Catastrophic Forecasting: Planning for the Unpredictable

Just a few weeks into 2009, Clif Bar & Company, as well as a large number of other food corporations, announced a recall of their products due to contamination of an ingredient in them: peanuts.  The peanuts may have contained salmonella.

It may seem strange that a disease caused by bacteria found in animal intestines could contaminate peanuts, but there are actually many possible sources for salmonella contamination of plant products, including fertilizer containing animal feces for the crops, or a handler’s failure to wash his hands after using the bathroom.  In this instance, the problem lay with the peanut supplier, Peanut Corporation of America, based in Georgia.  This massive peanut factory distributed peanut products all over the country, from schools to Clif Bars to Kellogg’s, so the effects of the contamination were far-reaching.  All told, over 3,000 products from 130 companies had to be recalled.

The recall personally affected me because I love Clif Bars and eat them frequently – more or less daily.  For weeks I was unable to purchase and consume my beloved (and healthy) treat.

It is harder to see how the recall affected Clif Bar & Co’s bottom line.  Being a private company, they don’t have to release financial information, and I wasn’t able to find sales volume, revenue or profit numbers in their annual reports.  Also, just a year later, the company was named the number one hottest brand by Forbes magazine, beating out such giants as Google, Apple, Disney and Facebook.  So whatever setback there was, it was only temporary.

Nevertheless, it goes without saying that having your products off the shelves for several weeks will hurt your revenue.  For a lesser company, such a hit might have spelled the end for them.  So how can a company plan for such an unexpected drop in sales?  Or should they not even bother, and just hope such a freak occurrence doesn’t happen to them?

According to, short life-cycle products should most certainly include projections for unexpected events like “freak weather and competitor attacks.”  Their list doesn’t include product recalls, but for a company that sells food products containing over 70% organic ingredients, it’s probably a good idea to do so.

Probably more important, however, is how the company responds to the recall., a subsidiary of the New York Times, wrote an article detailing the ways a company can effectively handle an organic product recall.  Their main point is that it’s vital to have a protocol and disaster team in place to handle just such an event.  Based on Clif Bar & Co’s press releases, decision to voluntarily recall products as soon as news of the contamination broke without even knowing if their particular products were affected, and honest communication with the public, it seems as if they did have such a system in place, and their reputation did not suffer at all.


3 thoughts on “Catastrophic Forecasting: Planning for the Unpredictable

  1. It’s important to have back up suppliers in these instances. While this is hard for a smaller company, once you reach a certain size, this is imperative. PR and communication plans are also important. I’ve been a part of a couple projects looking for substitute products with blind taste tests to ensure that if a switch is made, it does not impact product quality.

  2. It is interesting that their reputation didn’t suffer much and Cliff Bar & Co. handled the situation very well. I personally head nothing about this. However, I can recall a few products in the past that took major hits because they did not handle recalls properly…. For instance the Bridgestone tires controversy in the late 90’s or the Tylenol recall in 1982. Tylenol had to recall 31 Million bottles of tylenol with retail value of $100 million dollars because 7 people died from cyanide poisoning. Impressive that Cliff Bar handled the damage control so well.


  3. I agree that it is very important to plan for unpredictable events, because unplanned situations may hurt company in a long run. It was a great idea to research this topic. You also provided a great summary of the article and pointed out key points, such as the importance of including planning for unpredictable events and proper handling of recalls. It is better to prevent unexpected situations, but it is critically important to address unexpected situations and recalls in a proper way. We all remember recent Toyota recall and BP oil spill that definitely effected both companies’ sales.

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