Horse Meat Should Spark Supply Chain Evolution

MarketLine Expert View

February 20, 2013

Following the revelations of horse meat in frozen burgers, the scandal has escalated throughout Europe, with suppliers, manufacturers and retailers all involved. This has highlighted the complexity of the supply chains used to get meat onto consumers' tables. Retailers must become more diligent and ensure traceability so shoppers know exactly what they are paying for and eating.

What started on Jan. 15, 2013 as revelations of contaminated beef burgers in several stores in the United Kingdom and Ireland has now turned into a pan-European scandal. Tesco has undoubtedly been the highest profile retailer exposed, removing its Everyday Value beef burgers and spaghetti bolognaise from sale and cutting ties with supplier Silvercrest. Tesco's reaction was fast, effective and frank; it came clean and was able to prevent the situation escalating.

However, the situation has worsened. Among others, frozen food giant of crispy pancake fame Findus has been in the frame, as samples of its frozen beef lasagna were found to contain between 60% and 100% horse meat. Comigel, the source of the meat, says it came from its Tavola factory in Luxemburg, which was supplied by Spanghero, yet another French meat producer. Spanghero reportedly purchased this meat from a Romanian abattoir via a Cypriot supplier and a trader in the Netherlands. Now, U.K. abattoirs and suppliers are being implicated.

All of this highlights the risks of having such a complicated supply chain in place. Provenance is difficult for the end user to distinguish, and is rarely communicated clearly on packaging. The demand for low price food, competition among supermarkets, and lack of quality control appear to be the main factors behind these incidents.

U.K. grocer Morrisons on the other hand has vertical integration, at least for fresh meat and poultry, and provenance can be easily traced and guaranteed. Removing the many complicated steps between retailer and supplier makes products far easier to trace and identify, and reduces the risk of supply chain contamination. Retailers must become more active in policing and managing their supply chains to reduce the risk of failure in the future.

Diligence and an insistence on genuine traceability from farm to fork is the only way a retailer can be sure of a product's provenance, regardless of whether it is a box of GBP1.00 beef burgers or a GBP31.99/kg dry aged Aberdeen Angus rib steak. This saga is likely to add another nail in the coffin of cheap meat.

Retailers and manufacturers, in a bid to cut costs, have taken a path that has destroyed consumers' trust. As a result shoppers will be highly suspect of meat in low priced ready meals and fast food or at promotional prices. Provenance and trust will become far more important—even at the budget end of the market.