Food Protection Trends - May/June 2017 - 157
Marcus (10) concluded that adverse stock price reactions
are not large enough to discourage the sale of unsafe
automobiles even though these reactions were negative
and statistically significant. The literature on automobiles
and other consumer products is larger than that focusing
on food. It is possible that with larger numbers of studies,
similar null findings of a meaningful relationship between
food recalls and stock market valuation will emerge from
food-industry studies as well. Finally, Freedman, et al. (24)
found that the statistical significance of the average stock
market response to the toy recalls in their study depended
on one influential event. This is worth mentioning in that it
shows that one event can make the average effect of a recall
appear worse than that of the typical recall. The influential
event in question was a follow-up recall of the Thomas the
Tank Engine line of toys that came on the heels of a larger,
June 2007 recall for high levels lead in the paint used on the
toys (24). As will be explained later, recall preparation efforts
are one way to prevent a typical recall event from turning into
something that is financially devastating. While the evidence
is overwhelming that adverse product safety information
meaningfully affects market valuation and future profitability,
these few exceptions in the literature suggest that recalls are
not always catastrophic and that there may be preparatory
actions companies can take to mitigate the adverse financial
effects of recalls when they occur.
Other researchers have estimated the duration for which
markets are affected by recalls. The evidence from food
markets is summarized as follows: Bakhtavoryan et al. (4)
examined demand for peanut butter following a salmonellosis
outbreak that led to a recall of the Peter Pan and Great Value
brands and to the temporary removal of the Peter Pan brand
from the market. Their estimates of demand relationships
among brands before and after the recall suggest that Peter
Pan had largely recovered from the food safety crisis after a
six-month recall period. In another study, frankfurter brands
recalled for Listeria monocytogenes contamination took four
to five months, on average, to recover to pre-recall levels
after experiencing an average 22 percent initial drop in sales
volume (47).
Similar patterns of a drop in demand or prices followed by
a recovery with time are also apparent in commodity-level
studies. Brown (11) estimates that per-capita cranberry
purchases dropped 26 percent in the wake of a 1959 pesticide
contamination scare, but that purchases in the 1960 to
1962 period had recovered to pre-scare levels. O'Rourke
(40) estimated that red delicious apple prices were lower
by 21 percent (from a predicted price of $14.71/box that
dropped to $11.62/box) during the 1988-1989 marketing
year as a result of two "60 Minutes" television segments on
pesticide use in apple production. More recently, Arnade
et al. (2) found that retail purchasing declined by as much
as 63 percent and 32 percent for bagged and bulk spinach,
respectively, after a 2006 Escherichia coli outbreak linked to
spinach and an advisory that consumers avoid consumption
of bagged spinach. These authors found that bulk spinach
expenditures recovered within six months. Bagged spinach
expenditures also recovered, but took longer and had not
completely reached pre-event levels by the time the study
period ended, over a year later. Attavanich et al. (3) found
that media coverage of the H1N1 (swine flu) outbreak in
2009 caused a significant drop in lean hog futures prices,
which persisted for approximately four months.
These studies provide evidence that market disruptions
due to adverse food safety information last for at least
several months and can generally be expected to exceed the
volume removed from the market directly by a recall. One
explanation for slow recovery in the wake of a food scare is
that adverse product safety information has an asymmetric
impact on consumer preferences. Several studies demonstrate
that the impact of negative media stories on food safety is
much larger than the impact of positive stories (42, 47, 57).
DEVELOPING A ROBUST WITHDRAWAL SYSTEM
A survey of food manufacturers showed that product
disposal, business interruption, and customer reimbursement
were the top three costs associated with food recalls (27).
However, a proactive company with a robust market
withdrawal system in place that has been routinely tested
may be able to remove a suspect product from the market
quickly so as to minimize the risk to consumers and their
brand image. A robust recall system may reduce all of the
cost associated with product withdrawal. The purpose of
this portion of this report is to examine the foundations of a
robust withdrawal system.
It stands to reason that if the time that consumers are
exposed to a contaminated or mislabeled product is reduced,
the potential harm and associated cost will be diminished.
A robust market withdrawal system allows the manufacturer
to track the product the moment it leaves the production
facility. A report by the Grocery Manufacturers Association
(27) found that 88 percent of companies surveyed had
Hazard Analysis Critical Control Point (HACCP) plans
in place; integrating HACCP plans electronically allows
for more checkpoints and faster identification of potential
sources of contamination, mislabeling, or manufacturing
errors. This reduces the likelihood that a contaminated
product will make its way into the hands of a consumer.
In addition, if the food product can be withdrawn before
entering the market, the cost incurred by creating hotlines
for consumers, damages to those that purchased the
products, recall consultants, and product avoidance would be
negligible.
Ketchen et al. (32) classify recalls into four types, namely
(1) precise recalls, (2) overkill recalls, (3) cascading recalls,
and (4) incomplete recalls. As the name implies, a precise
recall refers to a situation in which the firm knows the nature
of the problem, can identify the exact lots and locations of
May/June Food Protection Trends
157
Table of Contents for the Digital Edition of Food Protection Trends - May/June 2017
Contents
Food Protection Trends - May/June 2017 - Cover1
Food Protection Trends - May/June 2017 - Cover2
Food Protection Trends - May/June 2017 - Contents
Food Protection Trends - May/June 2017 - 148
Food Protection Trends - May/June 2017 - 149
Food Protection Trends - May/June 2017 - 150
Food Protection Trends - May/June 2017 - 151
Food Protection Trends - May/June 2017 - 152
Food Protection Trends - May/June 2017 - 153
Food Protection Trends - May/June 2017 - 154
Food Protection Trends - May/June 2017 - 155
Food Protection Trends - May/June 2017 - 156
Food Protection Trends - May/June 2017 - 157
Food Protection Trends - May/June 2017 - 158
Food Protection Trends - May/June 2017 - 159
Food Protection Trends - May/June 2017 - 160
Food Protection Trends - May/June 2017 - 161
Food Protection Trends - May/June 2017 - 162
Food Protection Trends - May/June 2017 - 163
Food Protection Trends - May/June 2017 - 164
Food Protection Trends - May/June 2017 - 165
Food Protection Trends - May/June 2017 - 166
Food Protection Trends - May/June 2017 - 167
Food Protection Trends - May/June 2017 - 168
Food Protection Trends - May/June 2017 - 169
Food Protection Trends - May/June 2017 - 170
Food Protection Trends - May/June 2017 - 171
Food Protection Trends - May/June 2017 - 172
Food Protection Trends - May/June 2017 - 173
Food Protection Trends - May/June 2017 - 174
Food Protection Trends - May/June 2017 - 175
Food Protection Trends - May/June 2017 - 176
Food Protection Trends - May/June 2017 - 177
Food Protection Trends - May/June 2017 - 178
Food Protection Trends - May/June 2017 - 179
Food Protection Trends - May/June 2017 - 180
Food Protection Trends - May/June 2017 - 181
Food Protection Trends - May/June 2017 - 182
Food Protection Trends - May/June 2017 - 183
Food Protection Trends - May/June 2017 - 184
Food Protection Trends - May/June 2017 - 185
Food Protection Trends - May/June 2017 - 186
Food Protection Trends - May/June 2017 - 187
Food Protection Trends - May/June 2017 - 188
Food Protection Trends - May/June 2017 - 189
Food Protection Trends - May/June 2017 - 190
Food Protection Trends - May/June 2017 - 191
Food Protection Trends - May/June 2017 - 192
Food Protection Trends - May/June 2017 - 193
Food Protection Trends - May/June 2017 - 194
Food Protection Trends - May/June 2017 - 195
Food Protection Trends - May/June 2017 - 196
Food Protection Trends - May/June 2017 - 197
Food Protection Trends - May/June 2017 - 198
Food Protection Trends - May/June 2017 - 199
Food Protection Trends - May/June 2017 - 200
Food Protection Trends - May/June 2017 - 201
Food Protection Trends - May/June 2017 - 202
Food Protection Trends - May/June 2017 - 203
Food Protection Trends - May/June 2017 - 204
Food Protection Trends - May/June 2017 - 205
Food Protection Trends - May/June 2017 - 206
Food Protection Trends - May/June 2017 - 207
Food Protection Trends - May/June 2017 - 208
Food Protection Trends - May/June 2017 - 209
Food Protection Trends - May/June 2017 - 210
Food Protection Trends - May/June 2017 - 211
Food Protection Trends - May/June 2017 - 212
Food Protection Trends - May/June 2017 - 213
Food Protection Trends - May/June 2017 - 214
Food Protection Trends - May/June 2017 - 215
Food Protection Trends - May/June 2017 - 216
Food Protection Trends - May/June 2017 - 217
Food Protection Trends - May/June 2017 - 218
Food Protection Trends - May/June 2017 - 219
Food Protection Trends - May/June 2017 - 220
Food Protection Trends - May/June 2017 - 221
Food Protection Trends - May/June 2017 - 222
Food Protection Trends - May/June 2017 - 223
Food Protection Trends - May/June 2017 - 224
Food Protection Trends - May/June 2017 - 225
Food Protection Trends - May/June 2017 - 226
Food Protection Trends - May/June 2017 - 227
Food Protection Trends - May/June 2017 - 228
Food Protection Trends - May/June 2017 - 229
Food Protection Trends - May/June 2017 - 230
Food Protection Trends - May/June 2017 - 231
Food Protection Trends - May/June 2017 - 232
Food Protection Trends - May/June 2017 - Cover3
Food Protection Trends - May/June 2017 - Cover4
https://www.nxtbook.com/nxtbooks/trilix/fpt_20240910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20240708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20240506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20240304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20240102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20231112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20230910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20230708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20230506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20230304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20230102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20221112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20220910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20220708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20220506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20220304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20220102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20211112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20210910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20210708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20210506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20210304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20210102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20201112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20200910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20200708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20200506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20200304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20200102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20191112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20190910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20190708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20190506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20190304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20190102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20181112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20180910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20180708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20180506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20180304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20180102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20171112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20170910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20170708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20170506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20170304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20170102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20161112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20160910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20160708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20160506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20160304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20160102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20151112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20150910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20150708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20150506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20150304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20150102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20141112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20140910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20140708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20140506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20140304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20140102
https://www.nxtbook.com/nxtbooks/trilix/fpt_20131112
https://www.nxtbook.com/nxtbooks/trilix/fpt_20130910
https://www.nxtbook.com/nxtbooks/trilix/fpt_20130708
https://www.nxtbook.com/nxtbooks/trilix/fpt_20130506
https://www.nxtbook.com/nxtbooks/trilix/fpt_20130304
https://www.nxtbook.com/nxtbooks/trilix/fpt_20130102
https://www.nxtbook.com/nxtbooks/trilix/fpt_201212
https://www.nxtbook.com/nxtbooks/trilix/fpt_201211
https://www.nxtbook.com/nxtbooks/trilix/fpt_201210
https://www.nxtbook.com/nxtbooks/trilix/fpt_201209
https://www.nxtbook.com/nxtbooks/trilix/fpt_201208
https://www.nxtbook.com/nxtbooks/trilix/fpt_201207
https://www.nxtbook.com/nxtbooks/trilix/fpt_201206
https://www.nxtbook.com/nxtbooks/trilix/fpt_201205
https://www.nxtbook.com/nxtbooks/trilix/fpt_201204
https://www.nxtbook.com/nxtbooks/trilix/fpt_201203
https://www.nxtbook.com/nxtbooks/trilix/fpt_201202
https://www.nxtbook.com/nxtbooks/trilix/fpt_201201
https://www.nxtbook.com/nxtbooks/trilix/fpt_201112
https://www.nxtbook.com/nxtbooks/trilix/fpt_201111
https://www.nxtbook.com/nxtbooks/trilix/fpt_201110
https://www.nxtbook.com/nxtbooks/trilix/fpt_201109
https://www.nxtbook.com/nxtbooks/trilix/fpt_201108
https://www.nxtbook.com/nxtbooks/trilix/fpt_201107
https://www.nxtbook.com/nxtbooks/trilix/fpt_201106
https://www.nxtbook.com/nxtbooks/trilix/fpt_201105
https://www.nxtbook.com/nxtbooks/trilix/fpt_201104
https://www.nxtbook.com/nxtbooks/trilix/fpt_201103
https://www.nxtbook.com/nxtbooks/trilix/fpt_201102
https://www.nxtbook.com/nxtbooks/trilix/fpt_201101
https://www.nxtbook.com/nxtbooks/trilix/fpt_201012
https://www.nxtbook.com/nxtbooks/trilix/fpt_201011
https://www.nxtbook.com/nxtbooks/trilix/fpt_201010
https://www.nxtbook.com/nxtbooks/trilix/fpt_201009
https://www.nxtbook.com/nxtbooks/trilix/fpt_201008
https://www.nxtbook.com/nxtbooks/trilix/fpt_201007
https://www.nxtbook.com/nxtbooks/trilix/fpt_201006
https://www.nxtbook.com/nxtbooks/trilix/fpt_201005
https://www.nxtbook.com/nxtbooks/trilix/fpt_201004
https://www.nxtbook.com/nxtbooks/trilix/fpt_201003
https://www.nxtbook.com/nxtbooks/trilix/fpt_201002
https://www.nxtbook.com/nxtbooks/trilix/fpt_201001
https://www.nxtbook.com/nxtbooks/trilix/fpt_200912
https://www.nxtbook.com/nxtbooks/trilix/fpt_200911
https://www.nxtbook.com/nxtbooks/trilix/fpt_200910
https://www.nxtbook.com/nxtbooks/trilix/fpt_200909
https://www.nxtbook.com/nxtbooks/trilix/fpt_200908
https://www.nxtbook.com/nxtbooks/trilix/fpt_200907
https://www.nxtbook.com/nxtbooks/trilix/fpt_200906
https://www.nxtbook.com/nxtbooks/trilix/fpt_200905
https://www.nxtbook.com/nxtbooks/trilix/fpt_200904
https://www.nxtbook.com/nxtbooks/trilix/fpt_200903
https://www.nxtbook.com/nxtbooks/trilix/fpt_200902
https://www.nxtbook.com/nxtbooks/trilix/fpt_200901
https://www.nxtbook.com/nxtbooks/trilix/fpt_200812
https://www.nxtbook.com/nxtbooks/trilix/fpt_200811
https://www.nxtbook.com/nxtbooks/trilix/fpt_200810
https://www.nxtbook.com/nxtbooks/trilix/fpt_200809
https://www.nxtbook.com/nxtbooks/trilix/fpt_200808
https://www.nxtbook.com/nxtbooks/trilix/fpt_200807
https://www.nxtbookmedia.com