Kroger Clobbered in Tainted Food Recalls

Last Updated Jul 7, 2009 7:53 PM EDT

Food has become an important category for retailers trying to cope with a tight-fisted consumer in a prolonged recession, but it can be a risky business, particularly as stores take on more direct responsibility for delivering to the public products that can cause serious illness.

Over the past week or two, Kroger particularly has gotten pounded and has had to run a series of recalls that raised consumer concerns. Kroger got burned on beef contamination almost exactly a year ago, so this particular run of luck has to be particularly disheartening.

Perishable food segments such as meat, where supermarkets traditionally processed much of what they sold, have always held a certain amount of risk, but, the danger is becoming more acute with the expansion of private label products and the development of processed and partially processed convenience food under store brand names. Given the nature of food safety failures, problems inevitably tie retailers into concerns about illness even if they correctly followed food safety procedures. When more product in stores was branded, at least retailers didn't have to face the problem alone. Today, it might be a supplier's fault that a product or even an ingredient was contaminated further back along the distribution chain, but if a retailer has its name on a product, consumers, government and investors are going to inevitably look at it as having responsibility for a problem.

Just in time for the Fourth of July holiday, a recall of beef products originating with JBS Swift Beef Co., of Greeley, Colo., spread across food retailing and garnered massive media attention. Kroger was caught in an initial recall, which it issued to customers on June 30, that affected beef sold under its private label program. Yet, when the United States Department of Agriculture expanded the recall last week, food retailers ranging from Loblaw in Canada to Costco in the U.S. also had to issue recall notices for products that, again, were being sold under own brand names.

Bad as that was, food retailers were forced to recall an additional range of products last week. On July 2, Kroger â€" hit again -- recalled private label popcorn seasoning and butter flavored sprinkles due to salmonella concerns. Problems related to the July 2 recall caused it to ask customers to return still more products on July 6.

Others have been hit by the salmonella scare, which originated with ingredients emerging from the Plainview Milk Products Cooperative, of Plainview, Minn. Meijer and Ahold USA chains Stop & Shop and Giant recalled nonfat dry milk, cocoa and other products due to possible contamination. In those cases as well, the products involved were private label items. Malt-O-Meal had to issue a product recall for oatmeal, but at least in that case, retailers involved could point to a recognized supplier. In the case of private label products, it was retailer names on the packages.

Retailers have been working with vendors to strengthen food safety standards that sometimes are outdated and subject to jurisdictional confusion between federal agencies, and sometimes between them and local authorities. In the end, retailers may be forced to become more effective watchdogs than government in the case of food safety, as they have more to lose in cases when private label programs are key to their strategies.