Until the worlds of business, politics and science learn that consumers have a different perception of risk to the experts, food scares will continue to be damaging and costly affairs, says David Edwards, Director of CMi Consulting Ltd.
From BSE to dioxins to GMOs, it seems that food scares are a permanent feature of everyday life and it is, therefore, hardly surprising that a recent survey by Mintel confirmed that 41% of consumers said that they could not be sure the food they bought is safe to eat. The publication last week of the long awaited report on BSE will have done little to change that opinion.
Go deeper with GlobalData
Irrespective of whether the media initiates scares or simply reports them, coverage of food safety has dramatically increased, and it’s not simply the intensity of coverage that makes food scares so damaging. The media response is now virtually instantaneous and supplemented by developing sources such as the Internet. The Belgian government responded to the dioxin scare with a traditional telephone helpline and a Website. The helpline received 3,000 calls in two days, while the Website received 150,000 ‘hits’.
“Consumer – victim or aggressor?” |
Food scares are fundamentally damaging to the reputation of the entire food industry and can be very costly. BSE is currently estimated to have cost UK taxpayers £4bn, and a complete loss of export income to the industry of £700m. Cost estimates for the Belgian dioxin scare are up to £3.3bn. In both cases, there was also serious political fallout . Ministers of both governments in power at the time of the scares ended up losing their jobs.
It is common sense that a food scare will be financially damaging but research by KVRA Templeton College, Oxford, puts hard figures on the impact for individual companies. A badly handled scare depresses share values on average by 15% in the first year, but paradoxically companies which handle a crisis well can expect their share value eventually to perform above the average for their market by 5%.
The implication is that professional investors will look objectively at the company and if they perceive it to be handling the crisis well they will take advantage of short-term share price falls and buy in. Who said it is an ill wind that blows nobody any good?
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSo how do we handle a food scare? A good starting point is a better understanding of the consumer who, after all, fulfils the dual role of victim and aggressor.
“The Hitchcock factor – playing on fear” |
Given the poor showing of the current UK administration regarding GMOs ,and the previous one over BSE it is ironic that some of the best research in terms of public perception of risk has been funded by MAFF, the UK Ministry for Agriculture, Fisheries and Food. Since 1991, MAFF has been spending millions of pounds on a risk management programme that ministers and Monsanto would have been wise to read before telling the public that GMOs were nothing to be concerned about.
A natural response for many companies faced with food scares, particularly those involving controversial or novel technologies, is to fall back on internal scientific advice. Time and again, scientists are pushed into the glare of publicity in an attempt to reassure the public, and time and again that reassurance is rejected, prompting frustrated politicians and company spokespersons to accuse the public and media of scare-mongering or over-reaction. Positions become polarised and, in the final event, the industry or companies concerned are often forced into humiliating defeat whilst complaining that they were acting upon the best advice available.
What is the dynamic here? Why do the public and scientists seem to have such differing perceptions of risk? The MAFF research gives us an important insight. One of the most useful research projects demonstrated that the consumer is simply using a different set of values that is often wider than the scientist is prepared to countenance, but no less valid.
Researchers found that there were a number of key factors that made consumers rank risks much more highly than scientists – for example, hazards associated with risk to future generations. One might see this as a natural survival instinct coming into play. Second, control is a key factor. Given the ability to exercise choice, individuals significantly downgrade risk, and the value of clear labelling and communication immediately becomes clear.
“Edwina Curry – the patron saint of food safety consultants?” |
Last, there’s what might be called the “Hitchcock factor”. The master film maker understood that a shadowy figure created far more audience adrenaline than a well-lit and known villain. MAFF’s researchers found the same. A risk that involves the unknown or is difficult to quantify races up the rankings in terms of perceived risk, irrespective of scientific evidence or ministerial claims to the contrary.
Researchers also found the media had their own set of identifiable “triggers” that were related not only to an innate ability to read the consumer’s feelings but what made a good story. Factors included for example high profile and controversial comment, one thinks of the patron saint of food safety consultants Edwina Curry and her devastating and incorrect statement about eggs or Prince Charles and GMO’s, intrigue and cover up. BSE comes to mind again, with its mass of conflicting opinions.
There is in fact a relatively predictable pattern that differentiates something that has food scare potential from the more straightforward product recall. Checkmate International has pulled these issues together to create a framework or prediction system that is helping major supermarket retailers assess the potential media and consumer reaction to food safety issues and more effectively predict which might cause problems from a commercial and trading perspective. The days when it was sufficient to manage real risk are gone. Perception is reality.
 |
David is MD of CMi Consulting. Checkmate plc is a leading food safety certification, inspection and consulting business operating throughout Europe. |
By David Edwards
David Edwards helped set up the independent food safety consultancy Checkmate International in 1985. CMi has grown into a respected multi million pound international consultancy operating throughout the UK and Europe.
The company is responsible for the certification of several billion pounds worth of food, has over 1,000 food manufacturing clients and operates throughout the food chain from farm to consumer. Checkmate are strategic partners of DiverseyLever Consulting.
David Edwards is the Managing Director of Checkmate’s Consulting unit and is a regular contributor to TV and radio on the subject of consumer safety in relation to food.
He can be reached at: david.edwards@cmi-plc.com
