Marketing experts say a nationwide recall of beef slaughtered at XL Foods has done severe damage to the company's brand, but that a sincere apology could begin to restore trust among grocery retailers, cattle farmers and consumers.
Over the weekend, the number of illnesses linked to beef products from the XL Foods plant in Brooks, Alta., has increased to 10 people from three provinces. More than 2,200 slaughterhouse workers are without jobs, abattoirs are backlogged and cattle ranchers are facing losses.
The United States has once again closed its doors to Alberta beef, dealing another blow to Alberta cattle ranchers who have only just recovered from the mad cow crisis.
The company's decision to remain largely silent throughout the crisis is fur ther undermining its reputation, said Debi Andrus, a marketing professor who studies product recalls at the University of Calgary's Haskayne School of Business.
"I'm not sure they fully comprehend the ripple effect of what they have done," Andrus said, noting people at every point along the beef supply chain have been affected by the recall.
"Their corporate reputation is really going to be hurt with their major buyers, who are the large retailers ... That's where they're going to have to do their work," she said. "Will they be able to convince (grocery chain) Safeway that they won't have to deal with this again?"
Andrus said good corporate crisis management begins with communication. "What might help them is if they come out with a sincere apology," she said.
A recent statement from the company said: "We take full responsibility for our plant operations, and the food it produces, which is consumed by Canadians from coast to coasts ... We are doing everything we can to take the lead in an enhanced, comprehensive food safety program at our plant."
Prof. Allison Johnson studies consumer retaliation at the University of Western Ontario Ivey School of Business in London, Ont. She said: "XL and the companies who are supplied by them should be concerned about their relationships with customers."
"If (consumers) feel betrayed in trusting the company, they may not be quick to forgive," Johnson said in an email.
Paul McElhone, executive director of the University of Alberta School of Retailing, said consumers need assurance the company is being proactive in dealing with the crisis.
"The problem now is that it has become so escalated - it is the biggest recall in North American history - and that is putting the onus on the company to become accountable," McElhone said. "As a consumer, you have to ask, 'Have they become accountable?' And I think the answer is no."
McElhone said the "longer they remain silent, the worse it going to be for the company.
"As soon as someone comes forward and is public in his apology, acknowledges how serious it is, the public will say: 'We're going to forgive them.'"
In the meantime, people who eat beef will be looking for alternatives outside the mainstream.
"Consumers today are much better informed than they've ever been, particularly because of the Internet. They're going to be doing their homework and looking for other options," McElhone said. "This is a boom for the market guys who bring their beef to the farmers market every week."
Marius de Boer is one of those guys, and he says beef sales at his Four Whistle Farm are up 20 per cent since the recall started...
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Source: Argentine Beef Packers S.A.
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