Why Horsegate is yesterday's news

On 15 January 2013 the Republic of Ireland’s FSA announced it had discovered horse DNA in beefburgers on sale in the UK and Ireland. A nation gagged. And the story exploded.

‘Horses for courses!’ screamed The Sun. ‘Supermarkets clear shelves over horsemeat fears’ panicked the Daily Mail. ‘Horsemeat DNA found in Tesco and Aldi burgers’ explained the Times. The horrified headlines kept on coming as more unfortunates were dragged into the scandal. Even Ikea pulled its meatballs. Horsegate dominated the news for months. As more than one wag pointed out, Horsegate had legs.

All the more surprising, then, that one year on almost three-quarters of supermarket shoppers questioned for The Grocer say Horsegate hasn’t made any difference to the way they shop for food today. Meanwhile, sales of frozen burgers and frozen ready meals, which plunged when the scandal hit, are either back, or steadily climbing back, to the same level they were when horsemeat was just a glint in a crafty criminal’s eye.

So given the systemic failings that led to the scandal, and the sheer volume of lurid coverage that followed the story breaking, how has the industry effectively managed to make Horsegate yesterday’s news?

To get a clear understanding of how the issue resonates with consumers today, The Grocer teamed up with Ipsos MORI in December to question 1,010 UK adults (aged between 16-75) on the subject.

It found that although 95% of them were aware of Horsegate, only three out of 10 said the scandal had made any difference to the way they choose or buy food. When asked what upset them the most about Horsegate, 21% said they “hadn’t been upset by it”. And despite horsemeat being indelibly associated with the cheaper end of the market, 26% of shoppers said they were buying cheaper food than 12 months ago.

Given the hysterical reaction of both consumers and the media just 12 months ago, the results may be surprising, but the gradual or complete recovery of sales, and the return to business as usual, supports this. Frozen burgers were first in the firing line when the FSAI delivered its shock announcement on the Tesco Everyday burgers in January. Tesco quickly fired its burger supplier Silvercrest, at the end of January, saying the “breach of trust [was] simply too great”, but it didn’t halt the decline. Kantar Worldpanel data shows sales of frozen burgers went into freefall, hitting rock bottom in April, down a whopping 41% year-on-year.

Scorching summer fuels a comeback

It didn’t last, though. In May, sales started to recover. By July, with the heatwave sending the UK barbecue-crazy, spend on frozen burgers actually jumped 2% year on year.

Obviously the heatwave fuelled the comeback, but together with other measures taken by the industry, by September, with the weather back to a gloomy grey, spending on frozen burgers was up 4%. Today they are down just 1%.

“Unlike the Turkey Twizzler,” says Ed Garner, director at Kantar Worldpanel “there has been enough promotion of frozen burgers to restore common sense and get them back into the basket.”

Sales of frozen ready meals also was at its lowest point in April, with overall spend dropping 15%, and none suffered more than Findus, with sales slumping by 43% and the value of the brand almost halved from £9.5m to £5.4m [Nielsen 52 w/e 12 October 2013], after tests discovered 100% horsemeat in its frozen lasagne in February. Ready meals were implicated every bit as much as burgers - of the 29 products that tested above the 1% FSA horse DNA threshold, eight were burgers and eight were ready meals (of the remainder, five were minced beef, three were meatloaf, plus one sliced beef in gravy, one pie ‘with minced meat’, one corned beef, one bolognese sauce, and one spicy beef skewer.)

“Ready meals took a serious hit, The category could come back but it’s a longer term thing”

Ed Garner

“Ready meals took a serious hit,” says Garner. “The category could come back but it’s a longer term thing. It may require something more proactive from the brands involved.”

Frozen ready meals didn’t benefit from the scorching summer either - if anything it would have had the opposite effect. Spend remains down, although the trend is positive, moving from that 15% low in April to 6% down in December.

Nielsen’s frozen specialist Richard Anderson agrees the “cost was high” for companies like Findus. Although it threatened to sue supplier Comigel - itself a “victim” it has insisted (see box) - for the category as a whole, Anderson says consumers were not ready to give up their frozen lasagnes and “just bought other products” instead.

This brand-switching behaviour is summed up by the fortunes of Bisto, which followed the proactive approach Garner recommends. With the scandal at full swing in March, Bisto launched two cheap (£1.50) ready meals - lasagne and spaghetti bolognese, the two varieties most associated with Horsegate (of the eight contaminated ready meals, the only exception was a single cottage pie.)

Bisto backed the daring launch with an ad campaign that told consumers they could ‘trust Bisto meals’ as they were ‘made with meat from trusted sources’. It also slapped a ‘100% British Beef’ rosette on packs. Its reward was a sales uplift of 52% and a value boost of 64%, which whacked £3.8m on the value of the brand.

It’s also an example of consumer pragmatism, which Anderson says suggests the media “made more of Horsegate than the consumer did”. Overall, he says, the situation has “returned to normal from a big picture perspective” and that at a “super-category level, Horsegate didn’t really impact”.

Figures from Eblex back up the lack of a long-term overarching impact on beef. The category went into predictable decline in the first half of the year, but bounced back in July, and sales for December 2013 are up 4.5% compared to January 2013.

Industry reaction

The industry played a big part in lessening the impact by quickly pulling products from shelves, by introducing comprehensive testing and, when the results became available, by collectively hammering home the message that horsemeat wasn’t a widespread issue but that a criminal element had introduced horsemeat into the food chain. The supermarkets were every bit as appalled as their customers, they explained. And suppliers were equally furious at being given the old switcheroo.

Tesco swiftly took out apologetic full-page ads on 17 January and pulled 10 million burgers from freezers. On 15 February, with the scandal still raging, CEO Philip Clarke opened up in a video to explain what Tesco was doing to put things right: “Nothing is more important to us at Tesco than the trust of you, our customers.”

Today, when asked if Tesco has regained that trust, a spokeswoman says: “Customers have told us they like the measures we are taking to bring food closer to home, and we know they appreciate the work we’ve been doing. We will continue to work hard to ensure customers know our food is of the highest quality.”

“Customers have told us they like the measures we are taking to bring food closer to home, and we know they appreciate the work we’ve been doing”

Tesco

Aldi used a different tack to reassure customers. It had four products test above the FSA 1% threshold and, on 9 February, deployed social media to respond, using Facebook to fire both barrels at supplier Comigel. “We feel angry and let down,” Aldi blasted. “If the label says beef, our customers expect beef.”

John Barton, from social media analyst Testify Digital, says the post received 1,776 ‘likes’ and 850 comments. Although some were “disappointed” in Aldi, the majority were “jokes and people thanking Aldi for their honesty and swift reaction to testing their products”, says Barton. A spokesman for Aldi adds that “customers’ perceptions of Aldi recovered quickly” and that the discounter has “worked hard to ensure those perceptions have continued to climb ever since”.

Not all retailer responses were quite so well received, however. On 17 February, Iceland CEO Malcolm Walker’s attempts to downplay it backfired spectacularly after he described the situation as a “storm in a teacup”. It got worse after his appearance on Panorama’s Horsegate special on 18 February, where he joked about not testing for hedgehog and made a derogatory remark about the Irish - which he later blamed on a sharp bit of editing. The damage was done, though, and today his willingness to discuss horsemeat has evaporated.

Still, it wasn’t all bad news for Iceland. Despite being named by the FSAI, and the reams of bad press in February, no Iceland products tested above the 1% threshold set by the FSA and Walker defiantly launched a half-price promotion on its ‘100% tested’ burgers in March. Iceland later claimed record sales.

Asda CEO Andy Clarke also reacted fast to calm his customers, testing 700 products when tests flagged up Asda bolognese sauce on 14 February, although of those 700, only three (the bolognese, lean minced beef and Smart Price corned beef) ever tested above the 1% FSA threshold.

However, in April, further tests on the corned beef found “very low levels of horse medication called phenylbutazone, also known as bute, at four parts per billion”. This was worrying. Horsemeat isn’t hazardous to human health. Phenylbutazone is.

“Possible weaknesses in the supply chain”

The FSA confirmed the level of bute posed a “very low risk”, but the discovery explains why, even today, Clarke remains cautious. Speaking to The Grocer, Clarke says he is “ever more conscious of possible weaknesses in the supply chain”, although, on the plus side, he is also confident that consumers know who the real villains of the piece were. “This was fraudulent activity, perpetrated on retailers and suppliers,” he says. “The customer has understood that.”

Overall, the retailers handled the situation well, says BRC director of food & sustainability Andrew Opie. He declines to comment on individuals, but says they did “everything they could do and they all recognised the importance of using transparency to build trust”.

Opie says there was “some criticism for staying quiet between the testing process and the announcement of the results on 15 February”, including a suggestion that they should be more communicative that apparently leaked from Number 10, but Opie is clear all the retailers involved knew having the testing results confirmed by the FSA was the “only categorical and definitive way of demonstrating there wasn’t a problem”. He adds that after the results revealed no new positive products, “media interest died quickly”.

The criminal threat

The industry kept busy, though. While environment secretary Owen Paterson told MPs that “criminal activity” was responsible for Horsegate, Defra also announced a review of the supply chain in June, to be helmed by food safety expert Professor Chris Elliott. The final report is due in the spring, although a draft copy released last month left readers in no doubt that while criminals were to blame for Horsegate, there was still a major danger of another Horsegate-type scandal, with Elliott warning of a “worrying lack of knowledge regarding the extent to which we are dealing with criminals infiltrating the food industry. The food industry and thus consumers are currently vulnerable. A food supply system that is much more difficult for criminals to operate in is urgently required.”

Suppliers swindled by crooks would agree. Opie says Horsegate was “all about food fraud” and wants the government, and European governments, to work more closely with retailers to create a “better flow of intelligence information” to prevent fraud.

“That’s the area we need to develop, so we can target test for specific things, then prevent them,” he explains. “Getting people to think about food fraud as much as food safety will build on the robust supply chain we have. And it will send a clear message to criminals - this is not a sector you want to try and defraud.”

“Getting people to think about food fraud as much as food safety will build on the robust supply chain we have. And it will send a clear message to criminals”

Andrew Opie

Unfortunately, it hasn’t been able to send a clear message to consumers by bringing anyone to justice yet, but retailers and manufacturers caught up in the situation aren’t just concerned with hanging criminals out to dry. They also shone the spotlight on themselves.

Opie says the “major shock” of Horsegate made everyone take a “fresh look” at the “trust, transparency and robustness of their individual supply chains”. The result is “permanent improvements that go above and beyond traceability”. These will include “unannounced audits” and the introduction of “a standard for agents and brokers”.

Elliott agrees with those and calls for plenty of others - in total the review makes 48 recommendations to strengthen the supply chain. Elliott will assess them for feasibility with key industry figures ahead of the final draft, but his priorities are to introduce a “specialist food crimes unit” and “unannounced inspections”, where inspectors will remove food samples for authenticity tests there and then. And, ominously, he warns that “large amounts of meat of dubious origin and quality remain available”.

With complex industry supply chains still vulnerable, says Dr Denyse Julien, senior lecturer on the supply chain at the Cranfield School of Management, a “vigilant” industry must constantly be thinking about “what might be coming, or what people might be trying to get away with, as it’s difficult to pinpoint where they might do it, or what to test for”.

It’s made harder because companies are always working with “new suppliers, entering new markets and introducing new products. No matter what they do, there will always be things that can go wrong.” On a more positive note, she says the “genuine concern” for customers shown by the industry following Horsegate means although “people stopped buying lasagne for a few weeks, they accepted, forgave and moved on”.

Not the end of the world after all

Julien also points out another calming factor - that, ultimately, levels of contamination were “very low”. She highlights the 13 June, when the FSA released the results from 19,050 tests and only three were positive. “When those results came out I was surprised the level of contamination was so small, because it sounded like the end of the world in January and February,” she says.

For the industry, January and February probably felt like it, too. Today, the situation feels better, although Opie is reluctant to sound the all-clear. “A lot of trust has returned as a result of the work the industry has already done, but consumers still talk about horsemeat so we probably have more work to do,” he says.

The stark warnings in the Elliott review will keep them going. Besides, the industry doesn’t lack for motivation, knowing it has far more to fear, and lose, from another Horsegate than consumers.

And there is one final reason why consumers have moved on: no-one died. No-one even got ill. Even when bute was discovered, the FSA said the levels were never close to being hazardous to human health. In short, Horsegate was a food scare without the severe consequences of food scares past, so there was always someone cracking a joke, or reminding us that a quick cheval frites is a typical lunch across the Channel.

In stark contrast, salmonella threatened the lives of anyone fond of a runny egg, Sudan 1 floated the evil spectre of cancer into the air, and BSE, with its burger-chomping children, devastating Creutzfeldt-Jakob disease and funeral pyres of cattle piled high into the sky, created images that remain stuck in the mind 15 years later.

While Horsegate will live long in the memory, a combination of the contrition from those unwittingly involved, an increasingly vigilant and determined supply chain, the low level of products that actually tested positive, the non-existent threat to health, and the never-ending jokes, means as long as the industry remains at defcon one, consumers appear content to forgive and forget the whole sorry mess. So long as it doesn’t happen again, that is.