Managing A Recall -- APC's Role, An

Industry Association Perspective

Outline

Managing the peanut recall

Its consequences

Next steps & key learnings

What is the APC Role?

APC is the umbrella trade association for the U.S. peanut industry

Located in metropolitan Wash., DC

Represents growers, shellers, manufacturers and allied members

APC acts as spokesperson for industry and manages a crisis communications team

The Recall…By the Numbers

In the United States:

Over 4,000 products recalled

691 people confirmed ill (extrapolate to 20,000)

48 states involved

Nine deaths linked to the outbreak

Tens of thousands of media stories

Cost: Hundreds of millions of dollars

Timeline of Events

2008 Seven tests performed for Peanut Corporation of America are positive for salmonella. PCA retested, received a negative — and shipped.

Sept. 8 First reported salmonella cases according to the Centers for Disease Control and Prevention.

Nov. 10 The CDC detects cluster of genetically identical salmonella cases in 12 states; two weeks later, second cluster of 27 cases in 14 states.

Nov. 25 Working with state and local partners, the CDC begins an epidemiological assessment.

Jan. 9: Initial linkage in Minnesota

The Perfect Storm

The Perfect Storm

Inauguration Weekend in Washington, DC

FDA makes announcement of expanded recall with no prior warning, 15 min. before holding press conference late on Sat. afternoon

City in lockdown – no one can get to offices

Professional staff out of country

Approaching snow storm

Timeline of Events

Jan. 17: FDA announcement of expanded recall

Jan. 27: FDA released findings that PCA knowingly released contaminated product

Jan. 28: FDA expands recall to include all products produced in Blakely, GA plant

Feb. 12: TX issues mandatory recall of Plainview, TX product

Industry Response

Our strategy: To leverage the APC/industry voice as source for confused consumers while maintaining focus on overall issue of food safety and that PCA was an isolated incident, not representative of our industry – keep the focus off of the U.S. peanut industry!

Our Challenge: To communicate messages consistent with FDA in a constantly changing news environment

Key Messages

Consumer safety is always our no. 1 priority

Our shock & dismay that a company would knowingly put contaminated product into the food supply

Our industry won’t tolerate such behavior – not representative

We continue to work closely with FDA to monitor changing situation

How We Managed the Crisis

Research & detail: Get all facts

Cooperation, collaboration & consistency with FDA, CDC

Media monitoring – print, broadcast, on-line

Daily conference calls with PR firms & crisis team

Membership communications become critical; many voices, stakeholders

International involvement as required (Haiti, Europe, Mexico)

Tactics To Address Situation Press releases

Promote Unaffected Products List on our APC website to media and by use of

on-line drivers on Google

Media Interviews, print & broadcast

Satellite Media Tour

Industry Communications

Efforts Over Past 2 Years

June 2007 – formed Scientific Advisory Committee on Food Safety

October 2007 – Issued Revised GMPs October 2007 – Began Protocol Design of

Prevalence Study November 2007 – Began Protocol Design

of Kill Step Study Dec. 2007 – Held Food Safety Workshop

with FDA, CDC, UGA April 2008 - Began development of food

safety training course

Next Steps - Be Part of Solution

Working to revise all GAPs, GMPs

Comprehensive training and outreach to industry

Food Safety Course for Mfrs.

Food Safety Training Webinar to target small manufacturers

Completion of Prevalence Study

Industry Certification based on Global Standards

Impact & Outcomes

Largest food recall in U.S. history

The criminal element was new, shocking

PCA Recall was the catalyst for federal and state food safety legislation

Nuts are now considered a high risk food

New focus on food safety within the industry and with consumers/Congress/FDA

We must redouble our efforts to regain consumer confidence

Consumers returning to peanut butter!!

What Does This Mean for the

Peanut Industry?

No longer business as usual

Two recalls in two years has raised doubts in consumer minds over safety of peanut butter

We must work to regain trust

CDC Pulsenet System Increases Chances of another recall

Why Is Prevention So Important?

The cost of a recall:

• Your reputation – Instant News Coverage in 24/7 Media Culture

• The Bottom Line $$$

Removal/replacement costs, legal costs, PR costs, stock price

• Possible Bankruptcy

“An ounce of precaution is worth a pound of cure” – Benjamin Franklin

Key Learnings

Worst case scenario – it will happen

Have a clear prior understanding of everyone’s roles involved in managing a crisis – have a crisis mgt. plan

You need to have key relationships with Government officials, allied trade groups, and other stakeholders established before there is a crisis

Key Learnings

You are going to get recommendations from several opposing sides – one person has to be the ultimate decision maker and be able to make decisions quickly

Trust your gut instincts in most instances, though be open to listening to various opinions

If change is inevitable, get on board and be part of the solution rather than being perceived as part of the problem – embrace change

Thank you!