Why Transparency and Traceability Matter in the Food Supply Chain
And while you voluntarily issue a product recall to protect consumers from food-borne illness, you also realize those same customers will probably take heed the next time they see a John Doe Fruit label in their local produce section.
Besides a brand’s reputation being called into question, food product recalls can also wreak havoc on a company’s financial profile and performance in the market. One would assume it’s because of decreased sales from less-than-pleasing public optics.
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But companies that issue product recalls actually absorb the costs of product replacements and reimbursements to affected consumers, including applicable lawsuits.
On top of that, they also funnel substantial amounts of capital toward crisis management marketing.
So when you take all those factors into consideration, it’s possible for a recalled food product to cause a multi-million dollar dip in a company’s bottom line. Couple that with a decline in public confidence, and the economic effect is devastating.
The fact is, if consumers can’t trust the companies from which they buy, they certainly won’t purchase products from them any time in the near future.
Sure, big brands like Kroger, Walmart or Costco might be better equipped to weather the storm of a product recall, but the smaller ones can’t. Without a robust cash flow or international brand recognition, these smaller organizations become much more susceptible to financial losses and cataclysmic long-term impact.
Our thoughts go out to John Doe Fruit.
Sue Welch is CEO of Bamboo Rose.