So, now it appears that bean sprouts are the cause behind the E. coli outbreak that has rocked Europe’s produce sector and killed – at the latest count – 22 people.
The latest twist in the contamination scandal emerged over the weekend. Officials in the German state of Lower Saxony have claimed to have found a link between the outbreak and bean sprouts. The results of an investigation are due later today.
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Should the results prove a link, it will provide some clarity to a situation that has provoked some knee-jerk reactions from officials from Hamburg to Moscow, confused consumers across Europe and angered produce firms and farmers in a number of countries, particularly Spain.
Of course, the number of deaths is the most significant element to what has become an horrific story. The cost to human life is more important than the cost to business. However, the hasty and misplaced conclusions made in Germany last week – officials first blamed the outbreak on Spanish cucumbers – have brought severe economic pain to Spain’s produce sector and hit the industry in other parts of Europe. Consumer caution here in the UK, for instance, hit the price of salad vegetables. And Russia’s latest bulldozing act in the trade arena – to ban all imports of fruit and vegetables from the EU – only served to worsen the situation.
Hindsight is a wonderful thing of course but the mistakes made in Germany have had a real impact on businesses across Europe. If the link to bean sprouts turns out to be correct, the produce sector in Europe can start on the long road to rebuild consumer trust in their products. And, what this scare has again proved is that, in the food industry, few things – if any – are as important to consumers as safety. Consumer confidence is easy to lose and hard to win back.
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The E. coli outbreak dominated the industry’s headlines last week but there were some other notable stories to digest. Wal-Mart secured regulatory approval for its bid to buy 51% of South African retailer Massmart, a ruling that brought an end to what had been a controversial transaction locally and that marks the entry of the world’s largest retailer into Africa.
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By GlobalDataSouth Africa’s regulators attached some conditions to the deal, including ordering Wal-Mart and Massmart to set up a development fund to support local suppliers. The country’s food retail sector also has some well-entrenched players, including the likes of Pick ‘n’ Pay, Shoprite and Spar Group. Pick ‘n’ Pay, for one, insisted last week that it was “confident” about its long-term prospects in South Africa despite the imminent competition from the world’s largest retailer. What’s more, Wal-Mart will face the usual challenges of operating in an emerging market, including distribution and infrastructure.
However, the deal will also give Wal-Mart access to Massmart’s wider operations in sub-Saharan Africa. The retailer operates in 14 countries in the region, where, according to investment firm Silk Invest, the consumer opportunity is “absolutely phenomenal”.
And, as a quick aside from the weekend, could Wal-Mart’s move into Africa be swiftly followed by significant expansion in the UK? There is speculation that Asda, Wal-Mart’s UK arm, could make a bid for Iceland Foods, the frozen-food retailer. Asda, unsurprisingly, is giving nothing away but the retailer has been named by analysts as a retailer that could have a serious interest in Iceland, which is controlled by failed Icelandic bank Landsbanki.
Our M&A pages were busy last week, with more talk linking US agribusiness giant Bunge to Tate & Lyle (speculation that divided the City) and the latest rumours over the future of UK own-label manufacturer Uniq.
One deal that was made involved McCormick &Co.’s latest move in India, where the spice maker has formed a venture with local firm Kohinoor Foods. A day later, the US company hinted that more acquisitions could be in the offing, with CFO Gordon Stetz revealing to analysts that it has a “robust pipeline” of targets.
And another company that is likely to be looking at new targets is Spain’s Ebro Foods, which came up short in its quest to buy SunRice, the Australian rice firm, last week. A vote of SunRice shareholders failed to produce the necessary level of support for Ebro’s bid, which had been recommended by the Australian company’s board but had caused division among investors.
Companies in the rice and pasta sectors in Europe and the Americas – Ebro’s core markets – could be where the Spanish group turns next.
