General Mills Counts Cost of Pizza Recall

Manufacturer General Mills yesterday said a pizza recall in November knocked $20 million off its second quarter operating profit.

In November, General Mills recalled more than 400,000 products, after fearing that the E. coli 0157:H7 strain found its way into pepperoni meat used on Totino and Jeno pizzas.

The possible E. coli contamination was uncovered by state and federal authorities investigating 21 E. coli-related illnesses in 10 states.

General Mills said nine of the 21 people reported having eaten Totino's or Jeno's pizza with pepperoni topping at some point before becoming ill, although all recovered from the illness later on.

The recall hit the Pillsbury USA ranges particularly hard, as net sales for the division fell two per cent.

As well as the E. coli scare, higher input and commodity expenses had a negative impact on margins, together swelling the cost of sales to $2.3 billion, a 7.8 per cent increase from the same period in 2006.

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