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Food Industry Hit by Widespread Recalls on Health Threats

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The food industry has been facing the brunt of the recent outbreak of bacterial infections caused bypotentially lethal bacteria like Listeria monocytogenes and E.coli. Fast food restaurants and food companies are incurring heavy losses from the repeated recalls of their products fearing that they could be contaminated with these bacteria. .

Last week, TreeHouse Foods Inc.THS announced the recall of products which are expected to be contaminated by L mono bacteria. A supplier SunOpta Inc. STKL had notified TreeHouse of the possibility of contamination of the products that had been distributed nationwide. The recall is expected to affect revenues significantly for the company.

L mono is known to cause serious infections in children, weak or elderly people. It can be as lethal as to cause miscarriages and stillbirths among pregnant women. However, healthy individuals may suffer only short-term symptoms such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea.

General Mills, Inc.GIS also announced a voluntary national recall of four specific flavors of its Nature Valley protein chewy bars and Nature Valley simple nut bars on grounds of possible L mono contamination in this week.

Costco Wholesale Corp.COST came into news for the wrong reasons after Centers for Disease Control and Prevention ("CDC") alleged that its rotisserie chicken salad caused E. coli infection in 19 people from the U.S. states of California, Colorado, Missouri, Montana, Utah, Virginia and Washington. The company took its rotisserie chicken salad off the shelves, effective Nov 20. In addition, the retailer stopped further production of the item.

E. coli is commonly found in the intestines of humans and animals, some strains of which can cause severe food poisoning.

In Dec 2015, leading coffee retailer Starbucks CorporationSBUX reportedly removed the holiday turkey paninis and several other items in more than 1,000 stores across three U.S. states after an E. coli outbreak. The sandwiches contained celery, an ingredient responsible for Costco's chicken salad recall in Nov 2015.

Also in November, Chipotle Mexican Grill, Inc.CMG had to close 43 outlets in Oregon and Washington as a safety measure after 37 students from Boston College fell ill, most likely after the consumption of E. coli infected food from one of the company's restaurants. The company enforced stricter guidelines for suppliers in the wake of the latest E. coli outbreak that affected several customers in six U.S. states.

Widespread recalls by food companies are in one way a relief for consumers because it ensures that regulatory authorities are more vigilant. However, negative publicity associated with these outbreaks keep customers away from fast food restaurants.

Chipotle's first-quarter revenues reported in Apr 2016 took a hit as negative publicity surrounding the E. coli outbreak had dented its sales to a large extent. The E. coli outbreak, has hurt traffic severely for many of its restaurants. Similarly, repeated recalls made by companies like Starbucks and TreeHouse can hurt the company's top and bottom line.

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GENL MILLS (GIS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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