When food becomes a threat

Recalls of food products are on the increase

Recalls of food products are on the increase, and social media represent a rising threat in relation to this. This subject was in the spotlight at If's Nordic Food & Beverage conference earlier this year.

Some examples of risks in food industry are: listeria in smoked salmon. Salmonella found in minced beef. Yeast growing in skyr. Excessive amount of campylobacter bacteria in chicken. Pests found in packets of dried pasta. Risk of shards of glass in pasta sauce. Gas being formed in packs of chopped ham. Excessive amount of E coli bacteria in oysters. Risk of metal fragments in packs of chicken fillets.

The list of food products that have been recalled because of a health risk seems virtually endless. For many food producers, recalls result in lost production and operating losses, as well as harm to their image. This can cripple production and earnings for companies, and ultimately result in closure or bankruptcy, because of incorrect handling, an online backlash or loss of consumer confidence. Vince Shiers, MD of the RQA Group and international expert in product recalls, sees a rising trend in both Europe and the USA.

“There are more and more product recalls. I can’t think of one product category that has been immune to recalls,” he says. There are more regulations, more complex supply chains, higher expectations from producers and more channels for complaints thanks to social media, all of which help to create the overall picture of more recalls.

There are more and more product recalls.

Threats from social media

Social media form a major part of everyone's lives, and this is increasingly a problem for companies when there is a need for a recall. Messages spread at lightning speed, and if a company fails to act correctly, it can actually create its own crisis if it either underreacts or overreacts, explains Vince Shiers.

"There are many people who jump on the bandwagon when a potential contamination or recall is made public, and they write negative comments about the company in social media. People can say anything – regardless of whether or not it's correct. It's really important that companies know how to manage these kinds of interactions," he says.

The trend among consumers is that more people are using social media to complain about companies, and the tone of these postings is getting tougher, if there is an ongoing case, e.g. a product recall, against the company. The trend from companies is that they themselves are increasingly using social media to provide information about recalls.

The situation and problem in question must determine how many communication channels are used by the company concerned: If you overreact, there is a risk that you might blow up an issue of less significance. If you underreact, the crisis can engulf you. If the threat is a serious one, the company should be geared up to manage internal communication, social media, the press and the publishing of announcements.

Human error still primary cause for recalls

"I feel that the insurance industry, with the aid of recall insurance policies or product liability policies, is increasingly contributing to limiting the level of risk faced by companies in recall situations. Together
with RQA, they advise and assist companies in getting an overview of the absolutely essential internal
processes that must come into play if the need arises for a recall," says Vince Shiers.

Microbiology, e.g. listeria and salmonella, is the reason for many recalls, although the primary cause is
still human error. One example might be production equipment, which is assembled 99.9% correctly
following a repair. Small pieces of metal can become detached and are only discovered in a subsequent inspection. The situation might have been going on for several months. So all of a sudden there
are huge batches that have to be recalled.

The response is crucial

It is decisive that relevant technicians are brought in quickly to assist in localising and limiting the damage. Professional, open handling of the product recall can contribute to the perception of a responsible, professional company and thus avoid losing the confidence of consumers. Put it simply, consumers can forgive a company if a piece of plastic has found its way into a product, but they will not forgive the company if it puts its own profit ahead of the consumer’s safety. Research has even shown that correctly handled recalls can actually increase customer loyalty.

Greatest need in the food industry

A report from the Relational Capital Group showed that almost nine out of ten users (87%) would probably buy and remain loyal to a brand that handles a recall in a responsible, praiseworthy manner – even if the error that caused the recall had resulted in a safety or quality problem. 91% of respondents in the report also answered that they understand that safety and quality problems can occur in even the best-run companies.

In most cases it is the way the situation is handled rather than the actual problem with the product that has a positive or negative effect on consumers. By far the majority of companies with recall insurance cover at If are from the food industry. This reflects clearly where the greatest need exists.

Recall insurance cover includes, among other things, around-the-clock contingency help from crisis consultants with experience of food and consumer products, the costs of announcing the recall, costs and transport in connection with the return and destruction of the products.

Most frequent causes of food product recalls

The following situations usually occur as a consequence of human error or a failure to follow procedures

  • Chemical contaminants
  • Problems in the supply chain
  • Labelling errors
  • Contaminated animal feed
  • Inadequate control of foreign bodies (e.g. glass, stones)
  • Procedural errors
  • Packaging errors
  • Criminality/manipulation
Article by
Birgitte Ringbæk

Birgitte Ringbæk

Head of Information, Denmark, If

Published in Risk Consulting Magazine 2/2017