Belinda Hazell Principal Consultant Have you considered the costs of a food safety crisis?

Outline: Case Studies Impacts – by not getting it right Obstacles to recovery - or opportunities

Commitment = Food with Integrity Multiple food-borne illness outbreaks

In store sales dropped 26% Marketing and promotion expenses increased Revamping food safety protocols - 2% cost increase Increased costs on supply chain Share prices plunged 30% Wiped off $10 billion in market value Distrust in brand 6 million free burrito coupons mailed – 21 million more Fines Second subpoena issued – expanded scope of investigation to cover company wide food safety matters

NANNAS: 2015 national voluntary recall for a potential Hepatitis A contamination

Direct costs of recall = $13.6 million before tax 87% fall in net profit Divested frozen fruit business Share prices immediately plunged 10% Distrust in brand Loss of shelf space and listings with major retailers Increase from low to medium risk for berries Increase in import testing requirements Call for change in labelling Breach in corporate responsibilities

Internal / external costs of recall Discarded finished products / ingredients Crops ploughed in Reduced confidence in processes Immediate sales losses Loss of shelf space / market share Category sales plunged 35% nationally – yet to recover Distrust in brand Loss of consumer confidence in category Many ‘innocent’ businesses put under huge stress Increased retailer requirements Fines / penalties and legal issues yet to unfold

COST IMPACTS MONETARY: Recall costs : External / Internal Business interruption - production costs (product / staff) Replacement costs Marketing and promotion costs Legal costs – advisors and consultants Reduced business value (market / share) OPPORTUNITY: Lost Sales / loss of goodwill / brand damage