Poultry producer Pilgrim's Pride, the supplier at the centre of animal abuse allegations, has seen its shares fall by 10.4 per cent since a video depicting horrific cruelty was released earler this month writes Anthony Fletcher.
This can be seen as proof that both customers and consumers have been so horrified by the allegations of cruelty - which centre around a video taken by an undercover animal rights activist - that they are choosing to purchase products elsewhere.
The group's earnings have also tumbled from $9.8 million in the three months ended 3 July 2004 compared with $17.4 million a year earlier.
The undercover video recorded by People for the Ethical Treatment of Animals (Peta) shows the horrific treatment of chickens at a Pilgrim's Pride plant that was named KFC's "Supplier of the Year" in 1997.
Available on Peta's kfccruelty.com website, the video depicts workers at the plant owned by Pilgrim's Pride, the second largest processor of chickens in the United States, breaking birds' beaks, throwing them into cages and shows dead and lame birds in appallingly overcrowded conditions.
However, while condemning the cruelty at the plant, Pilgrim's Pride insists that the poor third quarter results are more to do with the cost of turkey restructuring and the sale or closure of the company's Virginia turkey operations.
Revenue was $1.45 billion, slightly below the analysts' forecast of $1.49 billion. But sales more than doubled from a year ago, largely because of the acquisition of ConAgra Food's chicken operations in November.
Pilgrim's Pride president O. B. Goolsby has certainly been keen to focus on this ray of sunshine.
"Our outstanding quarterly results reflect a combination of positive industry trends and our success in achieving quicker-than-expected synergies from the integration of the ConAgra chicken division," he said in a statement.
"I am very pleased that seven months into the acquisition, we are well ahead of our integration synergy timeline and have achieved an estimated $27 million of synergies thru the end of the third fiscal quarter of 2004; an amount in excess of 50 per cent of the previously announced anticipated acquisition synergies.
"Product and process innovations and enhanced operation, distribution and customer service capabilities achieved as a result of the ConAgra acquisition are allowing us to take full advantage of the favourable industry conditions that exist today."
It is clear for the time being however, that the animal abuse scandal will not go away. The company has been effectively forced to take steps to ensure that such abuses do not happen again.
Following the revelations, Pilgrim's Pride sacked 11 employees, including one superintendent, one supervisor, one foreman and eight hourly employees. The company has also promised to hire Temple Grandin, a veterinary scientist known for designing plants for humane slaughter.
Grandin is also an animal-welfare adviser to fast food giant KFC, a major customer of Pilgrim's Pride chicken.
"Steps we have taken include forming an independent task force to assure adequacy of our animal welfare program, including redoubling our monitoring measures and other safeguards," Goolsby, said during a conference call with Wall Street analysts.
But while accepting that gross misconduct was carried out by some Pilgrim's Pride employees, the company is clearly desperate to draw attention away from KFC, a major customer that has been the focus of Peta's cruelty campaign. Pilgrim's Pride has clearly been concerned that the incident has embarrassed the fast food giant, with Goolsby saying that KFC restaurants shouldn't be blamed for "inappropriate actions" by Pilgrim's Pride employees.
"KFC has been unfairly identified with this unfortunate incident and should not be caught up in the media coverage surrounding it," he said.
However, animal welfare campaigners point that KFC specifically says on its website that "as a major purchaser of food products, we have the opportunity, and responsibility, to influence the way animals supplied to us are treated. We take that responsibility very seriously, and we are monitoring our suppliers on an ongoing basis to determine whether our suppliers are using humane procedures for caring for and handling animals they supply to us.
"As a consequence, it is our goal to only deal with suppliers who promise to maintain our high standards and share our commitment to animal welfare".