OPINION:The controversy that has bedevilled Larry Goodman's ABP Food Group is disturbing for a number of reasons, not least because of its potential to damage reputations.
The decision by Tesco and others to withdraw contracts from the Silvercrest Foods plant at Ballybay will have a manageable financial impact on Goodman’s empire.
The shrewd and astute Goodman must be conscious that the beef tribunal of the mid-1990s, which shed a bright and unwelcome light on his business, has a long shelf-life in the minds of many.
However, given the pivotal position of ABP in this country’s food sector, the greatest concern is that Goodman’s difficulties are fast becoming Ireland’s problem.
Ireland can ill-afford serious and sustained damage to its coveted international image as a green and clean food producer. Tens of millions of euro have been spent on the marketing and promotion of leading Irish brands.
It takes a long time to build a reputation. It can be demolished in days.
Irish Creamery Milk Suppliers’ Association president John Comer laid the blame for the current scandal on the “cheaper and cheaper” policy that has been adopted by Europe’s biggest supermarket chains. Is the inference that producers can sell whatever they like to consumers because of a perceived financial form of ill-treatment by the retailing majors? So much for reputation.
Consumer confidence
Controversies about food and what exactly we are consuming have been around for quite a long time, mainly because it isn’t always what it says on the tin. And if you are in the business of building a brand, you don’t want the consumer to dump your product because of doubts about quality or uncertainty about what they are consuming.
A report by the Food Commission in the UK some years ago highlighted the economic advantage to a producer of adding water to meat and cured meat: “Just 1 per cent of undeclared added water in bacon and ham alone would amount to the annual consumption in the UK of 4,662 tonnes of water in the mistaken belief that it is meat.”
In 2009 the Peanut Corporation of America filed for bankruptcy shortly after a federal investigation and a series of civil claims triggered by contaminated peanut products. The publicity caused a swift collapse of the business. Stewart Parnell, the company’s president, was a big player in the food business, supplying ingredients to some of the biggest names in retailing in the US, including Kellogg.
The global honey industry has been badly damaged by a series of scandals. In 2010, 11 German and Chinese executives and six companies associated with Alfred L Wolff GmbH, a German food conglomerate, were indicted in a Chicago court on federal charges alleging global conspiracy to illegally import Chinese honey. Then last year Pulitzer-prizewinning journalist Andrew Schneider revealed that 75 per cent of honey sold in US grocery stores was not “honey” as produced by bees, in a special investigation he conducted for Food Safety News.
The Silvercrest meat controversy could not come at a worse time for Ireland. International scepticism and doubts about the integrity of food produce could deal a blow that would be a major setback for such an important revenue source for domestic and export income.
We are fortunate that our stock internationally is impressively high given our unprecedented economic problems. Taoiseach Enda Kenny is extremely adept at putting our case and promoting our cause in Europe and the United States overseas. He is generally liked and respected and our presidency of the EU offers him and his Cabinet members a prized platform to network. Such “positioning” cannot be quantified in monetary terms, nor indeed can the cover of Time magazine.
“Ireland has shown stoic resolve and is admired for it in much of Europe,” says Philip Stephens, associate editor and chief political commentator at the Financial Times. “If it wants a model for the periphery, Germany would do well to give it more support with an easing of the terms of its bank debt,” he adds.
Commendation indeed from a newspaper that in 2010 declared the late Brian Lenihan to be the worst minister for finance in Europe. Meanwhile, Suma Chakrabarti, president of the European Bank for Reconstruction and Development, cited Ireland as a good example to countries in eastern Europe of how to manage an economy.
Too much at stake
Whatever it takes, Ireland must not lose its coveted status as a country dealing with its problems. There is too much at stake for the country’s “customers” – buyers of our products and services, and foreign direct investors. That one of the largest food retailers in the world collapses an agreement with one of Ireland’s biggest food producers, declaring that “the breach of trust is simply too great”, sends Ireland Inc a very strong message.
This country’s success in wooing and winning some of the biggest names in the technology and pharmaceutical sectors was secured over many decades by the unstinting efforts of the Industrial Development Authority, one of the finest State-controlled investment agencies in the world.
Ireland’s reputation as a location for foreign direct investment is second to none. But it has taken many decades to get to where we are.
Of course, our economic problems cannot be underestimated. It is possible the loss of confidence of a generation could surpass the longevity of the fiscal pain. Do we see ourselves as down and almost out while the rest of the world sees us in strong recovery mode?
The controversy over the use of horsemeat in beef products is far from over. Ireland must not become its biggest loser.
* James Morrissey is a communications consultant and former journalist