher cost to consumers.

Share this:

  • Facebook
  • Twitter
  • LinkedIn
  • Email

Filed Under: Food Fraud, Food Safety, Impact of Food Fraud Tagged With: blue bell, cost of recall, FDA, listeria, penalties, recall, wire fraud

27th September 2015 by foodfraudadvisors

How much does a recall cost?

Here in Australia one of the best publicised food scares we have had in recent years was a large-scale recall of frozen berries that were apparently contaminated with Hepatitis A.  The recall was prompted after a string of cases of the virus in New South Wales and Victoria were blamed by health officials on the well known Nanna’s brand of mixed berries.

The recall is reported to have caused direct costs of $4.4 million, including the loss of $3.8 million worth of berries that had to be disposed of, compensation payments to people who contracted Hepatitis A, public relations and social media costs and the cost of advertising the recall to consumers.

Indirect costs were much higher: the owner of Nanna’s brand and manufacturer of the berries, Patties Foods, posted a profit decline of 90%.  The chairman Mark Smith blamed the decline saying “The frozen berries recall had a significant impact and was the primary reason for the approximate $14.6m reduction in net profit,”

Patties later sold their frozen berry business and in the process lost a part of their business that had generated 13% of their sales in previous years.  More on the sale

Not one sample of Nanna’s berries tested positive for the virus.

Larger brands:  more to lose

Mars Galaxy and Teaser brand chocolates were recalled from markets in the United Kingdom and Ireland in June 2017 after the company found evidence that Salmonella could have been present in ingredients used to make the products.  Mars reportedly filed a product recall insurance claim of $50 – $60 million in November 2017.

So to answer the question posed by the title of this blog – how much does a recall cost? – the answer is A LOT.

pics 019

 

Share this:

  • Facebook
  • Twitter
  • LinkedIn
  • Email

Filed Under: Adulteration, Crisis Management Tagged With: berries, cost of recall, hepatitis A, recall

MORE FROM FOOD FRAUD ADVISORS

Preventing food fraud: testing is not the answer

Fraudulently adulterated food is receiving a lot of attention at the moment. While it is widely acknowledged that food … [Read More...]

Honey Fraud This Month: The Good, The Bad and The Ugly

Honey authenticity is all over the (food fraud) news this month.  There’s good news.  And bad. Here’s what's … [Read More...]

The Cost of Deception (the not-so-sweet-story of an ice cream company’s food fraud)

Food fraud takes many forms.  When a food company makes deceptive claims about its products to gain an economic … [Read More...]

Nutraceuticals; a growing risk

A nutraceutical is a food or food component that is designed to provide health benefits when ingested.  The term is … [Read More...]

Investigating susceptibility to food fraud

This page contains information and links to help you investigate, understand and summarise incidences of food fraud that … [Read More...]

follow

  • View foodfraudadvice’s profile on Facebook
  • View karenconstable4’s profile on Twitter
  • LinkedIn

© Copyright 2015 - 2020 Food Fraud Advisors · All Rights Reserved · Privacy Policy

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.