Product Recall: Major Threat to Profitability for the Food and Beverage Industry
Tips for minimising and effectively dealing with a food and beverage product recall

Increasingly stringent global food and beverage regulations are requiring tighter food safety controls to be implemented by food business operators to ensure effective public consumer health protection. In the event of a product recall, having a robust plan in place ensures that the impact to business is minimised.

Food and beverage recall relates to any food safety incident that requires consumers to be notified of the safety issues, whether or not the product is actually required to be removed from consumers. According to the 2015 annual report of the Food Safety Authority of Ireland (FSAI), there were 67 published alerts during 2015, comprising 31 food alerts and 36 food allergen alerts. The alerts dealt with a range of matters including undeclared allergens, misbranded products and microbiological contamination.

At a European level, one of the largest food product recalls of 2016 involved confectionary giant Mars which recalled millions of its snack sized bars and sweets after plastic was found in one of its products. Despite the fact that the product involved had been manufactured at a factory in the Netherlands, it was necessary to recall it not just in the Netherlands, but in over 50 countries including Ireland, Britain, France and Germany. This led to significant related costs for the company.

A product recall survey conducted in the UK in 2015 indicated that one-fifth of UK food and beverage companies were operating without a product recall plan. A lack of an effective product recall plan can leave businesses exposed to potential financial loss and serious reputational damage as well as cause significant health issues to the consumer.

Methods to minimise and effectively deal with a food and beverage product recall include: 

1. Simulated product recalls and staff training

Staff training is critical at every level of the operational process. Companies should invest in a quality program that evaluates and updates its recall implementation capabilities. From there, organisations can evaluate and improve strategy to protect against recalls, reduce recall operational costs, and protect the business brand.

2. Traceability and supply chain knowledge

When a recall occurs food business operators need to have a robust and tested traceability system in place. Having a global supply chain raises the possibility of legal enforcement in several different countries leading to associated litigation costs. To deal with this, all food producers should have an accurate, detailed, transparent and up to date traceability system in place so as to be in a position to identify from whom and to whom a product (including ingredients) has been supplied.

3. Business communications strategy

An effective and well-thought-out crisis communication plan, which alerts both the public and relevant authorities to the product recall, should be in place to minimise reputation and branding damage to a company. Bearing in mind the speed at which publicity can spread on social media and elsewhere, companies should be in a position to act quickly should a food safety issue arise. Communications should be co-ordinated and targeted and should put the needs of customers first.

4. Understand your insurance policy

Product recall insurance can reimburse insureds for financial losses they sustain due to a product causing or having the potential to cause bodily injury or property damage. Companies should clearly understand their policy coverage to ensure all relevant matters are insured in the event of a recall. 

Contributed by Cliodhna McDonough

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