Friday, December 19, 2008

Maple Leaf Foods Moves From A- to A on My Rating Scale


News this morning that Maple Leaf Foods has settled a number of class action law suits that were launched in the wake of the listeria outbreak this summer. Reports in the Globe and Mail (A4) and The Record (A1) indicate that the company has agreed to pay around $27 million to settle the claims. This is an approach that I recommended in media interviews in late August as a way to show that the company is living their corporate values -- "Doing the right thing."

I also suggested that due to the high credibility ratings that Mr. McCain achieved in our two DeGroote-Leger national surveys (also had high ratings for trust and believability) conducted in early September and October -- that he should continue to be the company's spokesperson as it worked to regain consumer confidence and rebuild market share.

In those surveys we also isolated a direct and significant effect of their communications efforts on trust and credibility factors and intent to repurchase Maple Leaf products. We also showed that their crisis communications actions also had a positive impact on consumers valuation of the company.

On a final note...Maple Leaf Foods stock traded for $10.90 the day before the recall. It fell about 25% in the first few weeks after the recall and hit a low of $7.10 in early October. Yesterday it closed at $11.00 -- the stock market has certainly viewed their recovery efforts very positively.

Grade === move from A- to A.

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