Product Recall: Major Threat to Profitability for the Food and Beverage Industry
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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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