Horsemeat scandal: The business impact

Findus Beef Lasagne Findus Beef Lasagne was withdrawn from sale after 100% horsemeat was found in some products

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The latest scandal surrounding horsemeat in processed food could be "disastrous" for the meat processing industry, retail analysts are warning.

Lost contracts with supermarkets "will undoubtedly cost them millions of pounds", Neil Saunders of retail analyst Conlumino told the BBC.

"The loss of supply contracts could be disastrous for food suppliers."

The Food Standards Agency now wants the industry to test all its processed beef products.

The British Meat Processors Association, whose members produce 80% of meat sold in the UK, said: "It's too early to say what the impact will be on our industry. The BMPA is co-operating with the FSA [Food Standards Agency] to establish the facts, and to deal effectively with the issues."

One supplier, meat processor Silvercrest, based in County Monaghan, Ireland, lost supply contracts with Tesco, Aldi and Co-operative supermarkets after the Food Safety Authority of Ireland (FSAI) found horse and pig DNA in burgers it supplied.

"It wouldn't surprise me if there were redundancies," said Mr Saunders.

A spokesperson for ABP Food Group, which owns Silvercrest, said: "We feel it would be inappropriate to comment at this stage."

Testing regime

In a statement issued on Friday, the FSA said: "In addition to the widespread testing we are doing, we've instructed the industry to urgently carry out its own tests on processed beef products to see whether horsemeat is present."

But this new testing regime could cost the industry millions of pounds.

Giving evidence to the Environment, Food & Rural Affairs select committee on 30 January, Tim Smith, Tesco's group technical director revealed that the supermarket's new DNA testing regime, introduced following the discovery of horsemeat in its value burgers, would cost it "£1m to £2m a year".

Meanwhile, Tesco's sales loss would be "a lot bigger than a million pounds" as a result of the scandal, he said.

But Richard Dodd of the British Retail Consortium, which represents 80% of the UK retail industry, told the BBC: "What we're hearing from our members is that this [horsemeat] issue is not having an impact. People are clear that it isn't a health issue, so it's not producing a change in customer shopping habits."

And Conlumino's Neil Saunders agrees that the supermarkets are unlikely to be affected much by the scandal, since they can claim compensation from their suppliers.

"While it is highly likely that sales will have deteriorated in some food lines, such as value burgers, other categories may have benefitted, meaning that there is little net loss overall," he said.

Traditional High Street butchers might even be benefiting from the horsemeat scandal, says Richard Stevenson, technical manager of the National Federation of Meat and Food Traders.

"Our members are telling us that they're all getting more business since the Tesco burger issue, because most butchers know exactly where their meat has come from. You could argue that this issue has arisen as a direct result of the cheap food policy adopted by supermarkets."

Findus, which had to withdraw its beef lasagne ready meals after some samples were found to contain 100% horsemeat, said on Friday that it had tested all its other beef products and found no evidence of contamination.

What UK consumers spend on beef

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  • rate this

    Comment number 230.

    The only thing thats going to stop these corporate crooks from selling us their lies is mass litigation.
    Yes I unwittingly ate a frozen 'beef' lasagne, it disgusts me. I will join any joint law suit
    I am not interested in compensation. Any financial compensation I will give to horse sanctuaries. Horses are not farmed for food. Dogs cats or even humans may be next

  • rate this

    Comment number 229.

    If people are too lazy to go to a proper butcher and rather buy cheap supermarket "meat" because they can't bothered to do the small effort it would take, then they deserve to get the junk they buy so cheaply.
    They may argue that they haven't got the time to go somewhere else, however many butchers are quite willing to deliver your meat to your house if you are a regular customer.

  • rate this

    Comment number 228.

    The real point of all this is food labelling, if it say beef or pork that's what it should be otherwise its a criminal offence of fraud.

  • rate this

    Comment number 227.

    The point is that beef is supposed to be safe and even traceable back to a specific farm.

    Supermarkets and cheap burger manufacturers are selling "beef" products with meat in them that they have absolutely no idea where it came from, other than it was a horse.

    There are strict rules about raising beef cattle, all of which become irrelevant when you stick a label of "beef" on horsemeat.

  • rate this

    Comment number 226.

    For me there are two concerns 1- that ingredients lists can not be trusted, if the seller can not guarrantee it , I expect Tesco to satisfy itself that what it says is true and not rely on a supplier of raw ingredients claims 2 - if they can not what else is in there. You can eat cheaply and quickly using fresh ingredients that have no need of content labels.


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