Fresh Meat Product Recalls More Likely to Lower Customer Demand

Pei Zhou, doctoral candidate in energy, environmental, and food economics and lead author of the study, said the results suggest different strategies companies can take to prevent food recalls, which then can benefit both consumers’ health and the companies.

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“Government agencies and food companies could take action to prevent recalls by, for example, increasing the mandatory inspection of fresh meat products prior to food distribution,” Zhou said. “They could also reduce recall scales and respond quickly by developing standard regulations, guides, and procedures for recalling — especially for frequently recalled foods.”

According to the researchers, food safety issues that threaten consumers’ health have increased in recent years. In 2011, the Centers for Disease Control and Prevention estimated that about 48 million Americans get sick, 128,000 are hospitalized and 3,000 die of food-borne diseases each year.

Zhou explained that while food recalls are important to help keep consumers safe, they also pose a significant financial blow to the company whose product is being recalled. For example, previous research estimated that the average cost of a food recall to a company is about $10 million.

The U.S. food safety system has two branches — with the recalls of most meat, poultry, and some egg products being monitored by the U.S. Department of Agriculture and the recalls of other foods and beverages being supervised by the Food and Drug Administration. Because of that system, the researchers noted, not all consumers are exposed to the same types of information during a food recall.

“Consumers are exposed to various types of food recall information, and that information may change consumers’ perceived health risks and further affect their purchasing behaviors and food demand,” Zhou said. “We wanted first to explore the impact of food recall on consumer demand and then follow up by examining how consumers respond to the various types of recall information.”

For this study, the researchers focused on the fresh meat market — the largest U.S. agricultural sector, with meat production totaling 52 billion pounds and poultry production totaling 48 billion pounds in 2017.

The study examined information from the Nielsen Retail Scanner Data from 2012 to 2016, which covers more than half the total sales volume of U.S. grocery and drug stores and more than 30% of all U.S. mass merchandiser sales volume.

The researchers also pulled data on recalls from the USDA Food Safety and Inspection Service website, including the volume of food recalled, the specific products recalled, the classification of the recalls, what caused the recalls, how consumers learned about the recalls and any health consequences stemming from the recalled products.

After analyzing the data, the researchers found that while recalls overall lowered product demand, customers also responded to recalls differently, depending on the severity of the recall classification, what caused the recall, and how they learned about the recall.

For example, declines in demand were more than eight times greater after recalls originated by government agencies compared to those initiated by the manufacturers themselves.

Preventing Food Recall may up Consumer Demand

The researchers said the study — recently published in the journal Food Policy — gives companies essential insight into the meat market and market strategies aimed at reducing the negative effect of food recalls on consumer demand.

“In general, reducing the number of food recalls by preventing food safety issues from occurring is the most straightforward way to avoid demand reduction,” Zhou said.

Yizao Liu, associate professor of agricultural economics, also contributed to this work.

Source: Eurekalert