Market Recalls; Don’t Throw Pebbles in the Pond

Market recalls, don’t throw pebbles in the pond:

Recalls and Product Market Withdrawals are some of the scariest words in business. I have worked at companies where even the mention of those words could stop conversations in their tracks. The tones become hushed, and information is uttered in a whisper. I have spent over 30 years in the food/pet food industry working within the Food Safety, Quality Assurance, and Regulatory arena, and I can tell you that, even today, recalls and withdrawals are not my favorite. I have experienced many types of recalls during my tenure, everything from small 50 lb. recalls to recalls involving over 2 million cases and tens of millions of pounds. But for every event, there is one constant that will plague the brand owner or manufacturer and it is going to cost a lot of money the worst thing a brand could do is to have no comprehensive plan.

So how frequent are product recalls and withdrawals, how do they even start in the first place, and what are the most prevalent recalls?

Recalls and safety alerts can occur in almost any product. Recalls are often seen for cars, baby products, and even consumer goods with warnings ranging from choking to fire hazards. For food, supplements, and drugs, recalls and safety alerts are issued by two government authorities: the FDA and the USDA. Both have a process for notifying consumers, methodologies of investigation, and determining when a recall is considered closed. In the year 2021, the FDA had 233 food recalls and safety notices, in 2022, they had 221.¹ The USDA in 2021, had 63 recalls and safety notices, and in the year 2022, they had 69.² This equates to approximately one recall involving food per day. 

It might surprise you to know that most recalls are not due to an outbreak of Salmonella or Listeria - the most prevalent recall is in a class called “misbranding.” Misbranding occurs when a label does not include important information, or a claim made on the labels is false. The most common misbranding is an undeclared allergen. In 2021, there were 65 recalls sent due to allergen concerns, and in 2022, there were 70 recalls initiated due to undeclared allergens. Other recalls that fall under the misbranding category are missing ingredients, untrue labeling claims, or short-weight items. However, these do not make the press and are easier to mitigate from a brand perspective, unless injuries are in play.

The next class of recalls or withdrawals is from foreign material. This is where a hazardous or unwanted material of plastic, wood, glass, or metal is potentially contained within the product. Often this is not a widespread event within a given lot of products and is generally limited to specific lots. Other products are unaffected by the recall or withdrawal, and, in most cases, there will be no reports of serious injury.

Far less frequent, but more serious, are recalls and withdrawals associated with microbial or chemical contamination. These can cause or have caused, serious injury or adverse effects. These issues are often multi-lot in nature and larger in scale and distribution and often make national news. These are most serious for a brand, with more financial damage and a tarnished brand reputation.

The Food Safety Modernization Act of 2015, and FSIS Directive 8080.1 outlines the regulatory requirements each producing establishment must follow. It is important that producers familiarize themselves with these regulations, have complete and concise recall plans, and perform mock traceability exercises.

What drives the FDA or USDA to initiate a recall or product withdrawal?

There are three ways in which a recall or product withdrawal usually begins.

1. The brand or manufacturer voluntarily reports an issue with the product and initiates a product withdrawal of their purview. Why would they do that? Because it’s required by law. Part of the Food Safety Modernization Act of 2015, and under FSIS Directive 8080.1 is that actionable product withdrawals must be reported within 24 hours of a known problem. This is why many recalls are listed as voluntary recalls or withdrawals. The use of voluntary in the notices indicates that companies elected to act without objection, in lieu of the FDA or USDA compelling action.
2. A consumer reports an incident or injury that prompts either the FDA or USDA to investigate, they determine the product to be adulterated and initiate a recall or safety alert. This action usually takes several weeks from the time of reporting to issuing a notice. It may not be easy to isolate a multi-ingredient food or if there are varying sources of products.
3. Government while conducting surveillance detects a contaminant that renders the product adulterated. This can be any agency like the CDC (Center for Disease Control) which also monitors outbreaks of pathogens and their sources. Often this is done through clustering where there is a group of complaints in a geographical area with a common food consumed between reported incidents. It may take up to 6 months of cluster surveillance to initiate a recall. The FDA and USDA conduct product sampling and testing as well, for known pathogens and will take appropriate action if they feel a production lot has become adulterated.

 

So why are recalls and product withdrawals like throwing pebbles in a pond? 

When you throw a pebble in the water you get the initial splash, this is the shock that a company goes through when they realize that they are going to have to perform a product recall or market withdrawal, and then some rings spread out and out and out until they eventually hit land. This is exactly what will happen if you do not have a comprehensive crisis response plan.

Most companies believe that the only expenses that they may face during a recall are: 

1. Loss of product or product destruction
2. Communication and messaging costs
3. Transportation fees
4. Costs associated with settling with complainants
5. Loss of product due to wrongly returned products

First Ring in the Water

But then the costs continue:

1. Costs to replace the product at an expedited rate
2. Loss of sales while trying to replace the product
3. Additional man-hours to manage and mitigate the recall
4. Copying and record transcription costs to submit to FDA or USDA

Second Ring in the Water

But then the costs continue:

1. Additional product storage costs as you will get back much more than the lot.
2. Sorting and inventory manhours
3. Rush ingredient costs
4. Rush packaging costs
5. Litigation costs
6. Product investigation costs and expedited testing
7. Manufacturing shut down

Third Ring in the Water

But then the costs continue, and it gets expensive.

1. Settlement and class action costs
2. Preventative mitigation costs
3. Brand damage and marketing communication costs
4. Promotional costs and discounts
5. Loss of market share costs
6. Loss of customer loyalty
7. Loss of retail acceptance
8. Case evidence storage costs 

Fourth Ring in the Water

Yet another ring emerges.

1. Jail time and criminal prosecution for plant management. Usually the General Manager (could be the CEO or President), the Plant Manager, and the Food Safety/Quality Manager.

Each time you add another ring the costs get bigger and more expensive and if a company or brand does not put the proper time into planning crisis mitigation it could quite frankly end up in bankruptcy, or acquisition.

So how can we protect ourselves to minimize the effects of a product recall or market withdrawal? What makes up a good crisis media plan?

Any company that works with a food product should have a robust product withdrawal program in the event they must initiate a recall or product withdrawal. A company or brand should also see if Recall insurance is prudent for the company. It is also important to understand as a processor or Brand where you have gaps and the highest amount of risk in your process. Food Safety professionals, like those at BSM Partners – Assurance can help address food safety gaps, determine your product recall risks, and develop a great crisis management and recall strategy.

Points to keep in mind while developing these products and performing successful crisis management should include points like:

• Practice mock recalls fully
• Good product traceability
• Managing the message
• One voice, one spokesperson for the company - What do I say? How do I answer these questions?
• All hands-on-deck
• Accepting accountability and restoring brand faith
• What actions do I take, how much, and where?
• Conduct a proper risk assessment for the facility and product
• Product testing
• What records do I need?
• How do I file with the FDA or USDA and where?
• When is it alright to close a recall and petition to do so?
• All recall insurance is not created equal. Do you know what your company needs, is it adequate? 

Taking control of your programs is key to navigating a typical recall or product withdrawal. Though food and pet food companies strive to make a clean wholesome product they sometimes have unforeseen circumstances occur. The first 24 hours are critical under a recall scenario. Have a complete program and practice it. BSM Partners can help create, train, and test crisis management programs. Don’t be a fourth ring in the water company.

Next Time: A History of freeze drying and understanding what is cooked?

References

1. Food and Drug Administration. (2023, 11 07). Recalls, Market Withdrawals and Safety Alerts. Retrieved from US Food and Drug Administion: https://www.fda.gov/safety/recalls-market-withdrawals-safety-alerts
2. United States Department of Agriculture, Food Safety and Inspection Services. (2023, 11 07). Recalls and Public Health Alerts. Retrieved from Food Safety and Inspection Services - United States Department of Agriculture: https://www.fsis.usda.gov/recalls

 

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About the Author

August Konie has been a Food Safety, Quality and Regulatory Professional for over 30 years. He was worked in many sectors of the food industry including fisheries, beverages, poultry, pork and pet food, under both FDA and USDA regulatory oversight. As an active committee member in various trade organization for food and pet food organizations, he was successful of implementing new regulatory guidance. He has worked with various teams across Asian, Europe, North and South American on various food safety, quality and import/export concerns. He currently serves as the Principal of BSM Assurance overseeing FSQAR activities at BSM Partners.