Lactalis: The Product-Harm and Product Recall Crises

Abstract

The case explains how in December 2017 in France one of the world’s largest dairy companies, Groupe Lactalis S.A. (henceforth, Lactalis), issued a product recall after baby food contaminated with Salmonella bacteria was discovered. Further recalls were issued after Lactalis products were found to have sickened 36 infants in multiple countries. Lactalis was criticized for its response to the product-harm crisis and its management of the product recall. Consumers did not accept any compensation offered by Lactalis and furthermore demanded the resignation of its Chief Executive Officer (CEO). Some French retailers were found to be at fault when they were found selling the baby food after product recalls were announced. The French government was also criticized for its food inspection policies which should have prevented the contamination of the baby food or discovered it before the products went to market. This case encourages students to discuss the impact of the product-harm and the product recall crises on Lactalis and to draw broader conclusions about how firms should deal with such a crisis. The case also urges students to analyze how multiple parties associated with a firm are responsible for quality control, preventing product harm, and carrying out recall procedures while preserving the brand’s integrity. Lastly, the case urges students to think about how consumers respond to such crises and why they take extreme steps such as demanding the resignation of a CEO, and refusing compensation when a product–harm crisis occurs.

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