UPDATE 2-Nestle withdraws pasta meals as horsemeat scandal spreads

Tue Feb 19, 2013 7:27am EST

* Products withdrawn from sale in Italy and Spain

* Nestle latest company affected in scandal

* Says withdrawals have no major financial impact

ZURICH/LONDON, Feb 19 (Reuters) - Nestle has removed beef pasta meals sold under its Buitoni brand from sale in Italy and Spain after finding traces of horsemeat, becoming the latest victim of a food scandal still spreading across Europe.

The world's biggest food company, which said as recently as last week its products had not been affected by the scare, said the decision to withdraw the products came after tests over the weekend showed traces of horse DNA in batches of meat used to prepare the meals.

Nestle spokesman Chris Hogg said on Tuesday the withdrawals would have no material financial impact on the company. "These are chilled pasta products that do not have a long shelf life so there are very low levels of inventory," he said.

Hogg said Nestle was not attempting to estimate the level of impact the recall would have on the reputation of its brand.

The scandal of horsemeat in products labelled as beef has spread across Europe since last month, prompting product withdrawals, consumer concerns and government investigations into the continent's complex food-processing chains.

A fifth of adults said they had been buying less meat as a result of the discovery, according to a poll conducted by research company Consumer Intelligence and published on Monday.

Swiss-based Nestle withdrew two chilled pasta products, Buitoni Beef Ravioli and Beef Tortellini, in Italy and Spain. Lasagnes à la Bolognaise Gourmandes, a frozen product for catering businesses produced in France, will also be pulled, it said.

The group said tests had found more than 1 percent horse DNA in the products. It was not immediately clear whether the tests had been carried out by Nestle or by a third party.

"We have informed the authorities accordingly," Nestle said in a statement. "There is no food safety issue."

FURTHER PRESSURE

Nestle said it was suspending deliveries of all products using beef from a German company called H.J. Schypke, a subcontractor to one of its suppliers, JBS Toledo NV.

JBS Toledo said in a statement on its website it had suspended all its contracts with Schypke and no case of co-mingling of species had been identified in products produced in or at its factories.

Schypke said it was only a meat processor and that it buys meat from certified suppliers, adding it was collaborating with authorities.

One analyst said the immediate impact on Nestle as a whole would be small, but it illustrated the scale of the issue for the industry.

"In terms of the large and diversified size of Nestle's portfolio (it will be) largely irrelevant - we assume that barely 3 percent of its portfolio might be affected, mostly in its culinary division," said analyst Jon Cox at brokerage Kepler in a note.

"However, it will lead to further pressure on the meat category overall amid the problem of (cheaper) horsemeat getting into a beef supply chain and could lead to increased regulatory pressure on the food industry generally."

Governments across Europe have stressed that horsemeat poses little or no health risk, although some carcasses have been found tainted with a painkiller banned for human consumption.

But the scandal has damaged the confidence of consumers in supermarkets and fast-food chains since horsemeat was first identified in Irish beefburgers.

Retailer Lidl said on Monday it had withdrawn products from its stores in Finland and Sweden after finding traces of horsemeat.

Shares in Nestle traded 0.4 percent firmer at 0933 GMT, trailing a 0.9 percent rise in the STOXX Europe 600 food and beverages index.