Food industry mulls 'killer spinach' impact
Growers gauge effects of FDA E. Coli warning. Grocers, restaurants remove product from shelves, menus.
By David Ellis, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Growers, grocers and restaurants say it is too soon to tell what kind of economic impact a Food and Drug Administration warning about the E. coli risk associated with bagged spinach could have.

"Its way too early to tell," said Tim Chelling, a spokesperson for the Western Growers Association, which represents 3,000 growers in both California and Arizona. "It depends entirely on where this thing goes in the next couple of weeks."

Earlier Friday, the FDA issued a warning to consumers about an outbreak of E. coli in 10 states that officials suspect may be linked with the consumption of bagged fresh spinach.

So far, the Centers for Disease Control has received 50 reports of illness, 8 cases of kidney failure and one death from individuals who have eaten fresh bagged spinach suspected to be contaminated by E. coli.

A number of national grocery chains have pulled bagged spinach products from their shelves in response. Supervalu Inc. (Charts), which operates the Albertson's and Shaw's brands, has taken such action and said it was also removing all fresh spinach products from its shelves.

Wal-Mart (Charts), the largest U.S. retailer, which also operates the chain of Sam's Club wholesale stores, said it had removed bagged spinach products from its shelves as of midnight on Thursday. The company could not say whether sales had been impact by the advisory, although it said it was offering customers who purchased bagged spinach products a full refund.

Some restaurants are already pulling items containing spinach from their menus, including mesclun mix salads, a spokesperson for the National Restaurant Association said Friday.

The trade group estimated that the contamination could have an economic impact on its members, but it depends on the scope of the contamination. The group said restaurants typically receive the same bagged fresh spinach sold to customers at the supermarkets.

Calls to closely held organic grower Earthbound Farms were not immediately returned, and Chiquita Brands International, Inc. (Charts), which produces the Fresh Express brand of bagged spinach and salad products, referred all inquiries to the United Fresh Produce Association.

Approximately three-quarters of fresh spinach in the country is produced in California, according to the Western Growers Association, which generates $200 million dollar annually.

Chelling said there's little fear among his organization's members that the fear over bagged fresh spinach products will spread to bagged salad or other produce items.

"I don't think there is that fear yet," said Chelling. "It depends on how clearly everyone communicates."

Shares of such grocery store chains were down in afternoon trading Friday including Kroger (down $0.68 to $22.44, Charts), Safeway (down $0.50 to $29.31, Charts) and Whole Foods Market Inc. (down $0.52 to $56.45, Charts)

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