Horse meat scandal puts grocers through the mincer

January 17, 2013

TescoUntil a couple of days ago, few outside the food retail and logistics business would ever have heard of Silvercrest. Now it has achieved household notoriety as the weak-link in the food chain that has served illegal horse meat up on British tables, in the guise of own-label supermarket beef burgers.

The reputational damage has, rightly, been severe for all those involved. Tesco – which fessed up to at least one line of its apparently legit beef burgers being contaminated with 29% horse meat – has seen £300m wiped from its stock market valuation overnight and has now taken out full-page ads in most national newspapers, grovelling abjectly. The timing could not have been worse, from a corporate point of view. Just days ago, a halfway decent set of financials had seemed to indicate that Tesco was on the ramp of recovery.

Luckily for Tesco, it is no longer alone. A host of other high street names – Aldi, Lidl, Sainsbury, Asda, the Co-Op, Morrisons, Burger King among them – have now opted to clear their shelves of the offensive products. In some cases because they use the same supplier, ABP/Silvercrest, in others merely as a “precaution” lest the same fate might befall their own supply chain. Only McDonald’s and Marks & Spencer have been able to stand aside, smugly waving a clean bill of health.

Their smugness is unwarranted. This disaster could so easily – in only slightly modified circumstances – have happened to them.

Some might argue that the horse-meat scandal is little more than a storm in a tea-cup, got up by the media. After all, no one died and no one is likely to: horse meat is eagerly consumed all over the globe, from Kazakstan to Argentina, as a tasty substitute for the tougher, stringier beef that can be bought for about the same price. Indeed, there’s not a little hypocrisy in this country about the cultural taboo surrounding horse meat. Until about 100 years ago, the Brits themselves were avid consumers of the stuff. Only more recently have we developed the refinement of conscience that prohibits national consumption, while allowing us to send up to 10,000 nags a year to specialist abattoirs, there to be despatched for the perverted pleasure of less civilised foreigners.

Alas, the ramifications of this affair go somewhat deeper. Imagine, for a moment, that instead of horse meat (and elements of pork), those eagle-eyed  inspectors at the Irish Food Standards Agency (FSAI) had found the minutest traces of human DNA. The uncontainable revulsion – far from affecting a few animal lovers, Muslims and Jews – would be universal. An official inquiry would, there and then, be instituted into how these three wise monkeys – the suppliers, the retailers and the regulator – had, through cavalier negligence and the unobstructed pursuit of greed, been allowed to corrupt the integrity of the food chain. Because, make no mistake, this little cock-up is all about money. The burgers most tainted were those from so-called “value” products where the cost of ingredients is at all times under pressure. Retailers want to satisfy their customers with the lowest possible prices consistent with food safety regulations. The suppliers – browbeaten by the retailers – seek low-cost substitutes (in this case from the less  punctilious Netherlands and Spain, where the consumption of horse meat is legal). And the UK regulator takes a passive, compliant attitude to anything that is outside its immediate remit (no conceivable threat to health, so why bother with DNA tests?), suggesting a “lite-touch” relationship that is too cosy with the industry it is supposed to govern.

It makes you wonder why the FSAI could be bothered with such tests, but the UK’s FSA could not. Or indeed, why the retailers didn’t carry out such DNA tests themselves. After all, it’s their brand reputation which is going through the mincer because they have not.


The greening of chief executives

June 1, 2009

Sir Terry LeahyIt was to have been Sir Tel’s big week. Ahead of a ground-breaking speech at the London School of Economics advertising Tesco’s wholehearted commitment to green innovation, its chief executive had lined up a couple of showcase initiatives.

First up is the trial of electric-car charging facilities, and shortly afterwards Tesco will announce that it is building ‘the world’s first zero-carbon store’ in Cambridgeshire.

Then along comes Greenpeace and pours acid rain on Leahy’s parade with a report insinuating that Tesco, and numerous other famous brands, have been encouraging illegal destruction of the Amazon rainforest by sourcing their meat from unscrupulous ranchers who have systematically climate-raped the region.

Leahy’s predicament is typical of that facing many chief executives of major brands. How do you reconcile the provision of value for money with the broader communitarian needs of your customers – and not find yourself in the dock accused of hypocrisy?

The answer, if you are a progressive business leader, is that sometimes you cannot. But many judge the risk well worth taking; indeed they believe they have no real alternative but to embrace sustainability as an integral part of their corporate social responsibility programme. Despite the fact that it may consume a considerable part of their management time; and sometimes turn them, reluctantly, into figures of controversy.

That’s why a number of leading UK businessmen – among them James Murdoch, Justin King of Sainsbury, Ian Cheshire of Kingfisher, and Carphone Warehouse’s Charles Dunstone – recently wrote a letter to The Times openly proclaiming their opposition to Government plans for a third runway at Heathrow. Even though the project might, in the short term, create new jobs; even though their opposition also brought them into conflict with their natural constituencies at the Confederation of British Industry and the British Chambers of Commerce.

Mostly, however, espousing the cause of sustainability is a lot less controversial. Last week, for example, Cheshire helped to launch Eat Seasonably, an initiative aimed at persuading people to eat fruit and vegetables at their “seasonal best”. It’s the first leg of a two-year programme masterminded by himself and National Trust director-general Dame Fiona Reynolds which, with the backing of both Government and non-governmental organisations, will focus not simply on the food we eat, but the way we run our homes, what we throw away, what we buy and how we use transport.

I asked Cheshire why he was prepared to make such a commitment to the cause. And how he found the time to do it, on top of running a FTSE 100 company.

More in the column this week.


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