By Andrew Saunders Friday, 08 February 2013

Lion and horse, but no beef in Findus lasagne

Findus's owner Lion Capital is coming under close scrutiny, after FSA tests showed some of its so-called 'beef' products are 100% horsemeat.

Findus has withdrawn from sale beef lasagnes some samples of which the Food Standards Agency (FSA) says were composed entirely of horsemeat. Tests on a total of 18 of the firm’s products showed that 11 of them contained between 60% and 100% horse, a level of contamination which FSA chief exec Catherine Brown described as appalling and likely to have been a result of criminal activity at some point in the supply chain, rather than simple negligence.  

Aldi and Lidl have also withdrawn some products supplied by the same French company, Cormigel, that produced the withdrawn Findus lasagne. Findus’s private equity owners, headed by Lion Capital, have unsurprisingly come under some scrutiny this morning as a result. With deliciously juicy irony its boss Lyndon Lea turns out to be a polo-playing sybarite whom the Telegraph describes as a ‘financier straight out of central casting.’

He is also - surprise surprise - a Goldman Sachs alumnus. They do get everywhere don’t they? Poor old Findus - on whose Crispy Pancakes a generation of students cut their culinary teeth - has an unhappy financial history. In 2011 (under different private equity ownership) it made a loss of £241m and broke its banking covenants, and it broke covenants again - twice - in 2012. A programme of extensive cost cutting followed. Lion and a consortium of backers including Highbridge Capital, JP Morgan, CapVest and Northwestern Mutual, stepped in Sept 2012, refinancing and taking control.  

By this stage the firm had been tossed from pillar to post so many times one wonders if the factory managers and employees who actually make the products could spare the time to keep up with who was running the show this week. The private equity model does have virtues, but after a company has had its costs cut and its assets sweated for a year or two the benefits of continued repetition rapidly start to fade.  

At some point in the cycle a bit of engaged stewardship from owners who understand the industry and its foibles does not come amiss. The sort of people who ask probing questions, like ‘With horsemeat six times cheaper than beef, and tasting pretty similar, what’s likely to happen if we keep driving the cost of the ingredients in our lasagne down?’  

Now the food industry is a grisly old game at the best of times, as our editor described so eloquently yesterday, and no stranger to the occasional crisis. Unscrupulous traders have been doctoring our groceries since Roman times and probably before. And a bit (or even quite a lot) of horsemeat is probably less dangerous to human health than BSE, E.coli or listeria for example. 

But all the same, the ease with which uncredited quantities of Equus ferrus caballus seem to have penetrated our food chain is rather alarming. The contaminant happens to be relatively benign this time, next time it may not be.

When it comes to making sure that what’s in the packet was not last seen bringing up the rear in the 3.30 at Kempton Park, or worse, it seems there’s a long way to go yet.

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