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Beer Producers: Don't get caught on the hop

Breweries need to consider product recall protection

There are few industries which can claim to be as buoyant as British brewing – with around 2,000 breweries now open in the UK it seems our thirst for beer is far from being quenched.

As an insurer of food and drink manufacturers, NFU Mutual is well positioned to consider some of the key business safety and protection issues which face new and established breweries.

One such issue which has the potential to seriously impact on businesses is when product recalls are necessary. This can be necessary following:

  • accidental or malicious contamination
  • mis-labelling, for example failing to note the presence of allergens
  • packaging faults, such as broken seals or glass prone to shattering.

Recalls can be costly to a business as it will be necessary to identify the affected product; arrange for its removal from retailers’ shelves; conduct testing on the products; destroy and dispose of affected items; address any deficiencies; and repair damaged equipment.

There is also the potentially costly damage to hard-won reputations which might see manufacturers facing challenges to replenish customers with replacement stock and to re-gain market share in the face of fierce competition.

How common are these problems?

In 2016/17, the Food Standards Agency and Food Standards Scotland were notified of and investigated 2,265 foods, feed and environmental contamination incidents in the UK. These incidents included concerns about possible threats to the safety, quality or integrity of food and feed, as well as actual and confirmed threats.

Overall, the frequency of reported incidents has been increasing over the past nine years.

Some examples from the past 12 months of product recalls involving drink manufacturers demonstrate the types of incidents which can occur:

Each of these incidents not only caused disruption and cost to the organisations involved but were also widely publicised in the trade press as well as local and national media.

Make sure you’re protected

Businesses which have created great brands built on products produced with love, care and hard work will want to protect themselves should they face a product recall.

Having a plan in place to deal with an incident should be the starting point and the plan should be understood by all and regularly tested. This should include an understanding of the cost of a product recall which will inform the insurance they require to offer adequate protection.

Product recall insurance can give food and drink manufacturers the following cover*:

  • Costs involved in investigating the recall
  • Costs of recalling the affected product and any additional storage required
  • Additional costs of temporary labour to re-fill orders
  • Costs associated with disposing of the affected product
  • Cancellation of promotional advertising and retail shelf slotting fees
  • Business Interruption (Consequential first party financial loss)
  • Public Relations support to protect against reputational risks

* Limits and exclusions will apply