Last month, eight meat industry groups sued the USDA over the country-of-origin labeling (COOL) rule. These groups argue that the rule’s costs will outweigh its benefits, but that is not necessarily true. The COOL rule will actually help manufacturers and retailers save face — and potentially millions of dollars — in the event of a food crisis.
Manufacturers, like most companies, are always looking to minimize their costs and streamline their processes. It may seem easier to avoid traceability procedures altogether, but the risks far outweigh the benefits. In fact, the Center for Disease Control estimates that each year roughly one in six Americans gets sick from foodborne diseases. And, in this global age, when food manufacturers use contaminated or potentially dangerous ingredients, the effects aren’t just local or statewide, they can be international. The USDA estimates that the COOL rule will cost retailers, suppliers and manufacturers as much as $192.1 million to put in place. That is nothing compared to the more than $77 billion of estimated costs associated with foodborne illnesses each year, according to consumer group U.S. PIRG — not to mention the impact on brand equity and legal fees.
In addition to helping avoid the legal ramifications of foodborne illnesses, traceability saves retailers and manufacturers money, too. Why? Being able to keep track of all ingredients and material in a product from conception to consumption gives retailers and manufacturers more control and ultimately a stronger risk management system. Having a strong risk management system alongside country-of-origin labeling will lead to increased consumer confidence.
COOL is not the first time we’ve seen labeling for the benefit of the consumer. Organic, free range, non-GMO, anti-bacteria free, all-natural — these labels have been around for years and consumers have shown a growing interest in them. According to a recent study, 80 percent of consumers surveyed consider it important that their food and beverage purchases are made with natural ingredients. In that same study, 82 percent of consumers polled say "ingredient transparency is extremely important or very important.”
If consumers have reacted positively to these labels, the next logical step is country-of-origin labeling — for safety and for best marketing practices. Why not give consumers what they want, and protect your brand at the same time? Is there a cost to comply with these rules? Absolutely. However, those costs can be recouped with increased customer confidence, an effective risk management system, and retailer and manufacturer peace of mind.
Manufacturers and retailers who do not collaborate to properly label their products could cause another food crisis like the horse meat scandal in the UK. For manufacturers, being associated with contaminated food means a tarnished reputation, legal troubles and a decrease in revenue. Repercussions for retailers include a damaged brand, a drop in sales and lower consumer confidence. It’s not easy to bounce back.
Sahir is Vice-President Global Corporate Marketing and Strategy at Trace One. Trace One is the leader in private label product lifecycle management and e-collaborative solutions for managing private label products for retailers and manufacturers. Prior to joining Trace One, Sahir was a Vice-President & Group Director for Research at Aberdeen Group focusing on technology and process management practices in retail, and the interplay between retail and consumer goods.