Food & DrinkBarry Callebaut warns of Salmonella shutdown impact

Barry Callebaut warns of Salmonella shutdown impact

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Barry Callebaut is bracing for a significant financial impact after stopping production because of Salmonella contamination at a factory in Belgium.

Although the full effect of the incident is still being assessed, it is expected to be “notable” in the financial figures for the fourth quarter 2021/22. Full year results will be published in November.

Sanitization of the affected solid chocolate line started on July 5 and July 14 for the liquid line in consultation with the Belgian Federal Agency for the Safety of the Food Chain (FASFC).

Barry Callebaut is to resume production at the site in Weize from next month. The first cleaned lines should restart in early August, with a gradual ramp-up to full capacity over the following weeks.

Incident timeline

CEO Peter Boone said it was an “exceptional” incident, while reporting the 9-month sales figures for 2021-22.

“I want to thank all teams involved for the speed and diligence with which they are driving the cleaning and the gradual restart of the Wieze factory. We are working closely with our customers and fully understand that this incident is disruptive to their planning.”

One batch of contaminated lecithin was unloaded at the Wieze factory on June 25. Barry Callebaut confirmed Salmonella Tennessee in the lecithin system of the factory and in samples of the raw material. This batch came from a lecithin manufacturer in Hungary and was transported by a third party. The lecithin involved was only used at this site.

On June 27, Barry Callebaut detected a Salmonella positive on a production lot manufactured in Wieze and lecithin was identified as the source of the contamination on June 29, with production stopped.

Lecithin is used in all chocolate production lines, so the company blocked all chocolate products manufactured from June 25 to 29, except for cocoa production which is not linked to the lecithin circuit.

On July 1, Barry Callebaut confirmed that, based on its internal investigation, no affected products had entered the retail supply chain.

Other incidents

Ferrero, which recently restarted operations at a factory in Belgium that makes Kinder products, is also facing a significant financial impact after a monophasic Salmonella Typhimurium outbreak that sickened almost 450 people.

Nicolas Neykov, the head of Ferrero France, told the newspaper Le Parisien in May that the incident will cost the company “tens of millions of Euros.”

In Israel, Strauss Group estimated the impact of a recall in April due to Salmonella to be about $33 million on first quarter financial results. Preliminary estimates in May showed that because of the recall and closure of the confectionery plant in Nof Hagalil, impact on net profit for 2022 was expected to range between $49.7 and $67.2 million.

In early May, a routine internal inspection identified Salmonella in cooked chicken prepared at Cranswick’s poultry facility in Hull, England. Customers were asked to withdraw any products containing ready‐to‐eat chicken produced during the affected period. In its preliminary results in May, the company said the cost of the incident could not yet be estimated, however, it was expected the impact will not be material to the group. 

Salmonella in Jif peanut butter is expected to cost J.M. Smucker about $125 million and impact financial results for the year.

An investigation of Salmonella infections linked to the peanut butter is ongoing with the patient count standing at 16 with two hospitalizations.

These costs relate to the estimated impact of manufacturing downtime, customer returns, and unsaleable inventory, as well as other recall expenses.

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