Thursday, April 05, 2007

Three Weeks Later, Recall Still Growing

The pet tragedy continues to unfold three weeks after the first public announcement on March 16. Menu Foods, the first of six companies to recall product, and after several attempts to reassure the public of its safety, today expanded the date range of its original recall.

Sunshine Mills today announced a recall of its products but failed to mention brand names. Sound familiar? Yes, that is exactly what Menu Foods did on March 16, prompting retailers to pull too many products and consumers to panic.

Tracing just one of the supply chains: the tainted wheat gluten came from unknown sources, through a known middleman in China, to a distributer in the US named ChemNutra, then to Menu Foods' two processing plants. There are other routes, possibilities and companies involved. So the difficulty in finding exactly where the contaminant entered the supply chain is obvious.

Listen to a discussion on pet food manufacturing and animal nutrition with a vet, a food safety expert and a pet food maker, from KQED Forum.

The damage to established brands is yet to be determined, but it seems clear from the news that consumer confidence has been shaken.

I can't keep up anymore.

Pet Connection can.

[update: Sunshine Mills recalled brands have been posted on their website and include Wal-Mart's (WMT) Ol' Roy Puppy Biscuit and Peanut Butter Biscuit.]
 

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4 Comments:

At 7:13 PM, Blogger Rachel Monroe said...

I have also been following the pet food recall with great interest. On a marketing and business level, what type of damage do you think has been done to these brands? I know it is still too early to tell. But do you think these companies will see a tremendous decline in sales after the crisis is over? Or do you think the damage will be minimal? Do you see any way for these companies to minimize the damage done to their sales and marketing efforts?

 
At 7:37 PM, Blogger Michael Dillon said...

That's the big question. It is too early to tell. That said, I don't think the damage will last very long, but it may be costly. Full page ads in fifty-nine US newspapers cannot be cheap, which was Proctor & Gamble's first major PR damage control move.

I don't foresee a tremendous decline in sales in the long run. Some brand shifting for sure, and a boost to the very small segment of nutritious supplements for home prepared meals.

But the same thing that's driving intense pet owner reaction also motivates them to buy premium food in the first place: humanization and pampering trends (from our very own market research). Savvy pet companies have already been moving food selections upscale, and news reports tell of owners reacting to this pet food recall by moving from premium brands to ultra-premium brands: all natural, organic foods with even higher price points and profit margins.

Wal-Mart shoppers now wary of the established Ol' Roy brand may simply switch to Wal-Mart's private label, all natural, organic Natural Life brand.

Right now it seems that trust is at a low. So appealing to the pet owners more basic desire to protect their pet might be emphasized over the desire for a long relationship, which seems to have been the norm for a lot of healthy pet food marketers.

But this recall is ongoing. Hopefully not for long.

 
At 6:16 PM, Blogger Rachel Monroe said...

Hi Micheal,

I just wanted to follow up on my last post. The World Wide Pet Industry Association just published a press release that stated 75% of pet retailers are not concerned about the long-term affects of the pet food recall on their businesses. According the release, 50% of the stores surveyed said the recall has not negatively impacted their sales. And 45% of these stores carried one or more of the recalled brands.

The survey also found that 45% of retailers say this recall will not affect their relationship with manufacturers, while 39% said it would. You can read the whole article at www.wwpia.org

 
At 12:33 PM, Blogger Michael Dillon said...

Thanks for that link, Rachel. And here's a Gallup poll showing that pet owners overall are not worried. But it was done before the latest expansion. It'd be interesting if they redid that survey in a couple weeks.

 

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