Thursday, August 12, 2010

Menu Foods saga coming to an end?

This week started with the announcement that Menu Foods Income Fund, parent company of Menu Foods Ltd., has sold the private label manufacturer to Simmons Pet Food, another manufacturer of private label and co-branded wet petfoods.
The news is not really a surprise; reports that Menu might be for sale had circulated earlier in the year. And in fact, some people have seemingly been waiting for this "shoe to drop" ever since the 2007 petfood recalls that affected mainly products manufactured by Menu. An
article on the Calgary Herald website about the acquisition even said, "Menu Foods never recovered after it had to recall 60 million cans of petfood across North America in 2007."
It's true that the recall was a big hit to Menu's finances and reputation--but I'm not sure I agree that the company never recovered at all. It saw some financial rebounds within a year or so after the recalls, and its parent (and some clients) seemed to exercise plenty of patience in riding out the aftermath of the recalls.
I wonder if the lingering recession didn't have at least as much, if not more, impact on the parent company's decision to sell.
In any event, this appears to be a good outcome. Simmons, based in Arkansas, USA, has the capacity and reputation to take on the additional business and clients. And however much blame you believe Menu deserves for an external act of intentional contamination, the 2007 recalls at least had the effect of making every petfood manufacturer pay even greater attention to ingredient sourcing, safety and quality.

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