Tesco shares today fell down by 1%, knocking off about £300m from the supermarket’s market value, after horse meat traces were found in its beef burgers. The horse meat scandal pushed Tesco’s share 3.6p lower to 346p, making it one of the FTSE 100′s heaviest fallers today. The Tesco horsemeat burger row has, thus, led to Tesco share prices being among the heaviest fallers on the FTSE 100.
The Tesco horsemeat burger controversy is likely to reduce public faith in the retailer just as it attempts to turn around its UK business and tries to increase public confidence in the quality of its products. Last week, Tesco reported its highest sales growth in three years over the Christmas period. Tesco had dissatisfied its investors in October 2012 by posting its first dip in profits since 1994. The dip in Tesco profits was primarily due to slowing sales in its home market.
The Food Safety Authority of Ireland (FSI) assessed 27 beef burger products, which had been vended by Tesco. The FSI found that beef burgers, consisting of horse DNA, were produced in two Irish plants and in one UK plant. Tests on beef products, sold in Lidl, Aldi, Iceland and in Dunnes Stores also detected low levels of horse DNA.
Horsemeat was found to account for nearly 29% of the beef burgers, sold by Tesco Everyday Value Beef Burgers. The Tesco horse meat burger row forced the company last night to release a statement, in which it uttered that it was removing all its frozen and fresh burgers from its shelves, irrespective of whether they contained horse DNA traces.
As per analysts at broker, Shore Capital, the Tesco horsemeat burger controversy is not connected to food safety in any way for now. Tesco share prices have fallen due to the issue of ‘consumer deception’ and offence. Horsemeat in the British Isles has different cultural perceptions as opposed to other markets.
Tesco has stated that it is cooperating with the UK and Irish authorities to detect the origins of the horse meat burger controversy and to thwart it from happening again.