Move by second British supermarket giant is a huge blow to Monaghan plant
It was a black day for Larry Goodman’s ABP Food Group yesterday as not one, but two supermarket groups said they would no longer source frozen beef burgers from its Silvercrest Foods plant in Ballybay, Co Monaghan.
Tesco was first off the blocks with the not entirely unexpected news that it had withdrawn its contract for frozen beef burgers following its investigation into the presence of horse DNA in burgers.
Once it emerged the processor had used product that did not come from Tesco’s list of approved suppliers there was only ever going to be one outcome.
The frozen burger contract was worth about €15 million a year to Silvercrest Foods. But the good news was that ABP’s €100 million fresh beef contract with ABP’s other companies remained in place.
Tesco Ireland’s chief executive Tony Keohane also pointed out that Tesco spent about €177 million a year on Irish beef and this would continue.
Supermarket chain
But yesterday evening’s announcement from British supermarket chain the Co-operative Group was more surprising.
It had found 17.7 per cent horse DNA in one burger independently tested after the crisis emerged earlier this month.
It declined to say what the contract was worth, but sources have said the Tesco and Burger King contracts alone accounted for half of Silvercrest’s output.
Last Wednesday Burger King said it was replacing all Silvercrest products in the UK and Ireland with products from another approved supplier. That contract was reportedly worth €30 million a year.
The ABP group has not outlined who Silvercrest’s other customers are, but according to its website the company makes more than 100 frozen burger and grillsteak products for customers in the Irish, UK and European markets.
The company is fighting to win back the Burger King contract and is putting new protocols in place to reassure customers. It is replacing its management team, introducing a DNA-testing regime and auditing all third-party suppliers.
Burger King officials are planning to come to Ireland in the next week or so to discuss the issue with Silvercrest Foods and Department of Agriculture officials.
Minister for Agriculture Simon Coveney held a lengthy conference call with Burger King management last weekend and department sources said the responses were encouraging.
Opportunity
This latest setback for ABP is now an opportunity for other Irish companies. Tesco says it is planning to open discussions with other Irish beef processors for the sourcing of its frozen burgers. ABP is the State’s biggest processor but other significant processors include Kepak and Dawn.
Silvercrest’s 112 employees must be getting increasingly worried about the future of their plant.
Production was suspended two weeks ago and ABP has not said when it will reopen. All staff are being paid during the closure.
Silvercrest Foods reportedly accounts for 2 per cent of ABP’s total €2.2 billion turnover. There is no doubt that ABP will survive this crisis but can Silvercrest bounce back from this triple whammy?
UCD’s associate professor of public health Patrick Wall described it on RTÉ radio yesterday as “a spectacular own goal for Ireland Inc”.
Tesco is now introducing DNA testing across its meat products. Prof Wall said he believed this would become standard practice.
But who will pay for it?
“It will become another layer, and somebody will have to pay for it, most likely the consumer,” he suggested.
