Monday, February 09, 2009

Fallout Widens as Buyers Shun Peanut Butter

Many consumers, apparently disregarding the fine print of the salmonella outbreak and food recall caused by a Georgia peanut plant, are swearing off all brands of peanut butter, driving down sales by nearly 25 percent.

The drop-off is so striking that brands like Jif are taking the unusual step of buying ads to tell shoppers that their products are not affected, and giving them a coupon to make sure they do not learn to live without a staple that almost every child loves — and more than a few of their parents, too.

Given the steady stream of headlines since mid-January about one of the largest food contamination scares in the nation’s history, the companies whose products are not being recalled could have a difficult time winning over people like Guadalupe Vasquez.

On Friday, she and her three young children kept walking past shelves of peanut butter at a grocery store in Bellaire, Tex. “The news shows say don’t buy it and I won’t buy it,” said Ms. Vasquez, adding that she normally buys a jar each week for her family. “I’m very fearful of salmonella.”

The J. M. Smucker Company, which makes Jif peanut butter, placed ads in newspapers across the country on Friday, including The New York Times, that said the company did not buy peanuts from the Peanut Corporation of America, whose plant in Blakely, Ga., was found to be the source of the outbreak. The advertisement included a 35-cent coupon for a jar of Jif. “Obviously this has had a very negative impact on the industry,” said Maribeth Badertscher, a spokeswoman for Jif.

ConAgra Foods, the maker of Peter Pan peanut butter, is planning to run a similar newspaper ad on Sunday, along with a 50-cent coupon.

The contaminated peanut butter traced to the Georgia plant represents a small percentage of the total $800 million in annual sales by the peanut butter companies in the United States. But the public relations problem for the rest of the industry is unlikely to ease anytime soon.

So far, the salmonella outbreak has been linked to 575 illnesses and eight deaths, and more than 1,500 products have been recalled, including cookies, ice cream and pet food.

Three states — California, Idaho and Minnesota — were told to remove peanut products for school lunch programs. They received the peanut butter or roasted peanuts from the federal government, which bought them from the Peanut Corporation, in the last two years.

No illnesses have been reported from students eating tainted peanut butter provided by the government.

When the Peanut Corporation first began recalling products in mid-January, federal officials said the school lunch program was not affected. But the recall has expanded since then to cover a longer time period and more products, including the school lunch shipments.

“It has been frustrating because of the changing landscape, since initially the company’s recall did not go back as long as it should have,” said Jack O’Connell, California’s superintendent of schools. He said the government notified his state last week and that 215 school districts, many in the Los Angeles area, received shipments.

Mr. O’Connell also said that nearly 50 percent of his state’s schoolchildren were eligible for federally subsidized food, which covers everything from breakfast and lunch to extracurricular activities where peanut butter cookies might be served.

He said there have been no reports so far of related illnesses.

“Based on the facts that we’ve received today, at least 43 percent of the peanut butter in question has not been consumed,” he said.

The Department of Agriculture, which oversees school lunch programs, banned the Peanut Corporation of America from doing any further business with the government. The company’s chief executive, Stewart Parnell, was removed from the Agriculture Department’s Peanut Standards Board, which advises the agriculture secretary on quality and handling standards.

The peanut company is under criminal investigation for its role, and has been accused by federal regulators of knowingly shipping products that had tested positive for salmonella.

A spokeswoman for the company did not respond to requests for comment on Friday.

“If the company knowingly was providing these products with this contamination, I would be outraged,” Mr. O’Connell said.

The salmonella outbreak has also reignited debate about reforms of the nation’s food safety network. On Friday, the new agriculture secretary, Tom Vilsack, said that a single food safety agency was needed, an idea that some members of Congress have pushed for years.

Currently, responsibility for food safety is split between the Department of Agriculture, which regulates meat and poultry, and the Food and Drug Administration, which regulates seafood, produce and most other food.

“No matter how you slice it, the systems are different. The coordination is not what it needs to be,” he said. “Neither one of them is as modern as they need to be.”

In addition to the number of illnesses and recalled products, the outbreak has created a furor because of the importance of peanut butter in the American diet. On average, each American eats three pounds of peanut butter a year.

Market research firms said that peanut butter sales dropped sharply in January. Information Resources data shows a drop of 24 percent in unit sales in the four weeks leading up to Jan. 25, compared with the period a year earlier; another firm, Nielsen, shows a year-over-year decline in unit sales of 22 percent in the four weeks leading up to Jan. 24.

The numbers reflect only the first few weeks of the outbreak; more recent numbers, when the recalls have greatly expanded, were not available.

Besides the newspaper ads, the makers of Jif, Skippy and Peter Pan peanut butter have placed pop-up messages on their Web sites telling customers that their products are not part of the outbreak or recall.

ConAgra has sent similar messages to customers, and Smucker’s customer service representatives are fielding up to 400 calls a day from worried customers.

Gene Grabowski, senior vice president for Levick Strategic Communications, said it was unusual for companies to place ads saying that their products were not contaminated. Typically, he said, companies worry that such ads might draw more attention to the outbreak and inadvertently link their products to it. “That’s a marketing tactic that you want to hold back until you absolutely need it,” he said, noting that some companies ran similar ads when melamine was detected in pet food in 2007. “That’s an indication of how sales have been hurt.”

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