While there's no opportune time to have to recall salmonella-tainted meat, there certainly are exceptionally inopportune times. One such time is right before the Thanksgiving holiday when U.S. consumers purchase and eat upwards of 45 million turkeys (2017). Unfortunately for grocery store giant Walmart (NYSE:WMT), this is exactly where it finds itself.
On notice from the United States Department of Agriculture (USDA) last Friday, Walmart was forced to recall 6,400 pounds of its Walmart brand frozen meat selections over potential contamination fears.
What's been recalled
Before diving into analysis, we want to ensure anyone potentially affected is notified. The products recalled include:
- Great Value Fully Cooked Original Breakfast Turkey Patties
- 24.92-ounce packages; Use-by date of Oct. 24, 2019; Lot Code -- 1171971897
- Great Value Fully Cooked Original Pork Sausage Patties
- 24.92-ounce packages; Use-by date of Oct. 16, 2019; Lot Code -- 1091971894
- Family Size Great Value Fully Cooked Original Pork Sausage Patties
- 35.6-ounce packages; Use-by dates of Nov. 3, 2019, and Nov. 5, 2019; Lot Codes -- 1271972894 and 1291972894
According to the USDA press release, potentially contaminated packages were shipped to Walmart locations nationwide. The recall was classified as Class I, which the USDA lists as a situation where "there is a reasonable probability that eating the food will cause health problems or death."
Walmart's website lists this as the 18th food and pharmaceutical recall of 2019 but the first involving its store-brand product line. The products recalled last week bear the Walmart Great Value brand but were fulfilled by George's Prepared Foods located in Caryville, Tennessee.
The potential fallout for Walmart
In the four weeks leading up to Thanksgiving last year, U.S. raw meat sales totaled $3.9 billion. This is a big chunk of the proverbial sales pie Walmart does not want to miss out on if shoppers are spooked by a potential salmonella outbreak. Additionally, sales of side dishes, cooking equipment, and more items needed for the holidays could be at risk. Consumers could opt to complete the entirety of their holiday meal shopping elsewhere instead of straying just to buy their meat products.
Curious what a recall can do to a category? Look back at the romaine lettuce E. coli recall in April of last year. E. coli-tainted lettuce was linked to farms in the Yuma, Arizona, region. Sales were quickly and heavily affected. From April 14 to April 21, romaine, iceberg, and red leaf fell by 20%, 19%, and 16%, respectively. The entire lettuce industry saw double-digit losses. Granted, that outbreak saw 210 illnesses, 96 hospitalizations, and five deaths, and the current outbreak has seen no illnesses or deaths linked so far. Confirmation of illnesses in the romaine lettuce case wasn't seen until nine days after the contamination was first identified.
It's hard to gauge how the public will react to this recall and how much future press it will receive. Ideally, Walmart would like to see this story come and go in one news cycle. If there are no illnesses or deaths, this is entirely possible and the impact on holiday sales could be minimal. But we'll have to wait and see.
For now, investors should monitor the news and hope this passes without incident.