A magistrates court in Highgate, north London, last week highlighted one of the most dramatic and most feared issues a consumer goods company has to deal with – a food contamination scare.
Shannon Coggins was found not guilty of contaminating five packets of Batchelors Beanfeast in a Sainsbury’s store in Haringey. Coggins objected to the products because they contained genetically modified soya, so she stuck her own warning labels on the packets.
She was charged under Section 38 of the Public Order Act 1996, which was introduced specifically to deal with those who try to blackmail companies by contaminating their goods. However, the court threw out the case, saying the law did not apply in this case.
Sainsbury’s has no regrets about bringing the case. A spokesman says: “Our customers shop with us because they expect quality food and good prices. They do not expect anyone to tamper with any part of the food, including its packaging. If someone were to try this again, we would take the same action.”
As food tampering cases go, this is the low end of the scale. But in some of the worst examples a single individual can pitch a company into turmoil and can cost it millions in lost sales – and more in lost reputation.
In the past 18 months Gerard Farrell was sentenced to six years for contaminating food in Kwik Save with razors and rat’s blood and demanding 500,000 to desist. Fourteen needles were found at a Tesco store in Buckinghamshire, although the identity of the attackers has never been unmasked. But it is not just food contamination that retailers face – Sainsbury’s has had its well-documented fight with the Mardi Gras blackmailing bomber.
The public reaction to these scares, according to brand valuation director Alex Batchleor of brand consultants Interbrand Newell & Sorrell, is initially sympathetic; but this can soon change.
Batchelor says: “When news of a scare first breaks people tend to bring it down to their own terms and imagine what it would be like if they were being blackmailed. It can almost humanise a company.
“But if the company is seen to be slow in closing a store which has been threatened, because of commercial pressures to keep it open, the mood will change quickly.”
Although food contamination scares make the papers once or twice a year, large supermarkets face blackmail threats up to five times a year.
One of the first calls a large company makes is to a specialist commercial security company such as Capital. John Beadle, managing director of Capital’s investigation division, was a detective superintendent in Scotland Yard’s specialist operations department.
He says: “We are often called into a crisis situation at the same time as the police and act as a conduit between the police and the company as they proceed with the investigation.”
Beadle adds that until a couple of years ago the natural reaction of a company in this situation would have been to exclude the police until there was no other option. The view was that the police would automatically go public and give the case unnecessary bad PR.
But Beadle says: “Now the police are much more delicate and we take more of a back seat with them.”
Tesco is a testimony to the closer relations between the big consumer businesses and the police. A spokesman says: “Whenever these situations occur it becomes a police matter and they take the lead in any ensuing investigations.”
Batchleor adds that big companies have learnt to move quickly over these threats. “They have crisis books which tell senior management how to act,” he says. “One senior manager picks up the phone and tells two other managers, and they in turn phone two others and inside an hour 1,000 senior people in a nationwide organisation know what is happening.”
Mark Quinn, a broker for City insurance firm the Houlder Group, spells out the financial cost of insuring against blackmail. He says these policies can range from 1,500 a year for a small company to about 1m a year for a supermarket chain.
The companies which are most at risk from this are supermarkets like Sainsbury’s and Tesco. Food manufacturers, such as Heinz, with its baby food products, have also been prey to blackmailers in the past.
But in the information technology age, all types of companies are finding their security under threat as the secret information they hold in their files can be a risk to hackers or disgruntled employees.
Security consultants say that simple measures are needed to defend a company from harm. Companies need to screen their employees periodically to see that the people they take on are who they claim they are. And plans need to be put in place if a blackmail threat arrives, and tested periodically by outside companies.
As Beadle says: “You need to think of the worse case scenario and then prepare for it.” The fact is that not everyone out there wishes companies the best of luck.