Chinese Purchase of Smithfield Unlikely to Sway Bacon Buyers
Do Americans care who is makin' their bacon?
The proposed $4.7 billion acquisition of U.S. pork producer Smithfield Foods by China's Shuanghui International may elicit an emotional reaction from Americans but history shows they are unlikely to change their eating habits, food experts said.
"The general public may latch on to this and say they are going to boycott, go vegan, or otherwise," said Teri Gault, chief executive of TheGroceryGame.com, a membership site that tracks grocery sales and coupons.
But American consumers are unlikely to actually do it. "People say a lot more of that than they actually do," she said.
The same questions were asked in 2007 when JBS of Brazil bought the Chicago-based Swift & Company, making JBS Swift Group the largest animal protein processor in the world. The consumers didn't care then because all the same U.S. food regulations stayed in place, said Gary Karp, the executive vice president at Technomic, a food industry research and consulting firm.
"From a consumer stand-point, it's a huge non-event," Karp said of the Smithfield deal. "It will likely not have much of an effect."
When consumers go into a market, they're likely going to focus on what's on sale, which cuts of meat look good and then maybe narrow it down to a few of their favorite brands, Karp said. "But you may or may not even know which are Smithfield brands, since they're also Farmland, they are Armour, and Eckrich, and Carando and they own Gwaltney," Karp said, listing off just some of Smithfield's subsidiaries.
Founded in Smithfield, Va., in 1936 as the Smithfield Packing Company, the firm now dominates the $100 billion U.S. pork industry, according to the estimate from the National Pork Producers Council.
Company officials said the quality of the U.S. pork will not decline.
"We have established Smithfield as the world's leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees," Larry Pope, the president and chief executive officer of Smithfield said in a statement announcing the deal. "It will be business as usual—only better—at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world. We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality."
As for the Chinese consumers, who have had to endure several high-profile food contamination scares in recent years, they'll gain the quality the Americans are already used to, Shuanghui Chairman Wan Long said in a statement. "Smithfield is a leader in our industry and together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world," he said.
Americans have had another recent reason to realize it's difficult to change their shopping habits even if they're horrified by a related event half way around the world. The recent fatal clothing factory collapse in Bangladesh has not produced a shift in U.S. purchases, and weak labeling rules make it difficult for even the most dedicated to follow through. Food is easier as there are U.S. labeling rules for organic food, fair-trade coffee and many imported foods.
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Perceived concerns about quality can make people change habits, but the larger issue is that few consumers are aware where their food comes from, said Alina Halloran, vice president of global online brand protection for OpSec Security, an anti-counterfeiting consulting firm.
About 50 percent of apple juice and 16 percent of frozen spinach comes from China, she said. "I don't think if you stopped consumers on the street and asked them where their apple juice comes from, that they would guess China," Halloran said.
Avoiding one brand doesn't necessarily mean you're switching to something safer. Many popular foods, including olive oil, milk, fish and fruit juice have been the subject of misrepresentations to shoppers, (a problem within the industry known as food fraud.) "To look at the label at this point isn't always going to give you the real picture," Halloran said. "The onus is on the consumer to do a little extra work."
Jennifer Kingsley of East Smithfield, Penn., is among those willing to do a lot of extra work to ensure she knows where her food is coming from. A reporter for the Star-Gazette in Elmira, N.Y., Kingsley and her family started raising their own pigs about ten years ago.
"You just don't know what you're getting in the grocery store," she said. "It was just easier for us to grow our own, because we know what went into it."
Cases of foodborne E. coli and salmonella infections in the news were a big inspiration for Kingsley's family, who now also raise cows and chickens and have an extensive vegetable garden on their 125-acre property.
She still heads to the grocery store for milk and other staples, but is particular about which brands she buys to avoid added hormones. When she can, she buys local eggs, milk and other products. "I'm constantly reading labels and watching the news. You learn the brands that are in the news time after time for these little problems, and you avoid them," Kingsley said.
-By CNBC's Amy Langfield and Kelli B. Grant