Food safety trend drives record Neogen results
The results appear to back up the findings of a review by financial experts Deloitte which sees food safety as a major engine for growth in the future.
The US-based firm announced a 20 per cent growth in sales in its food safety division – rising from $15.3m to $18.4m. The section’s year-to date revenues performed similarly – climbing 16 per cent to almost $36m. The sales growth was broad-based across multiple market segments and product lines for the quarter and on a year-to-date basis, said the company.
The company said cool, wet conditions in the US Corn Belt led to increased demand for food safety tests.
“Our second quarter results were exceptional considering the economic situation encountered by many of our customers. We can report strong double-digit increases in revenues, same-store sales and profitability, while at the same time making solid progress in several fundamental areas during the quarter that will drive future growth,” said James Herbert, Neogen’s chief executive officer and chairman.
He added that weekly reports of food recalls due to food safety issues continued to draw the attention from US lawmakers, which had impacted its “US international trade”.
Company president Lon Bohannon emphasised the point by referring to “what seems to be a never ended parade of food recalls” and the continued high demand for food allergen detection kits.
Report
The company’s results and the observations by its senior executives on the growing prominence of food safety have been echoed in a new report on the North American food processing sector by Deloitte. The consultant’s Benchmarking for Success 2009 referenced a recent survey which found that 83 per cent of consumers were able to name a recalled product in the last two years over safety concerns; 57 per cent declared they had stopped eating a particular food either temporarily of permanently because of a recall and more than three quarters said food safety was of greater concern than five years ago.
The annual Top of Minds Survey – a survey based on a sample of almost 600 decision makers in 54 countries backed up this concern that “food safety has gained prominence across the globe”, said the study.
Global supply chain
The Deloitte’s research concluded the increasing nature global food and beverage supply chain network has also given rise to a broader set of food safety considerations.
“While industry efforts to reduce food safety incidents have traditionally focussed on reducing accidental contamination attributable inadequate food processing and handling processes, recent incidents involving deliberate contamination of product in (misguided) efforts to control costs have made the notion of food security far more prominent than it was in the past.”
The authors forecast the confluence of high-profile food safety incidents and the global food supply chain to “result in continued attention being devoted to product safety among consumers, organisations and governments worldwide”.
It also cited food safety as a potential engine for growth, stating: “Whereas food safety has historically been viewed as a cost of doing business, companies with trusted delivery capabilities will increasingly be able to leverage this advantage to create growth opportunities.”
Such a trend was echoed by Neogen’s Bohannon who said: “The attention focused on food safety by consumers and regulators remains at a very high level. As we look ahead to the remainder of our 2010 fiscal year we do so with a great amount of optimism.”
