Tesco and the horsemeat scandal: answers needed quickly

Tesco has played it by the book in terms of crisis management – but when the integrity of the food chain is in doubt, the public reaction can be hard to predict

Twitter and Facebook are first places companies look these days to gauge the public mood. The good news for Tesco and the other supermarkets is that the great horseburger scandal has been greeted as a chance to, yes, trot out some horse-related puns. Nobody has died, after all, and the Irish food standards agency has said there is no risk to health. So Tesco can be dutifully apologetic, clear its shelves and promise a thorough investigation while it hopes shoppers get on with their lives. A one-day story?

Don’t count on it. When the integrity of the food chain is in doubt, the public reaction can be hard to predict. Reassurances that appropriate action is being taken will wear thin if a full explanation of what went wrong doesn’t follow quickly.

Tesco technical director Tim Smith has said there are only two possibilities: illegality on the part of its suppliers, or their suppliers, or gross negligence. But the question he cannot answer is how long it’s been going on. Shoppers will wonder what else the company doesn’t know about the meat it sells and ask whether its boasts about regular audits of suppliers mean anything.

Labour MP Barry Gardiner, a member of the House of Commons food, environment and rural affairs committee, is on the case: “Big companies like Iceland and Tesco are responsible for their supply chain and for verifying whether their suppliers are giving them what they should be delivered.” Quite true.

On day one, Tesco has played it by the book in terms of crisis management. John Mahony, chief executive of consultancy ReputationInc, advises an apology, a recognition of the seriousness of the problem and “over-communication”. It’s a tick in all boxes, so far. But Mahony also advises making top leadership visible. So chief executive Philip Clarke may have to appear to reinforce the message that the affair is being addressed at the top of the company.

The contrast is with Toyota, whose management was invisible in the US during the earlier stages of the accelerator recall affair. That fed mistrust and has entered management textbooks as an example of how not to handle a crisis.

For what it’s worth, Tesco’s share price has barely moved. “A few people will get fired and then everybody can settle back down and get on with their jobs,” says one City analyst. That’s not an unreasonable bet. On the hand, the stock market’s record in spotting reputational damage has always been terrible.

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