(Adds OSI no comment)
By Lisa Baertlein
July 23 Yum Brands Inc's China division
has stopped buying from OSI China after Shanghai police detained
five people connected to the meat supplier's factory at the
center of a new food safety scandal, Yum said on Wednesday.
"Yum China has decided to immediately terminate all
procurement from OSI China," including Shanghai Husi Food Co
Ltd, Yum said in a statement.
China is the No. 1 market for Yum, whose nearly 6,400
restaurants in the country are mostly KFC outlets.
Yum's China restaurants, which also include Pizza Hut, have
arranged alternative suppliers and the company said it did not
expect any disruptions to its KFC business.
OSI is not a major supplier to Yum China, the company said.
OSI China and its Shanghai Husi business are part of Aurora,
Illinois-based OSI Group LLC, which was not immediately
available to comment.
The five people detained include the head of Shanghai Husi
and its quality manager, police said in a statement.
Shanghai Husi on Sunday was the subject of a Chinese TV
expose that showed staff at the plant using expired meat and
picking up meat from the floor to add to product mixes.
Before the five individuals were taken into custody, the
official Xinhua news agency cited the Shanghai food and drug
watchdog as saying that food safety violations at Shanghai Husi
were company-led rather than the acts of individuals.
Yum said in its statement: "It is difficult to believe and
completely unacceptable that the management of Shanghai Husi, a
division of OSI, would oversee and organize illegal and
Shares of Yum were up 0.3 percent at $75.09 in afternoon
trading on the New York Stock Exchange.
Yum, McDonald's Corp and Starbucks Corp are
among the global brands that have pulled products from their
outlets after it emerged that Shanghai Husi supplied expired
meat to clients in China, as well as in Japan, in the latest in
a series of food safety scandals.
(Reporting by Lisa Baertlein in Los Angeles; Editing by Jeffrey
Benkoe, Lisa Von Ahn and Dan Grebler)