If you live in Iceland, you’re now ground zero for one of the strangest stories resulting from the fallout over the European horse meat scandal.

Iceland’s Food and Veterinary Authority (known as MAST) launched an investigation of a small natural foods manufacturer called Gaedakokkar last week. Why? Because the high-end company markets a premium beef pie labeled as containing “30% beef.” As a result, MAST wanted to determine if the company’s product contained any horse meat, as has been the case with so many other beef products.

As the Wall Street Journal reported, “The good news: The agency found no horse meat in the pies. The bad news: The agency actually found no meat at all. In fact, there were no traces of animal protein found at all, Hjalti Andrason, a MAST official, said Friday.”

Even though the labeling on the products stated that the beef pie stuffing contained 30% beef, there was none present. Andrasonsaid that MAST suspected the filling “could be some sort of vegetable protein, but that is not confirmed.”

Gaedakokkar is a small firm founded in 1999 as a high-end organic food marketer, one that currently employs only 10 people. As might be expected, numerous stores carrying the company’s branded products quickly began pulling them from the shelves, and according to news reports, “the company’s phones have been ringing” since the disclosure of the food inspection agency’s findings.

There’s not a lot of suspense about the nature of those calls, and in fact company officials have expressed concerns about the firm’s survival.

Magnus Nielsson, Gaedakokkar’s owner, told WSJ that the development has devastated his business.

“It’s sad that MAST takes one pie from one store and then goes out and just kills me in the news,” he said. “MAST went into one store and bought one pie, which they tested. They sent us a mail [notification] and I was shocked.”

Shocked and saddened, no doubt.

One lousy mixing job

Nielsson complained that Gaedakokkar is but “a small company” and that “everybody’s trying to do their best.” However, his explanation defies belief.

He claimed that he reviewed the company’s production records and manufacturing processes and discovered that because the beef pie stuffing is mixed by hand, workers “didn’t mix the stuffing evenly enough.”

Really? He’s claiming that the pie MAST happened to select off the shelf for testing was one that by an incredible coincidence had no beef in it? By accident?

Nielsson explained that the pie stuffing process is now handled by a machine that mixes the stuffing evenly. But he said that the damage to the company’s reputation is already done, and that his firm might go out of business, as customers cancel their orders.

In a related development, Nielsson admitted that the company’s meat products initially contained only meat—beef, presumably—but that after the financial crisis that hit Iceland in 2008 (in which there were widespread bank failures), the company was forced to add “vegetable stuffing” and soy protein to its ground meat products to lower the price point for cash-strapped Icelandic consumers.

However, there’s the twist to this story, one that most Americans, inundated as we are with “natural foods” advertising, would have thought of immediately: In a coda to the news stories reporting the discovery of the meatless meat pie, Nielsson said vegetarians have been calling him and urging him to re-focus his company’s business on making vegetarian pies.

Hello? A “meat pie” with no meat, yet one’s that’s good enough to fool consumers?

In the market segment dominated by veggie believers, that’s pure gold. The best of all worlds.

Sadly though, Nielsson is apparently sticking stubbornly to a conventional business plan.

“We make meat pies, and there should be meat in them,” he said. “That’s what we do.”

Did, Mr. Nielsson. Did.

The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.