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Two Horrific Business Stories

Is It Smart to Outsource Your Reputation?

April 2007 By Denny Hatch
23
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In the News

Grieving couple commits suicide after dog dies
HYDERABAD, India (Reuters)—Unable to come to terms with the death of their pet dog, an elderly couple in southern India committed suicide by hanging themselves, police said on Monday ... Police said the childless couple had held a burial ceremony for their dog of 13 years, called “Puppy,” and hosted a feast for friends before hanging themselves in their bedroom. “The couple described the grief over their pet dog in the suicide note they left on March 29,” said police inspector V. Anantaiah.
—Reuters, April 2, 2007
I remember visiting a very wealthy friend who had a splendid estate right on the water in Marblehead, Mass. The path from the house to the tennis court went through a stand of pine trees where a collection of tiny gravestones lined the walkway. It was a pet cemetery—the burial ground for family dogs and cats going back to the 19th century.

Pet owners become deeply attached to their animals, and the joint suicide of a childless couple in India over the passing of a beloved canine may be extreme, but entirely believable. “Puppy” was very likely the only family they felt that they had.

My wife, Peggy, and I have an orange tabby cat and a feisty black-and-white Cocker Spaniel named Auggie, age 9. A fair part of my day is spent dealing with what goes into—and what comes out of—Auggie.

On the advice of our vet, Auggie is on quite pricey, low-residue Eukanuba dry food. Suddenly, Eukanuba is all over the media not only for making cats and dogs deathly ill with kidney failure, but also for killing legions of pets all over the United States and Canada.

Mercifully, Auggie’s dry food is not affected, but some 60+ million cans and pouches of wet food have been recalled. Not only are Iams/Eukanuba caught in the mess, but also a total of 53 brands of dog food and 42 brands of cat food. Included are the high profile Science Diet, Mighty Dog, and a slew of private label products from such well-known corporations as Food Lion, Foodtown, White Rose, Winn Dixie, Super Fresh/A&P (America’s Choice) and Publix.

If 53 brands of dog food and 42 brands of cat food all contain the same ingredients and are produced in the same manufacturing facility, then isn’t the entire concept of “brand” and “branding” shot to hell?

A Terrible Tale With a Very Long Fuse
You can just imagine the anguish and guilt hundreds—perhaps many thousands—of families are going through as they watch their pets, with big eyes and trusting, loving dispositions, die horrible deaths from kidney failure.

The culprit: a creepy manufacturer in Ontario, Canada, Menu Foods, that imported wheat gluten from China that was tainted with aminopterin (rat poison) and melamine, a chemical used in plastics and in fertilizer in Asia (although not approved for fertilizer in the United States).

When Menu Foods began hearing of problems on Feb. 2, it tested its products on 40 to 50 animals and they began dying on March 2. A total of seven died, with no word on how many were made ill.

Takeaway Points to Consider:

* If something starts to go haywire, don’t sit around hoping things will get better. Deal with it immediately.

* If it can get worse, it will.

* The cover-up always makes things worse.

* An aggrieved and angry customer wants to know that a real person is in charge and doing his or her damnedest to make things right. A sales letter signed by 1,000 people—including the engineer that runs the label machine and an assistant shipping clerk—doesn’t cut it.

* A CEO of a company that puts profits ahead of the well-being of its customers should be consigned to Dante’s Ninth Circle in Hell, which is for “Traitors, distinguished from the ‘merely’ fraudulent in that their acts involve betraying one in a special relationship to the betrayer.”

* Outsourcing your reputation is dangerous business.

Web Sites Related to Today's Edition:

Menu Foods
http://www.menufoods.com

Recalled Cat Foods
http://www.menufoods.com/recall/product_cat.html

Recalled Dog Foods
http://www.menufoods.com/recall/product_dog.html

Iams and Eukanuba Pet Foods
http://tinyurl.com/2gmj8h
 

Companies Mentioned:
23

COMMENTS

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Most Recent Comments:
Tobin - Posted on April 10, 2007
I hate to burst any bubbles here but it seems a little ridiculous to claim that the pet food fiasco/scandal/disaster has shot the concept of branding to hell. It doesn't take much research to see that ingredients in most products don't vary all that much. So what are you paying for when you spend extra on the "fancy" brand? You're paying for the feeling of being a good pet owner. When that food becomes the culprit in your animal's death, the fallacy of the product's differentiation is exposed. But, I would argue, that isn't proof that product's branding doesn't work, but rather is proof that it does. We want to feel like good pet owners so we will continue to purchase "high end" or "scientitific" brands - we'll just choose different brands, most likely brands that manage this crisis the best. At the end of the day, brands matter because they speak to our sense of self.
loda braida - Posted on April 11, 2007
Well, this is a fascinating story and so is your take on it. I'm not a pet owner but I am Canadian. So I do take exception to the "sleezy Canadian" remark. We've had our own share of "quality control" scandals etc but the problem with Menu Foods is one of the results of globalizations. I dare say, from my own knowledge of food brands etc, there is scarcely a product on our supermarket shelves that is not made or packaged and branded the way the affected pet food brands are packaged. The amazing thing, when you think about it, is that they were able to identify the culprit(s) so quickly - that says something about our mannufacturing systems. Now, exposing "brands" as smoke and mirrors says something else. We're not in Kansas more and alas, in this case, neither is Toto.
met - Posted on April 08, 2007
Regarding branding and generics: here's an opposite example -- a company that understands the danger of white-labeling for others. Our dermatologist recommended Cetaphil brand cleanser, by Galderma. It's pricier than what seem to be similar store-brand products in similar packaging, with near-identical ingredients. But here's what the Cetaphil bottle says on the back: "The makers of CETAPHIL(R) do not manufacture store brands." Well, there you have it, simply and directly -- if we want Cetaphil, we're going to have to buy Cetaphil, not an imitator. So, we do.
Bob Scott - Posted on April 08, 2007
Apropos your piece on the mishandled PR of contaminated pet food manufacturers, there's another fundamental precept that was ignored. When I worked at Newsweek, Jack Caldwell, the photo editor, used to preach whenever corner-cutting took place, "A good rule to remember is 'Never economize on the product you?re selling.'" By going to China, a country that would rather eat its dogs than own them and a questionable source with unknown quality controls, the pet food manufacturers violated that rule. And therein lies their original sin.


MarCom Guy - Posted on April 07, 2007
Apparently, Menu Foods (just outside Toronto) went through a middleman in San Diego for their wheat gluten. San Diego?? Very likely, this was a "lowest bidder" issue. Menu Foods obviously was not testing ingredients supplied by third parties, probably because their bean counters didn't see any value in it. And why should they? Their exposure was minimal, as only consumers' "property" was at risk (as shown by their stock rebounding almost to the previous level after the problem was announced). The real companies at risk here are the brand owners, even without lawsuits. No doubt the major brands have lost customers due to this, and will never recover those consumers. There was a time when brands did mean something. I still remember, during the 1970s, "If Kraft's name isn't on it, Kraft didn't make it." They haven't said that for decades. No doubt, Kraft is now providing some of their product for others, and outsourcing some of their products from third parties, just as many other companies do, including the brands involved with this; P&G ain't small potatoes. Brands don't seem to mean much anymore to multi-nstional companies, other than a reason to build a brand and charge more for the same thing that's in a generic label.
Michael Spanjar - Posted on April 07, 2007
Once again, Denny, you've swung your bat at an issue that can teach us a lesson about business practices and hit it out of the park. Like you, I feed my dog Eukanuba dry, and it is pricey. The P&G letter thinly disguised that behemoth's real fear: that consumers would generalize the issue and stop using their dry foods. Certainly, the brand owners are victims in this, too. But they need to offer real remedies to their customers, not a list of councils and task forces they've assembled internally. In my business, when the shipper delivers my customer's package late, it's MY fault. When the order produced by my supplier is incorrect, my customer doesn't give a damn where it originated, it's MY fault. No task force is going to bring back my trusted friend who died because he used your product. Lastly, as a brander myself, I am aware that many products out there carry many names but roll off one assembly line. But to discover that Euk and Ol'Roy share common ingredients is a slap in the face of consumers who care deeply enough for their pets to pay a premium for their well-being. And that's something the makers of those products can't claim they didn't know. It leaves ALL their reputations in tatters. I can't imagine feeling "great" about feeding my dog Eukanuba ever again, even though, as is often the case, I don't have much of a choice if I want to give him the best (insert cough) out there.
Carmen - Posted on April 05, 2007
1. Importing wheat gluten from China follows our tradition of: a) importing foreigners (via HB-1 visas) to fill US jobs cheaply, b) of exporting our services, and c) of outsourcing 90+% of our product manufacturing to China.

2. If Menu Foods produces pet food to each label?s specs, the impact to ?brand? is nil. If it makes the same food for all companies, then agreed: ?branding? must be reviewed.
Kevin Stecko - Posted on April 05, 2007
I am surprised at the lack of an upheaval so far against retailers and the corporate giants responsible. This entire story (from the importation of wheat products into the US to the fact that one company supplies hundreds of "differentiated" brands with the same supplies) has me baffled. Why is it that the only thing that shows up on sponsored ads on google when I type "pet food recall" is from a company trying to promote themselves as a healthy alternative. Shouldn't these companies do more? Shouldn't pet owners be up in arms? Maybe US consumers have gotten so used to this type of behavior that we are not shocked or outraged.
Bob Knight - Posted on April 06, 2007
What if government made pet food packagers like Iams, etc. (as we've learned, they're not the manufacturers...only the tin-packers and labellers of the product. And maybe they don't even do that) state the name of the true manufacturer? One can only imagine the effect on the sales of high priced products if pet owners saw that the food was made by the very same company that makes the cheapest brand.
Tim McCreight - Posted on April 06, 2007
This may be a Pogo moment in which we discover we are again our own enemy. But I submit this incident should be a wake up call re the way we have decided to practice capitalism in the United States. When I was taught neo-classical economics someone had to derive a way to add value through a transformative act.

So, for instance, the mine owner extracted ore from the earth (a transformative act), the ore was processed into raw metal (another transformative act) and, perhaps, turned into wire or I-beams or quarter panels. And those individual items might then be assembled into motors or automobiles undergoing yet another transformation and adding more value.

But now we seem to inhabit a new nether world. Actually making things is somehow beneath us. The heroes of this new economics can ?unlock? hidden value by unshackling corporations from the manufacturing process allowing them to concentrate on where the value is truly added: in marketing and finance. The markets reward this behavior and an entire generation believes that they are smarter than less developed nations, which must content themselves with lower order tasks like actually making things.

I make a good living as a marketer. Trained as I was by people out of McCann-Erickson I valued the art or telling the truth well. (Or, paraphrasing Spencer Tracy on acting, just looking straight at the customer and telling the truth.) Isn?t a brand supposed to be a repository of trust? How is the customer supposed to trust a product contracted for from the lowest bidder so that the doyens of finance can show the markets they are maximizing enterprise value?

Maybe it?s just a case of willful denial. Perhaps it?s easier to approve a plan that monetizes under-valued assets and employs leverage to optimize shareholder value than it is to shut factories and become a ?Wizard of Oz? corporation where the pulling of levers is the actual product.

Or maybe the answer is staring us right in the face, hidden behind the turgid prose of corporate business-speak. Because if, as Ambrose Bierce suggested, good writing is essentially clear thinking made visible then we are looking right at a train wreck.
Chris Altwegg - Posted on April 06, 2007
Great article, but I will question one thing. Just because various brands of an item are produced in the same facility, it doesn't mean they are the same. In my college days, I worked in a BirdsEye frozen food plant in Woodburn Oregon. A primary product was green beans. There were numerous points in the production line where workers would remove extraneous stems, or bits of leaves or beans which had rust stains etc. And there were folks who would take 20 boxes of beans in a row from the production line. They would carry these to a separate table and minutely inspect the contents. If they found too many defects, they would stop the line, remove the rolls of BirdsEye labels being wrapped around the consumer boxes and replace them with some second tier or store brand. The foremen would then admonish the line workers to "get back in grade" and if their efforts were successful, another inspection process might allow the BirdsEye label to go back on. Yes, it was the same beans going into the plant, from the same farms, etc, but the quality of the product with the BirdsEye label was higher.

(I will add, BirdsEye contracted with farmers for their entire crop, and if that produced more beans than BirdsEye thought they could sell in a year, the balance would be packed under various second tier brands. So it was entirely possible that you could buy one of those brands and get the very same quality of BirdsEye. But you wouldn't know, would you? And that, in some ways, is a primary selling point of a brand: the assurance of quality versus an unknown.)

Keep up the good fight!
Scott Wheatley - Posted on April 06, 2007
Why draw attention to the fact that the plant was Canadian, or that this is a "sleezy Canadian CEO"? Is the nationality somehow important to the pet owner. Are there no "sleezy" American CEO's. How does the nationality make a differance to your story other than to generate distrust of Canadians? Please give me a break.
David Garfinkel - Posted on April 06, 2007
It had to come to this, Denny -- direct marketers talking about branding. :) You make some great points. These pet food folks have done themselves in not once but several times, mostly through ineptitude and cowardice and not by taking calculated cynical risks. I have come to think of a brand as the condensation, or shorthand, of the person-to-person reputation (word-of- mouth way a business is talked about) in the marketplace. They've sure screwed their own. I just had a 90 minute business meeting on the phone with a guy in southern Virginia and another in Los Angeles, yesterday, and we spent the first 15 minutes talking about pets and vets. Small talk and bonding. You're totally right about how much emotional attachment there is between pets and their owners (or "guardians" as we say here in looney-tunes San Francisco). Great piece!
Carl Street - Posted on April 06, 2007
Branding is bunk in this, "America's Post-Manufacturing Age" where most companies have become mere marketing shells hiding behind the reputations earned during their REAL productive years. In short, you ain't seen nothin' yet!

When I left the military in 1972 and founded a computer based (novel idea at the time) direct marketing company, I learned early that I could NOT rely upon graphic artists, photographers, printers, etc. To protect my reputation and the welfare of my clientele I spent my first 5 years in business purchasing and/or creating ALL those links in my production chain.

Was it expensive? You bet! Did it pay off? Right again! We developed a reputation as the firm that NEVER missed a deadline and NEVER had quality control problems. My small San Francisco Bay Area firm suddenly started getting referral business from as far away as Florida. While we never solicited clients outside our local area, by the time I sold the firm in the late 1980's almost 90% of our revenue came from out of state and we even had clients in Canada and Mexico.

More importantly, we NEVER sold price -- we charged premium rates; paid top wages; and were extremely profitable and all those production assets also brought a good price when I sold the company. If I had listened to the "green eye shade bean counter group" with their myopic quarterly forecast mentality; I would have remained a mom and pop shop struggling to pay my rent. IMHOP, today's "management" largely lacks VISION capital; not financial...
Marc - Posted on April 06, 2007
I went to Walmart last evening to find bare shelves. There was some Alpo prime cuts but some of them were recalled and who walks around with a list. All wet food is suspect! Like most contract assemblers I am sure that Menu foods uses other ingredients of differing quality for the "brands" unique recipe, just open a can and you'll see. However, the real criminal is Menu Foods, the brands will survive, Menu management should be forced to eat the tainted food.
Allen Williams - Posted on April 06, 2007
Big pet food marketers don't realize it yet, but long-term damage has already been done to their "trusted" premium brands because of the way they handled this crisis. I predict
many pet owners will switch to
100% organic and more natural ingredient pet foods even at the higher cost. At least they feel they it's safe to
feed to their pets. If an expose' is ever done about
what really goes into pet food...these companies will
feel their customers pain in more ways than one. Betrayed pet owners will be angry enough betrayed and will do the hunthinkable -- change
their buying behavior towards
more natural ingredient brands.


Read these four articles and understand why the real cause
of the massive pet food contamination panic may never be revealed to the public. Though they were written 17 years ago, conditions
very likely remain the same today. The most disturbing aspect centers around the meat by-product "rendering" plants. You'll see how obvious
it is how test laboratories are finding strange contaminants like
melamine (plastic) and a chemical found in rat poison. How those contaminants
get into the pet food makes more sense after reading this.

With 15.4 billion dollars (2006 figures)of wet and dry pet food sales at stake, the big pet food marketers (and cattle and poultry feed producers) will do everything in their power to keep the lid on the stealthy "rendering"
plant business.

http://www.nexusmagazine.com/articles/petfood1.html

It's easy to see why our pets only live between 7-13 years. The Pet Food industry is
slowing killing them with each and every meal.

amy - Posted on April 05, 2007
I guess that I am lucky in that I don't feed my pets wet food. To your point, I am would expect to see some scrambling out of the industry to justify their pricing. If science diet = old roy in terms of production, why pay 10x more? It's going to be interesting to see this one play out. Thanks for your great articles!
Jason Scheiner - Posted on April 05, 2007
The mass-market pet food industry is one of America's worst industries, in my opinion. Companies grind up entrails and corn without a care for anything but cost, and they call it "pet food."

This recall is just the latest problem; pet food has been killing pets for years - slowly. Obesity and diabetes run rampant among dogs and cats. Why? Mass-market foods are packed with corn as filler and with poorly-absorbed by-products because they're cheap ingredients. Pets eat more cheap food to feel full, so they get fat. They get fat, so they get diseased - just like the millions of humans eating McDiets.

Many smaller, lesser-known brands (actual independent brands) are more nutritious and contain ingredients you don't need to look up in Wikipedia.

I have two cats, and I only buy a brand of cat food if I'd eat each of its listed ingredients. Sadly, much like Big Pharma, "Big Pet Food" spends immense sums on advertising, and veterinarians have told me that most veterinarians are not well versed on nutrition. (It's not required learning at vet school.)
Jennifer Markley - Posted on April 06, 2007
If Menu Foods had announced the suspected problem on Feb 2nd, my beautiful cat Schatze could have been saved. We could have gotten testing and treatment where she could have recovered. Instead, she died Feb 25th, Renal failure. Iams Flakes of Tuna and Ocean Whitefish.
Rebekah G - Posted on April 06, 2007
I'm a faithful reader of this newsletter and agree for the most part, but I'm going to have to disagree this time around. I think the letter was great. It came across as sincere, despite using "we" and "our" language. By making the letter from the employees rather than just the CEO, I feel as though it accomplished some much needed internal PR. When an embarrassed employee read that letter, I imagine they may have felt a little pride return.
Peter Hochstein - Posted on April 06, 2007
Nevermind brand image. Take a look at the ingredients list on half the human products in your pantry, from bread, to crackers, to pasta.

Wheat gluten pops up with the regularity of lightning during a thunderstorm.

Where is the wheat gluten coming from that you and I personally eat?

The internationalization of our economy means that we have less and less control even of what goes into our own mouths.

Part of the problem is a philosophy of government that says the marketplace will solve all problems. So nuts to inspections, regulation, fully informative labeling or funding to adequately enforce regulations.

Fine. My dog is dead. I won't buy your poisonous dog food any more. And when my grandkid dies, I suppose I can get justice by ceasing to purchase your bread?

Poisonous pet food isn't the end of the story. It could be only the beginning.
- Posted on April 06, 2007
On a similar note: I had a problem with a can of Evanger's Cat Food. After what happened I was concerned about a possible contamination. The lid blew off when I opened it and it broke a fingernail. It was only after my second e-mail to Evanger's that I got a response.

"Mr..Whitworth,
My name is Joel Sher. I am Vice-President of Evanger's Dog and Cat Food Co, Inc. I have received your inquiry as to a loud popping sound when opening a can of Holistic Turkey cat food. The most likely reason for the popping noise was due to a larger than normal amount of vacuum in can. Vacuum is required in all canning operations. There must be a minimum of 4 inches but there is no required maximum. Vacuum is achieved by a combination of variables including steam injection, initial temperature of the product, and amount of empty space in the can. The popping sound is created when the top is pulled and air rapidly rushes into the can to fill the void(similar to a sonic boom flying airplanes create). Excess vacuum has no negative impact on the quality of the food. In fact, it insures stability of the product. Unfortunately, once in a while there is a can or two with excess vacuum but again there is no negative impact to the food. Thank you for your inquiry and taking the time to report your observaiton.


Respectfully',
Joel Sher"

This response voiced no concern for possible contamination, nor a concern for my broken fingernail. Not that it was any big deal. But, the v.p. at Evanger's was more concerned with giving me the fundamentals of vacuum processing than my pet's well being or my broken fingernail. No offer was made even to replace the can. Where do these people come from?
~Bob Whitworth
Matt - Posted on April 06, 2007
The worst part about all this is that Menu Foods was practicing such poor supplier quality on the wheat gluten they were importing. The "savings" they found by using a supplier in China (and by not practicing proper supplier quality programs) was easily eaten up by the loss of business each company that got their dog/cat food from Menu Foods. It is obvious that Menu Foods (and the BIG name dog/cat food sellers) don't really care about their consumers. As you note, Denny, they dragged their feet on informing consumers of the problem food. I was one such consumer who discovered that he was feeding tainted food to his dog and cat for weeks before the news actually broke. I can't wait to see what the BIG name dog/cat food producers do to try and repair the broken consumer confidence wrought by Menu Foods and their shoddy supplier quality programs.
Click here to view archived comments...
Archived Comments:
Tobin - Posted on April 10, 2007
I hate to burst any bubbles here but it seems a little ridiculous to claim that the pet food fiasco/scandal/disaster has shot the concept of branding to hell. It doesn't take much research to see that ingredients in most products don't vary all that much. So what are you paying for when you spend extra on the "fancy" brand? You're paying for the feeling of being a good pet owner. When that food becomes the culprit in your animal's death, the fallacy of the product's differentiation is exposed. But, I would argue, that isn't proof that product's branding doesn't work, but rather is proof that it does. We want to feel like good pet owners so we will continue to purchase "high end" or "scientitific" brands - we'll just choose different brands, most likely brands that manage this crisis the best. At the end of the day, brands matter because they speak to our sense of self.
loda braida - Posted on April 11, 2007
Well, this is a fascinating story and so is your take on it. I'm not a pet owner but I am Canadian. So I do take exception to the "sleezy Canadian" remark. We've had our own share of "quality control" scandals etc but the problem with Menu Foods is one of the results of globalizations. I dare say, from my own knowledge of food brands etc, there is scarcely a product on our supermarket shelves that is not made or packaged and branded the way the affected pet food brands are packaged. The amazing thing, when you think about it, is that they were able to identify the culprit(s) so quickly - that says something about our mannufacturing systems. Now, exposing "brands" as smoke and mirrors says something else. We're not in Kansas more and alas, in this case, neither is Toto.
met - Posted on April 08, 2007
Regarding branding and generics: here's an opposite example -- a company that understands the danger of white-labeling for others. Our dermatologist recommended Cetaphil brand cleanser, by Galderma. It's pricier than what seem to be similar store-brand products in similar packaging, with near-identical ingredients. But here's what the Cetaphil bottle says on the back: "The makers of CETAPHIL(R) do not manufacture store brands." Well, there you have it, simply and directly -- if we want Cetaphil, we're going to have to buy Cetaphil, not an imitator. So, we do.
Bob Scott - Posted on April 08, 2007
Apropos your piece on the mishandled PR of contaminated pet food manufacturers, there's another fundamental precept that was ignored. When I worked at Newsweek, Jack Caldwell, the photo editor, used to preach whenever corner-cutting took place, "A good rule to remember is 'Never economize on the product you?re selling.'" By going to China, a country that would rather eat its dogs than own them and a questionable source with unknown quality controls, the pet food manufacturers violated that rule. And therein lies their original sin.


MarCom Guy - Posted on April 07, 2007
Apparently, Menu Foods (just outside Toronto) went through a middleman in San Diego for their wheat gluten. San Diego?? Very likely, this was a "lowest bidder" issue. Menu Foods obviously was not testing ingredients supplied by third parties, probably because their bean counters didn't see any value in it. And why should they? Their exposure was minimal, as only consumers' "property" was at risk (as shown by their stock rebounding almost to the previous level after the problem was announced). The real companies at risk here are the brand owners, even without lawsuits. No doubt the major brands have lost customers due to this, and will never recover those consumers. There was a time when brands did mean something. I still remember, during the 1970s, "If Kraft's name isn't on it, Kraft didn't make it." They haven't said that for decades. No doubt, Kraft is now providing some of their product for others, and outsourcing some of their products from third parties, just as many other companies do, including the brands involved with this; P&G ain't small potatoes. Brands don't seem to mean much anymore to multi-nstional companies, other than a reason to build a brand and charge more for the same thing that's in a generic label.
Michael Spanjar - Posted on April 07, 2007
Once again, Denny, you've swung your bat at an issue that can teach us a lesson about business practices and hit it out of the park. Like you, I feed my dog Eukanuba dry, and it is pricey. The P&G letter thinly disguised that behemoth's real fear: that consumers would generalize the issue and stop using their dry foods. Certainly, the brand owners are victims in this, too. But they need to offer real remedies to their customers, not a list of councils and task forces they've assembled internally. In my business, when the shipper delivers my customer's package late, it's MY fault. When the order produced by my supplier is incorrect, my customer doesn't give a damn where it originated, it's MY fault. No task force is going to bring back my trusted friend who died because he used your product. Lastly, as a brander myself, I am aware that many products out there carry many names but roll off one assembly line. But to discover that Euk and Ol'Roy share common ingredients is a slap in the face of consumers who care deeply enough for their pets to pay a premium for their well-being. And that's something the makers of those products can't claim they didn't know. It leaves ALL their reputations in tatters. I can't imagine feeling "great" about feeding my dog Eukanuba ever again, even though, as is often the case, I don't have much of a choice if I want to give him the best (insert cough) out there.
Carmen - Posted on April 05, 2007
1. Importing wheat gluten from China follows our tradition of: a) importing foreigners (via HB-1 visas) to fill US jobs cheaply, b) of exporting our services, and c) of outsourcing 90+% of our product manufacturing to China.

2. If Menu Foods produces pet food to each label?s specs, the impact to ?brand? is nil. If it makes the same food for all companies, then agreed: ?branding? must be reviewed.
Kevin Stecko - Posted on April 05, 2007
I am surprised at the lack of an upheaval so far against retailers and the corporate giants responsible. This entire story (from the importation of wheat products into the US to the fact that one company supplies hundreds of "differentiated" brands with the same supplies) has me baffled. Why is it that the only thing that shows up on sponsored ads on google when I type "pet food recall" is from a company trying to promote themselves as a healthy alternative. Shouldn't these companies do more? Shouldn't pet owners be up in arms? Maybe US consumers have gotten so used to this type of behavior that we are not shocked or outraged.
Bob Knight - Posted on April 06, 2007
What if government made pet food packagers like Iams, etc. (as we've learned, they're not the manufacturers...only the tin-packers and labellers of the product. And maybe they don't even do that) state the name of the true manufacturer? One can only imagine the effect on the sales of high priced products if pet owners saw that the food was made by the very same company that makes the cheapest brand.
Tim McCreight - Posted on April 06, 2007
This may be a Pogo moment in which we discover we are again our own enemy. But I submit this incident should be a wake up call re the way we have decided to practice capitalism in the United States. When I was taught neo-classical economics someone had to derive a way to add value through a transformative act.

So, for instance, the mine owner extracted ore from the earth (a transformative act), the ore was processed into raw metal (another transformative act) and, perhaps, turned into wire or I-beams or quarter panels. And those individual items might then be assembled into motors or automobiles undergoing yet another transformation and adding more value.

But now we seem to inhabit a new nether world. Actually making things is somehow beneath us. The heroes of this new economics can ?unlock? hidden value by unshackling corporations from the manufacturing process allowing them to concentrate on where the value is truly added: in marketing and finance. The markets reward this behavior and an entire generation believes that they are smarter than less developed nations, which must content themselves with lower order tasks like actually making things.

I make a good living as a marketer. Trained as I was by people out of McCann-Erickson I valued the art or telling the truth well. (Or, paraphrasing Spencer Tracy on acting, just looking straight at the customer and telling the truth.) Isn?t a brand supposed to be a repository of trust? How is the customer supposed to trust a product contracted for from the lowest bidder so that the doyens of finance can show the markets they are maximizing enterprise value?

Maybe it?s just a case of willful denial. Perhaps it?s easier to approve a plan that monetizes under-valued assets and employs leverage to optimize shareholder value than it is to shut factories and become a ?Wizard of Oz? corporation where the pulling of levers is the actual product.

Or maybe the answer is staring us right in the face, hidden behind the turgid prose of corporate business-speak. Because if, as Ambrose Bierce suggested, good writing is essentially clear thinking made visible then we are looking right at a train wreck.
Chris Altwegg - Posted on April 06, 2007
Great article, but I will question one thing. Just because various brands of an item are produced in the same facility, it doesn't mean they are the same. In my college days, I worked in a BirdsEye frozen food plant in Woodburn Oregon. A primary product was green beans. There were numerous points in the production line where workers would remove extraneous stems, or bits of leaves or beans which had rust stains etc. And there were folks who would take 20 boxes of beans in a row from the production line. They would carry these to a separate table and minutely inspect the contents. If they found too many defects, they would stop the line, remove the rolls of BirdsEye labels being wrapped around the consumer boxes and replace them with some second tier or store brand. The foremen would then admonish the line workers to "get back in grade" and if their efforts were successful, another inspection process might allow the BirdsEye label to go back on. Yes, it was the same beans going into the plant, from the same farms, etc, but the quality of the product with the BirdsEye label was higher.

(I will add, BirdsEye contracted with farmers for their entire crop, and if that produced more beans than BirdsEye thought they could sell in a year, the balance would be packed under various second tier brands. So it was entirely possible that you could buy one of those brands and get the very same quality of BirdsEye. But you wouldn't know, would you? And that, in some ways, is a primary selling point of a brand: the assurance of quality versus an unknown.)

Keep up the good fight!
Scott Wheatley - Posted on April 06, 2007
Why draw attention to the fact that the plant was Canadian, or that this is a "sleezy Canadian CEO"? Is the nationality somehow important to the pet owner. Are there no "sleezy" American CEO's. How does the nationality make a differance to your story other than to generate distrust of Canadians? Please give me a break.
David Garfinkel - Posted on April 06, 2007
It had to come to this, Denny -- direct marketers talking about branding. :) You make some great points. These pet food folks have done themselves in not once but several times, mostly through ineptitude and cowardice and not by taking calculated cynical risks. I have come to think of a brand as the condensation, or shorthand, of the person-to-person reputation (word-of- mouth way a business is talked about) in the marketplace. They've sure screwed their own. I just had a 90 minute business meeting on the phone with a guy in southern Virginia and another in Los Angeles, yesterday, and we spent the first 15 minutes talking about pets and vets. Small talk and bonding. You're totally right about how much emotional attachment there is between pets and their owners (or "guardians" as we say here in looney-tunes San Francisco). Great piece!
Carl Street - Posted on April 06, 2007
Branding is bunk in this, "America's Post-Manufacturing Age" where most companies have become mere marketing shells hiding behind the reputations earned during their REAL productive years. In short, you ain't seen nothin' yet!

When I left the military in 1972 and founded a computer based (novel idea at the time) direct marketing company, I learned early that I could NOT rely upon graphic artists, photographers, printers, etc. To protect my reputation and the welfare of my clientele I spent my first 5 years in business purchasing and/or creating ALL those links in my production chain.

Was it expensive? You bet! Did it pay off? Right again! We developed a reputation as the firm that NEVER missed a deadline and NEVER had quality control problems. My small San Francisco Bay Area firm suddenly started getting referral business from as far away as Florida. While we never solicited clients outside our local area, by the time I sold the firm in the late 1980's almost 90% of our revenue came from out of state and we even had clients in Canada and Mexico.

More importantly, we NEVER sold price -- we charged premium rates; paid top wages; and were extremely profitable and all those production assets also brought a good price when I sold the company. If I had listened to the "green eye shade bean counter group" with their myopic quarterly forecast mentality; I would have remained a mom and pop shop struggling to pay my rent. IMHOP, today's "management" largely lacks VISION capital; not financial...
Marc - Posted on April 06, 2007
I went to Walmart last evening to find bare shelves. There was some Alpo prime cuts but some of them were recalled and who walks around with a list. All wet food is suspect! Like most contract assemblers I am sure that Menu foods uses other ingredients of differing quality for the "brands" unique recipe, just open a can and you'll see. However, the real criminal is Menu Foods, the brands will survive, Menu management should be forced to eat the tainted food.
Allen Williams - Posted on April 06, 2007
Big pet food marketers don't realize it yet, but long-term damage has already been done to their "trusted" premium brands because of the way they handled this crisis. I predict
many pet owners will switch to
100% organic and more natural ingredient pet foods even at the higher cost. At least they feel they it's safe to
feed to their pets. If an expose' is ever done about
what really goes into pet food...these companies will
feel their customers pain in more ways than one. Betrayed pet owners will be angry enough betrayed and will do the hunthinkable -- change
their buying behavior towards
more natural ingredient brands.


Read these four articles and understand why the real cause
of the massive pet food contamination panic may never be revealed to the public. Though they were written 17 years ago, conditions
very likely remain the same today. The most disturbing aspect centers around the meat by-product "rendering" plants. You'll see how obvious
it is how test laboratories are finding strange contaminants like
melamine (plastic) and a chemical found in rat poison. How those contaminants
get into the pet food makes more sense after reading this.

With 15.4 billion dollars (2006 figures)of wet and dry pet food sales at stake, the big pet food marketers (and cattle and poultry feed producers) will do everything in their power to keep the lid on the stealthy "rendering"
plant business.

http://www.nexusmagazine.com/articles/petfood1.html

It's easy to see why our pets only live between 7-13 years. The Pet Food industry is
slowing killing them with each and every meal.

amy - Posted on April 05, 2007
I guess that I am lucky in that I don't feed my pets wet food. To your point, I am would expect to see some scrambling out of the industry to justify their pricing. If science diet = old roy in terms of production, why pay 10x more? It's going to be interesting to see this one play out. Thanks for your great articles!
Jason Scheiner - Posted on April 05, 2007
The mass-market pet food industry is one of America's worst industries, in my opinion. Companies grind up entrails and corn without a care for anything but cost, and they call it "pet food."

This recall is just the latest problem; pet food has been killing pets for years - slowly. Obesity and diabetes run rampant among dogs and cats. Why? Mass-market foods are packed with corn as filler and with poorly-absorbed by-products because they're cheap ingredients. Pets eat more cheap food to feel full, so they get fat. They get fat, so they get diseased - just like the millions of humans eating McDiets.

Many smaller, lesser-known brands (actual independent brands) are more nutritious and contain ingredients you don't need to look up in Wikipedia.

I have two cats, and I only buy a brand of cat food if I'd eat each of its listed ingredients. Sadly, much like Big Pharma, "Big Pet Food" spends immense sums on advertising, and veterinarians have told me that most veterinarians are not well versed on nutrition. (It's not required learning at vet school.)
Jennifer Markley - Posted on April 06, 2007
If Menu Foods had announced the suspected problem on Feb 2nd, my beautiful cat Schatze could have been saved. We could have gotten testing and treatment where she could have recovered. Instead, she died Feb 25th, Renal failure. Iams Flakes of Tuna and Ocean Whitefish.
Rebekah G - Posted on April 06, 2007
I'm a faithful reader of this newsletter and agree for the most part, but I'm going to have to disagree this time around. I think the letter was great. It came across as sincere, despite using "we" and "our" language. By making the letter from the employees rather than just the CEO, I feel as though it accomplished some much needed internal PR. When an embarrassed employee read that letter, I imagine they may have felt a little pride return.
Peter Hochstein - Posted on April 06, 2007
Nevermind brand image. Take a look at the ingredients list on half the human products in your pantry, from bread, to crackers, to pasta.

Wheat gluten pops up with the regularity of lightning during a thunderstorm.

Where is the wheat gluten coming from that you and I personally eat?

The internationalization of our economy means that we have less and less control even of what goes into our own mouths.

Part of the problem is a philosophy of government that says the marketplace will solve all problems. So nuts to inspections, regulation, fully informative labeling or funding to adequately enforce regulations.

Fine. My dog is dead. I won't buy your poisonous dog food any more. And when my grandkid dies, I suppose I can get justice by ceasing to purchase your bread?

Poisonous pet food isn't the end of the story. It could be only the beginning.
- Posted on April 06, 2007
On a similar note: I had a problem with a can of Evanger's Cat Food. After what happened I was concerned about a possible contamination. The lid blew off when I opened it and it broke a fingernail. It was only after my second e-mail to Evanger's that I got a response.

"Mr..Whitworth,
My name is Joel Sher. I am Vice-President of Evanger's Dog and Cat Food Co, Inc. I have received your inquiry as to a loud popping sound when opening a can of Holistic Turkey cat food. The most likely reason for the popping noise was due to a larger than normal amount of vacuum in can. Vacuum is required in all canning operations. There must be a minimum of 4 inches but there is no required maximum. Vacuum is achieved by a combination of variables including steam injection, initial temperature of the product, and amount of empty space in the can. The popping sound is created when the top is pulled and air rapidly rushes into the can to fill the void(similar to a sonic boom flying airplanes create). Excess vacuum has no negative impact on the quality of the food. In fact, it insures stability of the product. Unfortunately, once in a while there is a can or two with excess vacuum but again there is no negative impact to the food. Thank you for your inquiry and taking the time to report your observaiton.


Respectfully',
Joel Sher"

This response voiced no concern for possible contamination, nor a concern for my broken fingernail. Not that it was any big deal. But, the v.p. at Evanger's was more concerned with giving me the fundamentals of vacuum processing than my pet's well being or my broken fingernail. No offer was made even to replace the can. Where do these people come from?
~Bob Whitworth
Matt - Posted on April 06, 2007
The worst part about all this is that Menu Foods was practicing such poor supplier quality on the wheat gluten they were importing. The "savings" they found by using a supplier in China (and by not practicing proper supplier quality programs) was easily eaten up by the loss of business each company that got their dog/cat food from Menu Foods. It is obvious that Menu Foods (and the BIG name dog/cat food sellers) don't really care about their consumers. As you note, Denny, they dragged their feet on informing consumers of the problem food. I was one such consumer who discovered that he was feeding tainted food to his dog and cat for weeks before the news actually broke. I can't wait to see what the BIG name dog/cat food producers do to try and repair the broken consumer confidence wrought by Menu Foods and their shoddy supplier quality programs.