Sector News

BRF attempts to shake off meat scandal with major restructuring

March 29, 2017
Food & Drink

Brazilian meat company BRF has revealed for the first time how it will recover confidence, after being implicated in a food corruption scandal.

The police investigation accused health officials of taking bribes to allow unsafe meat to be exported overseas – including some that may have been rotten, or contaminated with salmonella. JBS and smaller company Grupo Peccin were also investigated by Brazilian police. The affair was dubbed Carne Fraca – or ‘weak flesh’ – by the country’s media.

Now BRF has unveiled a host of changes that will aim to prevent future misconduct in the supply chain, and avoid a repeat of what has been a damaging few weeks.

Alexandre Almeida, the former CEO of Itambé, will replace Rafael Ivanisk as the head of BRF in the Brazilian market. The company said that Almeida’s main responsibilities would be to ‘conduct the integration process’ of a new management model, and ‘prioritise ongoing initiatives’. But in the short term, he will be faced with the task of repairing BRF’s reputation after exports of meat from Brazil were banned or curtailed by some of the world’s largest economies.

In the middle of last week, FoodBev reported that at least 35 countries had imposed restrictions on Brazilian meat, with the country’s agriculture minister becoming increasingly concerned for the state of the industry.

Analysis: A problem that runs deep

At the end of February, FoodBev reported that BRF’s chief executive and chairman – Pedro Faria and Abilio Diniz – had reassured investors that it would make structural changes in order to avoid a re-run of the mistakes that led to a 4% fall in its fourth-quarter revenue. That was before details of Brazil’s meat scandal came to light. Now it seems that the miscommunication and lack of information that led to BRF’s disappointing fourth-quarter performance run deeper than first predicted. Rogue individuals in BRF’s supply chain – as well as the supply chains of other Brazilian companies – have managed to get away with bribing public officials into allowing unsafe meat to be exported. That has prompted a backlash from some of the world’s major economies, including the European Union, China and Japan, and now a string of additional executive changes at BRF.

As part of the restructuring, Leonardo Byrro, who shared the role of Brazil general manager with Ivanisk, will assume the position of supply vice-president and accelerate the planning process and the optimisation of BRF’s value chain. The new configuration, the company said, will allow for an increased focus on afro-industry management – an ‘important competitive differentiator’ for BRF.

But the most telling change is the creation of a ‘response management division’, which will allow the company to provide quick and transparent answers to the challenges it has been experiencing since the corruption scandal first came to light.

The division, led by BRF director Simon Cheng, is comprised of a multidisciplinary team that will assist the Special Response Committee.

CEO Pedro Faria will turn his focus back to the management of BRF’s business and oversee a second new unit – dubbed the business management division – that will concentrate on strengthening and sustaining growth.

The business management division will allow the company to maintain focus on the quality of its operations and on day-to-day activities.

BRF said that the changes would be temporary but didn’t provide details of a timescale, and said that they could be rolled out permanently if necessary.

In addition to the changes already mentioned, former CEO Latam of RedBull Pedro Navio will lead BRF’s strategic global marketing and innovation agenda.

The global quality department will now report directly to CEO Faria.


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