HM Insights

Mars attack: how Food & Drink businesses can sweeten the pain of product recall

The announcement that Mars has recalled a range of confectionary products after bits of plastic were found in a product, has hit the UK headlines.

The products involved include Mars and Snickers Bars, Milky Way Minis and Miniatures and certain kinds of boxes of Celebrations.

Chocolate Medium

The recall relates to products manufactured over a limited period of time in Mars’ production facility in the Netherlands. While at first it was limited to Germany, the extent of Mars’ distribution network saw this quickly extended to 55 countries, all of which could be selling products manufactured at the plant.

Handling a public recall of your products

Having to make a public recall on products is probably the most feared scenario for any food or drink manufacturer, given the high profile which it is likely to create and the risk to public goodwill. However, a properly co-ordinated recall, carried out in a professional manner, may be turned into a PR benefit by emphasising the concern of the manufacturer to ensure consumer safety by taking immediate and far-reaching steps to recall products which may pose a risk to consumers.

For even the smallest food or drink manufacturer, it is essential that they put in place an appropriate policy to work out what to do if they require to recall any product for whatever reason; and given the huge costs which could be involved it is also sensible to take out appropriate insurance covering this risk. Their goods may have been sold on to a third party – a distributer, retailer, or even the end consumer – but wherever the product may have reached in the food chain, every person involved will have assumed, and in any event it is implied, that the product is fit for human consumption.

Taking the step of recalling the product, whatever the cost, is likely to be less costly than any claim for damages from a consumer who is injured or made unwell by a product and the resultant damage to consumer confidence and brand goodwill which may have longer term effects. The horse meat scandal not only put consumers off meat products while it was going on, but had an ongoing effect on their eating habits.

Mars is not alone

While the scale of this recall by Mars explains why it is a major news story, the fact that this case hit the national UK headlines at a time when it was thought only to relate to products sold in Germany suggests that product recall in the food and drink sector is unusual. But in fact it is much more common than you might think.

Recent examples over the past few months reported on the website of the Food Standards Agency include:

  • Sainsbury's recalling its Sainsbury's sliced wholemeal bread because they may contain small pieces of metal;
  • the Co-operative, Asda and Sainsbury's all recalling certain ranges of Camembert due to possible presence of listeria;
  • Kettle Foods recalling bags of Kettle Chips which may contain pieces of plastic;
  • Waitrose recalling mint sauce which may contain pieces of glass;
  • Asda recalling Buttery Spread because it may contain pieces of plastic;
  • Boots recalling various sushi ready to eat products that might contain pieces of metal;
  • Tesco and Sainsbury's recalling their own brand branflakes because they might contain pieces of plastic.

Third party manufacture

While the Mars' recall relates to products made in its own production facility, the vast majority of cases on the Food Standards Agency website appear to relate to own-label products. There is added risk where manufacture is sub-contracted so that it is not under the direct control of the owner of the brand under which the product is sold. As businesses grow, they cannot always keep up with demand for their product, requiring manufacture by third parties; and for smaller business, given the costs involved in setting up a production plant, contracting a third party to manufacture on their behalf is common.

While there has been big publicity for the Mars' recall, none of the others listed on the Food Standards Agency's website hit the headlines in the same way. As long as the public believes that manufactures have a proper and effective policy in place and will follow it, the risk of damage to goodwill appears therefore to be limited.  But the actual cost of having to carry out the recall can be huge.

What can you do to minimise your risks?

The message to food and drink producers is clear:

  • have a product recall policy in place ready to implement.  You never know when you might need it and it is too late and too important to make it up as you go along.
  • take out appropriate insurance for the cost of recall; and
  • take care to ensure that there are appropriate provisions in your contracts with suppliers and in particular sub-contractors to ensure an appropriate remedy against them were the fault is not necessarily your own.

With these elements covered off, the risk of a claim arising from a consumer and, perhaps more importantly, the risk of irreparable damage to goodwill and brand value, can be minimised.

Get in touch

Scott Kerr is head of Harper Macleod's Food and Drink Group. If you wish to discuss any of the issues raised in this article, please get in touch.