10 Costly Food Recalls

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Be warned: After reading this list, you might start checking the recall news more diligently.

©­iStockphoto/Anniecounie

10 Costly Food Recalls

­­Let's preface this depressing list by saying we reap ­a lot of benefits from the globalization of food products. For one, our diets have grown more diverse now that we can find foods that originate from all the different corners of the world in our local grocery store. But there are downsides, too. For one, when you haven't grown or slaughtered your own dinner, you can't be sure where it's been. We have to rely on companies and government oversight to make sure what we're eating is safe -- and as we'll see, it doesn't always work.

According the Centers for Disease Control (CDC), food-borne illnesses cause about 300,000 hospitalizations and 5,000 deaths every year in the United States [source: CDC]. Common causes are outbreaks of bacteria such as salmonella and E. coli. It seems every time the public starts to regain trust in food handling safety, a new story breaks about another massive food recall.

These outbreaks are not only blows to victims' health, but also the economy. In the United States, the economy hemorrhages about $7 billion every year due to these outbreaks [source: Washington Times]. The recall costs, which include getting food off shelves, handling lawsuits, revamping plants and repairing public relations, can be gargantuan for companies. And that's not counting the tainted reputation and lost sales that can be difficult to monetize.

In the next few pages, we'll go through some of the biggest recalls and their devastating effects on companies.

The death of children in Jack in the Box's E. coli outbreak taught the nation the importance of cooking hamburger meat thoroughly.

AP Photo/Ric Francis

10. Jack in the Box Burgers

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This incident proved to be one of the most dramatic food-born­e illness outbreaks ever and awoke people to the danger of E. coli. The fast food restaurant chain Jack in the Box began selling hamburgers  contaminated with E. coli in 1992. Soon, hundreds were sick and four children succumbed to the illness and died.

This is especially tragic considering that it was so preventable. Even though the raw meat was contaminated, cooking it to a high enough temperature (155 degrees Fahrenheit or 68.3 degrees Celsius) would have killed the E. coli and made it safe to eat. However, the Food and Drug Administration (FDA) standards at this time only required the­ meat to be cooked to 140 degrees Fahrenheit (60 degrees Celsius). When this scandal proved that temperature was inadequate, the FDA raised the requirement to 155 degrees (and eventually 160 degrees or 71.1 degrees Celsius).

When the link to their hamburgers was discovered, the company that runs the restaurants, Foodmaker Inc., issued a recall in which they recovered about 20 percent of the tainted beef [source: MarlerClark]. Foodmaker lost approximately $160 million in sales and 30 percent of its stock market value as a result of the scandal [source: MarlerClark, Nestle]. They did offer to pay the victims' medical expenses with "no strings attached" [source: AP]. Nevertheless, they eventually paid out tens of millions in individual and class-action suits.

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Despite its healthy repuation, Odwalla struggled with an E. coli outbreak in its apple juice in 1996.

AP Photo/Paul Sakuma, File

9. Odwalla Apple Juice

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Consumers became more wary about underco­oked hamburger after the Jack in the Box incident, but no one was expecting the next big outbreak to concern a staple of the health-conscious diet: apple juice. Though the company prides itself in being the healthy choice, Odwalla learned a lesson in the importance of pasteurization in 1996. That year, its ap­ple juice became contaminated with E. coli, resulting in the death of one 16-month-old and dozens more cases of illness.

The recall caused the company's stock to plummet and cost the company more than $12 million [source: ERS/USDA]. This isn't including lost sales, lawsuits and a federal fine of $1.5 million. Odwalla executives pleaded ignorance, as they admitted they didn't realize that E. coli could survive in acidic apple juice [source: Drew]. As a result of the outbreak, the company began pasteurizing its apple juice, and the fruit juice industry (which had previous­ly been self-regulated for the most part) became more tightly regulated [source: Weier].

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Employees process ground beef in a Hudson plant a few weeks before the company is sold to Tyson Foods.

AP Photo/Dennis Grundman

8. Hudson Beef

A year after the Odwalla apple juice outbreak, the nation was struggling with E. coli yet again. This time, it led to the largest meat recall ever seen at that point. In 1997, Hudson sold beef that was contaminated with E. coli, sickening at least 16 people, five of whom were hospitalized (luckily, none died) [source: Neusner].

On Aug. 12, the USDA ordered Hudson to recall 20 million pounds (more than 9 million kilograms) of their ground beef, making this one of few recalls on this list that weren't voluntary [source: Smith]. Soon, this number rose to 25 million pounds (more than 11 million kilograms). The most crippling effect was not direct recall costs, but the loss of Hudson's best customer, fast-food giant Burger King, on Aug. 23.

A few days later, Hudson sold the beef-processing plant that was the source of the outbreak. But, even without that plant, the company suffered from a tainted brand name. By early September, Tyson Foods offered to buy the company for $642.4 million -- much less than it was worth a year earlier [source: Neusner]. Though Hudson founders had previously turned down offers to sell, this time it was an offer they couldn't refuse.

Sara Lee recalled deli products and hot dogs in 1998 when it was found that they were making people sick with listeria, a deadly disease.

AP Photo/Al Behrman

7. Sara Lee Deli Products

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In one of the largest meat recalls in history, Sara Lee Corp. recalled about 35 million pounds (almost 16,000 tons) of their deli products and hot dogs in December 1998 [source: Perl]­. Cases of listeria had been linked to the meat from a Bil Mar Foods plant. Never heard of listeriosis? It's not as well known as E. coli and salmonella, but it happens to be more deadly. In this case, it's believed the outbreak contributed to 21 deaths and more than 100 cases of illness [source: New York Times].

The recall itself cost about $76 million [source: Licking]. But that isn't counting the millions more the company would later fork over in lawsuits. In addition, it spent about $25 million to renovate the Bil Mar plant [source: Barboza]. There, it pointed to the presence of debris, old meat and a roach infestation as possible contributors to the outbreak.

The U.S. spinach industry was crippled with a massive recall in 2006 when it was found that the product could carry a nasty strain of E. coli bacteria.

©iStockphoto.com­/Kativ

6. Spinach

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In September 2006, the FDA warned U.S. consumers to stop eating fresh spinach. Apparently, Popeye's favorite leafy green vegetable was making people sick with E. coli. The company Natural Selection Foods issued a voluntary recall of their spinach products, and supermarkets pulled the product from their shelves. The outbreak eventually took at least three lives and made hundreds of people sick [source: Sung].

The U.S. spinach industry, meanwhile, took a harsh blow. Recall costs and estimated sales losses amounted to a staggering $350 million [source: Weise]. And the industry was only very slowly able to regain consumer confidence in the product.

Investigators were unable to pin down exactly how the spinach got contaminated with the disease. One suspicion is that farmers used contaminated water to irrigate the crops [source: Sander]. As a preventive measure, the spinach industry came up with stricter rules for growing spinach, including expanding the buffer required between crops and pasture areas [source: Schmit].

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A salmonella outbreak in 2007 resulted in a 100-percent recall of Peter Pan peanut butter.­

AP Photo/Dr. Scott M. Lieberman

5. Peter Pan Peanut Butter

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In early 2007, consumers heard that they shou­ld stop buying and eating the popular Peter Pan brand of peanut butter. Apparently, an outbreak of salmonella had been linked to the product. When it discovered the link, the company that made this peanut butter, ConAgra, engaged in a rare and massive 100-percent recall of the product. And later that year, the company recalled frozen pot pies that were also found to be linked to the outbreak.

After everything was said and done, the outbreak caused more than 600 cases of salmonella but luckily, no deaths. ConAgra spent around $78 million on the recalls [source: Nash]. These funds went into not only finding and getting rid of the products, but also notifying customers and implementing a toll-free hotline for consumers to contact. On top of shelling out this money, the company missed out on approximately $55 million worth of lost sales [source: Hughlett].

Investigations into the cause of the outbreak revealed that moisture (from broken sprinklers and rain leaking through the roof) was the culprit that fostered an environment hospitable to the bacteria. ConAgra then poured another $15 to $20 million into renovating the responsible plant [source: Nash].

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This Yorkshire terrier died of liver failure after eating contaminated pet food.­

­AP Photo/Reed Saxon, file

4. Menu Foods Pet Food

One of the biggest food recalls ever actually had to do with the stuff we give our furry friends -- pet food was at the center of the problem in this case. And unlike most other recalls on our list, this one didn't have to do with the outbreak of a bacterial disease. Rather, it's believed an industrial chemical known as melamine contaminated the wheat-gluten in the food. When the chemical enters an animal's system, it can cause kidney failure and possibly death. The melamine-contaminated wheat-gluten is thought to have come from a Chinese supplier.

In 2007, after the deaths of 14 cats and dogs were linked to their products, Menu Foods started a recall of about 60 million cans and packages of pet food [source: Reuters]. However, it wasn't able to prevent thousands more animal sicknesses and deaths [source: Barboza].

Menu Foods had to dish out about $42 million dollars to pay for the recall, not including lost sales [source: Henderson]. By 2009, after the company reached a $24-million settlement, affected pet-owners were able to receive damages due to veterinary bills [source: Jones]. This was in addition to the $8 million already paid out to affected consumers [source: Schneider].

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When it was found that Westland/Hallmark didn't get the proper inspections, it resulted in the biggest meat recall in history.

AP Photo/Damian Dovarganes

3. Westland/Hallmark Meat

In February 2008, this became the largest meat recall in history. Interestingly, despite its massive scope, the recall didn't come as a result of illness reports.

Rather, the drama began when the Humane Society of the United States released an undercover video on Jan. 30, 2008, depicting employees of Westland/Hallmark mistreating sick cows [source: Martin]. The video caused the company to shut down voluntarily and raised the attention of the USDA, which launched investigations. Although their cows passed initial inspection, the company allegedly failed to alert inspectors when the cows became too sick to walk before slaughter. Such circumstances increased the risk that the meat carried mad cow disease.

Westland/Hallmark voluntarily submitted to the USDA's request for the recall of more than 143 million pounds (almost 65 million kilograms) worth of beef, even though health risks were "remote" [source: USDA]. This meat spanned two years of their production and much of it was already consumed before the recall was announced. The initial burdens of paying for the recall have fallen on retailers and schools among other recipients [source: Schmit]. Organizations have been tallying the damage and seeking reimbursement from Westland/Hallmark. By some estimates, the total will amount to about $117 million [source: Goad]. It's unlikely the company will ever reopen.

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Though they were later deemed safe, tomaoes were recalled in a 2008 salmonella scare.

©­­­iStockphoto.com/ranplett

2. Tomatoes

When a rare form of salmonella broke out in May 2008, the CDC and the FD­A tried to track down the cause. Before it was over, the outbreak caused hundreds of hospitalizations and was linked to a few deaths [source: Hsu].

Early on, the FDA decided to warn the public off tomatoes, which was one of the likely culprits it was closing in on. Unfortunately, it was wrong. But, for the months until it ultimately traced the outbreak to peppers from a farm in Mexico, the tomato industry suffered expensive recalls.

Although tomatoes weren't really tainted with salmonella, tomato farmers had to foot the bill for recalls. Not only that, but farmers destroyed crops of tomatoes when the cost of picking them outweighed expected profits [source: Schmit]. Some estimates peg losses (including costs of recalls and lost sales) to be as high as $250 million for the industry as a whole [source: Enis].

In the face of a national salmonella outbreak, Peanut Corporation of America voluntarily recalled its peanut products.

AP Photo/Ric Feld

1. Peanut Products

This last recall was vast, and the outbreak deadly. By early January 2009, the FDA had linked a deadly salmonella outbreak to a Georgia plant belonging to Peanut Corporation of America (PCA), and the company immediately ordered a recall. Since the initial recall, another PCA plant in Texas was implicated and the number of recalled products amounted to more than 2,000 [source: Cook].

In addition to being among the largest recalls ever, it's also been one of the most dramatic. A criminal investigation into the outbreak has been uncovering startling evidence that PCA might have knowingly shipped products after salmonella tests came back positive, and in other cases, after retests came up negative or before test results came back at all [source: Schmit]. Whether that's true or not, the resulting outbreak has caused nine deaths and more than 600 cases of illness [source: Cook].

PCA has permanently closed down as a result. But like other devastating recalls, innocent companies have had to bear the initial costs. Kellogg has reported losing $70 million, and other smaller companies are struggling to survive -- the manufacturer Forward Foods filed for Chapter 11 bankruptcy [source: Newsday].

After inspecting a list like this, it's never been clearer that history repeats itself. But it's also testament to how incredibly complex the food production and distribution systems have become in the modern world.

For more interesting lists, browse the links on the next page.

Lots More Information

Sources

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