VIV Asia: Food safety, a global concern

A drop of 41% in sales in January 2013, a postponement of a planned growth path from 700 to 800 restaurants and an extremely negative sentiment on social media. Joaquin Pelaez, CSO of Yum! China is managing a crisis in one of the biggest food supply chain networks today.

Pelaez was planned to appear at the Alltech entrepreneurial dinner discussion about food safety in Bangkok at the 13th of march, but had to fly to Yum! headquarters in the US instead. KFC’s parent, Yum Brands, was facing problems of food safety, or food safety perception, originating in the 4th quarter of 2012.

Yum! reported a 6% drop in fourth-quarter sales in China because of adverse publicity on social media regarding antibiotics and toxic chemical residue found in its chicken supply. In January consumer trust took an even harder beating (-41% in revenue), when it became clear that there was more going on than just rumours.

“What went wrong, was it criminal behaviour, politically motivated or China’s X-factor?’’, Alltech’s vice president of China Mark Lyons asked at the discussion. Part of the problems in China could occur because of insufficient control from the farm level up at some of the suppliers. In a reaction Yum! stopped doing business with a few suppliers, cutting 1,000 farms out of the supply chain. Alltech is eager to facilitate any discussion on food safety to bring the protein sector forward. Vice president Aidan Connolly: “Production in China is pushed so fast due to an increase in consumption that organisation and knowledge fell behind. China really needs help and fundamental changes have to be made in education, management and mentality. Food security is one thing, food safety is at least as important.’’

Getting the right knowledge across to the Chinese farmers and introduce broad quality control scheme’s, topped off with possible sanctions when not complying, that is the challenge for the near future. Responsibilities are huge for everyone involved in the poultry sector. Food safety is a global concern.