Recalls due to parasitic infection
It appears that there is a spike in food recalls. McDonald’s — that recently opened its new headquarters in Chicago — isn’t the only company that is at the center of an investigation by health officials. Kellogg’s (K) is another company that has voluntarily recalled over 1 million cases of its popular breakfast cereal Honey Smacks after it was linked to a multistate outbreak of salmonellosis. The FDA and CDC are investigating this case. According to the CDC, nearly 100 people were affected in 33 states after eating the cereal.
The FDA also learned that despite the recall made in June, many retailers are still selling the recalled product.
Even the San Francisco, California-based Del Monte — producers, distributors and marketers of branded food — had voluntarily recalled vegetable trays after possible parasite contamination.
Cost of product recalls
Recalls often tend to weigh on food companies’ margins, with direct costs coming in at about $10 million on an average, according to the Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA). Recalls not only leave a hefty dent in the company sales but can also damage the brand’s image.
Shares of McDonald’s, which were down 8% so far in this year, were trading flat during the morning trading session today.