The fallout from food contamination and product recall

What started earlier this year as a single company recalling spice products, due to the undeclared presence of peanuts in cumin, snowballed into the most widespread series of allergy-related recalls in the US, with hundreds of products produced by dozens of companies affected.

The impact of a tainted product being used as an ingredient in many different products in this incident – from spice mixes, hummus and bread crumbs, to seasoned meat products – illustrates how vigilant food businesses must be to avoid hits both to their reputation and also to their bottom line.

At a dinner hosted by Freeths’ food group for directors in the sector this September, Mathieu Denarnaud, a product recall specialist at XL Catlin, highlighted the increased pressures on the industry to focus on safety as a result of increasingly onerous legislation, the potentially catastrophic nature of recall loss and more stringent contractual requirements from supermarkets, amongst other factors.

Added to this there is even greater media and consumer scrutiny of product safety issues, with the impact of social media meaning that news travels increasingly fast, leading to serious reputational damage.

Increase in food contamination

Whether due to greater scrutiny, the number of incidents of food contamination in the UK has increased by a staggering 30%. In 2013 the Food Standard Agency investigated 1,562 contamination incidents, equating to 4 a day. The three largest contributors were:

• Microbiological – eg e.coli, salmonella, listeria (21%)
• Environmental – eg spills, leaks (15%)
• Natural chemical – eg toxins in peanuts or shellfish (9%)

60% of contamination incidents were related to foods from the UK or imported from the EU and the main types of products contaminated were meat and meat products (235 incidents), fruits and vegetables (177 incidents) and shellfish (107 incidents).

Sources of contamination

Mathieu identified a number of sources leading to potential product recall. These include:

• Malicious tampering by disaffected employees; very often small scale – ie just one batch of product may be affect, but can lead to mass recall – see case below
• Cases of extortion, particularly in international markets
• Spurious claims by customers trying to get free samples or falsified compensation claims; this is a growing issue, particularly fuelled by social media
• Contamination during storage – eg leaking roofs in warehousing
• Issues in the supply chain, where contaminated ingredients are used in manufacture. There can be a particular risk from ingredients imported from overseas, where there is less regulation – as in the example quoted above where cheaper peanut proteins had been incorporated into cumin.

Food business’s obligations

Should the worst happen with contamination of products, the business must:

• Have traceability systems in place and make them available to the competent authorities
• Withdraw / recall unsafe products
• Inform the competent authorities
• Collaborate with the competent authorities on action taken

Key action points – preparation

The outcomes of a product recall are obvious to all – bad PR and damage to the brand, a drop in consumer confidence – leading to a reduction in turnover and ultimately profit. It therefore makes sense to plan for the worst:

• Pre-emption; have a recall plan in place in case the worst happens, with systems and processes. Keep the plan up to date and run through the plan with key personnel on a regular basis.
• Develop a crisis management plan to cover the whole process including PR.
• Manage the supply chain; consider provenance of ingredients and analyse the ingredient which appears in the most products. This could be the lowest cost component, but regardless of this can have potential for causing the greatest vulnerability.
• Rigorously check suppliers’ QA processes to ensure compliance with the necessary standards and keep an eye out for any gaps.
• Keep your own QA testing up to scratch.
• Consider your insurance cover. This can cover a range of expenses, including: recall expenses, logistics, repackaging, legal expenses, loss of profit, marketing expenses to bring turnover back to where it was, wages due during any shut down, clean up costs, adverse publicity cover to manage bad press.
• Some insurers offer consultants to provide recommendations in individual circumstances to prevent risks – you may wish to investigate this option.

Dealing with a recall

In the event of a case of contamination it may not be necessary in to destroy everything apparently affected. It can be worth, depending on the circumstances, considering whether any product can be salvaged (the advice of experts may provide options you had not considered).

In the event of a recall, engaging the right professionals is key; the right expertise can assist with areas such as managing cashflow, legal, PR and protection of the brand and ultimately assist in taking the business back to where it was pre-contamination. Taking out relevant insurance cover can offset these expenses. Should a recall
occur, a detailed debrief afterwards with experts can provide valuable insights – both to bring the business back on track and to ensure effective action to prevent future issues.

Malicious tampering – a recent case

A story which emerged on 25 September 2015 illustrates how malicious tampering and extortion can threaten a business’s livelihood.

Farmer David Bowman, who produces half of the UK’s supply of pumpkins, was blackmailed by Michael Young, who threatened to poison his entire crop with cyanide. He claimed to have contaminated some of the pumpkins and would destroy them all if Bowman didn’t pay £50k in Bitcoin (an online currency often used to carry out illicit activities online) within 7 days. When Bowman reported the incident to police he was told by the Foods Standards Agency to plough the field concerned, losing £120k worth of stock in the process. On testing it transpired that the crop had merely been injected with water. Young appeared to have a grudge against the farmer for employing Eastern Europeans and alleged that they were responsible for the threats. Whilst Young was convicted, the incident was hugely damaging to the business.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.