Importance of being prepared for a recall incident

In association with

Aside from disasters such as fire, and public or employee liability matters, product recalls often present the next most significant exposure to food and drink manufacturers.

By Gary Clifton, head of corporate clients, NFU Mutual Preston.

Risks such as mislabeling and contamination leaving the industry particularly vulnerable to such events.

Last year NFU Mutual conducted research that showed 17% of people would not buy a product again following a product recall. Younger individuals are influenced even more by recall events, with 23% of 18-24 year olds losing trust in a brand.

Reputational damage can lead to future sales losses, on top of reduced turnover during the affected period, but the true cost to a company will vary depending on the scale and nature of the product recall.

Other potential costs might include the logistics of tracing and recovering the products in question; reimbursement of retailers and/or consumers; contamination clean-up; production machinery repair or recalibration; and legal costs. There are ways a manufacturer can be prepared to deal with an emergency:

Have a crisis management plan already in place for a swift, coordinated response. Ensure customer complaints are monitored and thoroughly investigated – particularly on social media where problems can escalate if criticism is not addressed quickly. Have systems in place that allow product materials to be tracked through the supply chain effectively, allowing the source of the problem to be identified and affected batches identified and withdrawn. Always use trusted sources of raw materials and ingredients. Maintain regular communications with suppliers and retailers in order to identify as soon as a problem arises and to react quickly to resolve issues. Businesses also have a legal obligation to inform their local authority and the Food Standards Agency, which will give advice on what action to take. Insurers should be told of the circumstances in case there may be a claim