After the Horsemeat Scandal can SMEs in the food industry regain consumer trust?

“If the right measures are put in place to handle the situation carefully and to avoid any future misdemeanours the industry should be safe.

However this scandal should be a stark reminder of the obligations companies owe to their customers” according to David Taylor, CEO of James Caan’s business advisory firm HB Prime Advantage.

In January the nation was shook by the discovery that many popular frozen beef products were found to have traces of horsemeat, a meat that is not consumed in British culture. Public outrage escalated as it was unearthed that some of the most well-known and highly respected brands and supermarkets were retailing contaminated products.

The press were gripped by this on-going story as daily revelations of new discoveries hit the newsstands, exposing the vast scale of the horsemeat scandal. As the eruption of this story begins to calm, suppliers, producers and retailers alike are left picking up the pieces as consumers feel betrayed, deceived and cynical about the food industry.

The ready meal industry is currently estimated at £2.6bn in the UK but in the wake of the “horsemeat scandal” this number could drop as consumers already begin to change their eating habits. According to a survey by Consumer Intelligence, two thirds of British consumers trust food labels less than they did prior to the initial detection of horsemeat in certain beef products. The food industry has their work cut out for them if they are to regain full consumer confidence.

This is not an issue about hygiene or food safety, this is an issue about meeting consumer standards. SMEs in the food industry must deal with the consequences as food regulations and safety issues have been brought to light.

The main issue that has arisen out of these revelations is the loss of consumer trust and SMEs are going to have to work harder than ever before to instil faith back into the food industry. Heightened supply chain regulation and the provision of clear, convincing labelling about the traceability of food will become a strict requirement of British produce by concerned consumers.

This could have repercussions on the cost of production as suppliers and producers will be pressured to provide quality, traceable goods.

Larger, established supermarkets have the resources and skills to respond quickly to crisis’s, deflecting consumer doubt by promoting fresh meat produce and creating clever campaigns and offers that will regain customer loyalty. It is the smaller producers and retailers who are going to be hit the hardest as reputations become sullied.

The cost of reconciliation could include regular costly DNA testing, the use of more expensive cuts of meat and improved monitoring overheads, standards that may be too demanding to meet for SMEs.

The Food Standards Association, who are investigating the scandal, are on a mission to identify all contaminated products, rendering all businesses in the food sector at risk.

Although conditions may become more difficult for SMEs in the food sector, the ready meal industry will not disintegrate as a result of this scandal. Britain’s pockets are continuing to be squeezed as we enter a fifth year of recession, and as low wages and high job uncertainty remain the norm, one of the few areas consumers look to forgo big spending is on food.

These price conscious customers cannot afford fresh produce and therefore will continue to purchase more economically friendly options such as frozen food and ready-meals.

SMEs should view this scandal as an opportunity not a hindrance, but they must act quickly and strategically if they are to capitalise on the situation. Affected businesses need to show contrition and be seen to be acting on it to convince consumers that they have learnt from this incident.

With so much attention now being focused on the food sector, SMEs have a chance to further regulate the industry and banish any doubts in the consumer’s mind. If the right measures are put in place to handle the situation carefully and to avoid any future misdemeanours the industry should be safe, but this scandal should be a stark reminder of the obligations companies owe to their customers.

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