The incident represents “the worst possible food safety development imaginable”, as the firm approaches the all-important Christmas trading period, experts have said.
On Sunday, Premier was forced to recall a batch of Loyd Grossman Korma sauces after it was revealed two children from the same family in northern Scotland contracted botulism from the product.
The firm, along with the Food Standards Agency, ordered a recall of a batch of 350g jars of the sauce with a best-before date of February 2013, but analysts are predicting that the firm may be feeling the effects of the incident for some time to come.
Annus horribilis
Clive Black and Darren Shirley, analysts at Shore Capital, said: “Annus horribilis is an understatement for Premier Foods in 2011. With two quite earth-shattering profit warnings that contributed to the need to defer financial covenant tests at the year-end, alongside the sustenance of £900M of debts, a £3.1bn pension liability and £500M actuarial deficit.
“Perhaps more tragically, just as Premier begin implementing a new strategy, with a new credible ceo, plus senior hires in tow and the outline of a fresh strategic approach, the firm has been hit by just about the worst possible food safety development imaginable.”
The incident is the latest setback in a troubled year for Premier, which, under the guidance of new ceo Michael Clarke, is also battling to refinance the business in an attempt to tackle soaring debt.
The firm has reiterated its faith in its eight power brands, which include Loyd Grossman products, as a key factor in its strategy to save the struggling business.
Beleaguered
Black and Shirley said: “Quite whether this outbreak damages the reputation, and so the value, of the Loyd Grossman brand will also depend upon forthcoming events.
“One wouldn't wish such a thing on one's worst enemy and so it is a very unfortunate incident, but more so for this beleaguered firm. We now need to wait and see how matters pan out in what is the key trading period for Premier, as set out in its last two profit warnings to the market.”
Julian Wild, food group director at Rollits, said the firm would now be forced to wait and see how consumers will react to the scare.
He told FoodManufacture.co.uk: “It can’t be helpful. A botulism problem is never a good one as it is very rare. This is clearly not good news.
“The average consumer tends not to worry about batch numbers and specific dates and will simply decide not to buy a specific product anymore, so this could inevitably have a long-term impact on sales.”
Meanwhile, a spokesman for TV presenter and chef Loyd Grossman said he was “devastated” by the incident.