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Pundit’s Mailbag — Food Safety For Private Label Versus Branded Product/One Nation Versus Another

Jim Prevor’s Perishable Pundit, May 15, 2007

Our piece, Pundit’s Pulse Of The Industry — OneHarvest’s Rob Robson And His Food Safety Team, which reviewed the food safety operations of Australia’s largest fresh-cut processor, brought this trenchant commentary:

Nice interview with the folks from One Harvest.

Certainly there are differences in the degree of review that buyers implement over their supply chains. Even within a traditional American grocery retailer the level of oversight that they provide their own private branded product is different from generic or national brands. Those firms where displayed product is limited to their private branded products do develop a more aggressive review but the “focus” is not the same among the various firms.

The “focus” is reflective of the corporate culture, the firm’s targeted demographic and to those topics currently critical to the general population. This helps explain the plethora of auditing schemes originating from the buyers.

The value of comparing the success or failure of various national or regional auditing schemes is questionable. No foreign regulatory agency is working with a system as sophisticated or efficient as the CDC’s PulseNet.

What will be identified as an “outbreak” (two or more individuals infected by a common source) in the US will more than likely go undetected in other nations. We’re not being measured using the same tools. And certainly under the current US tort system the ramifications of failure are not the same.

— Robert F. Stovicek, PhD.
President
Primus Group

Bob operates at the confluence of many of the trade’s food safety issues as his company, a leading third party auditor, hears from everyone what, particularly, they want to see audited.

He astutely identifies several important areas to think about. We want to draw attention to two key points for the industry to consider:

  1. The distinction between private label and branded product has been significant — and not just with retailers. Many foodservice buying cooperatives had a rigorous set of standards for their private label program and were much more lax on other product. Many broker/distributor/marketers maintained one set of standards for their branded programs and another, lower standard, for other product they procured and sold.

    Part of this is motivated by the reputational risk that is evident if one’s own brand is implicated in killing someone.

    To a large extent, though, this dynamic is a reflection of the way we procure in the produce industry. If someone is going to do a private label item, they will have to secure year-round supplies, and this means that will probably enter into contracts. So a private label item typically has a closely aligned supply chain just to make sure the product is always available in the proper grade, quality, quantity, etc.

    It is actually relatively easy to talk with the company you are contracting with about food safety. It is another item on the list. Yet if you are just buying an item on the free market, from five states and three countries, working with 20 different suppliers during the course of a year, well, how, exactly do you ensure food safety?

    Obviously one can’t be flying all over the world at the last minute auditing and inspecting. There are two obvious answers: One is the industry could change so that no matter who you might buy from, the standard is acceptable. This is what the industry has attempted to do with the California Marketing Agreement. The alternative approach is that buyers simply cannot buy from anyone at any time but must, instead, constrain their supply chain to vendors that have been pre-approved.

    The problem with this approach is that, often, non-vetted vendors will be less expensive. Perhaps on a branded program, customers might be persuaded to stick with the program and pay a higher price, but on a non-branded program, it will be very difficult to convince the client to pay more for what, to him, is just another trade brand.

    We were told by one of the retailers that maintains franchise-type stores that even a small price differential leads the franchisees to buy from a local wholesaler or broker.

    There has been some positive changes in this area. A number of companies have elected to apply the private label standards to all their product. This is logical. Unfortunately, there is some question as to the long term sustainability of these efforts since if the product won’t sell because it is not market-priced, one suspects there will be a bending of standards after a while.
  2. In food safety circles, standards such as those followed by Woolworth’s in Australia and the British Retail Consortium are considered more rigorous than most of those followed by U.S. firms. In fact in our piece Would British Retail Consortium Standards Have Prevented The Spinach Crisis?, Jo McDonald, Technical Services Manager, British Retail Consortium, answers that question by saying: “I believe that if all companies had adopted BRC standards, the spinach E. coli outbreak very well could have been avoided.”

    This is a very strong statement and, as Bob Stovicek points out, one that involves many different questions. Not least of which is how safe is the food supply in other places under these different systems.

    We don’t really know, we don’t even have very good data to compare one state against another, as we pointed out in Many States Are Weak At Reporting Foodborne Illnesses. We certainly don’t have an easy way to compare relative efficacy of foodborne illness prevention efforts on a global scale. Bob points out that PulseNet is something exceptional, but even if PulseNet covered the globe we would have no way of knowing if differences in the incidence of foodborne illness were due to different growing areas, different food safety regimens, different cooking practices, different genetic propensity to illness or hundreds of other variables.

    Yet, we are capitalists and it strikes us as reasonable to think that a system in which buyers demand higher levels of food safety — due to increased utilization of private label or for any other reason — is likely to produce higher levels of food safety. We hope one day we will have sufficient data to be able to draw global comparisons. Until then we have to make reasonable assessments, and the notion that buyers can drive enhanced safety is a reasonable, if unverifiable, assumption.

    As they say, the race is not always to the swift, nor the battle to the strong, but that is the way to bet.

Many thank to Bob and to Primus for this thoughtful letter.

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