Does Your Recall Plan Serve Your COVID-19 Business Strategies?
Since the beginning of the pandemic, the food industry has seen lower than normal rates of recalls. While the reasons for this likely vary – from lack of regulatory oversight to increased sanitation in the facilities, there is no question that the pandemic had an impact. However, the operative word here is “had,” at least in the case of FDA-regulated facilities. According to the third quarter Recall Index Report from Stericycle Expert Solutions, USDA recall activity has continued to show record-low levels for the third quarter. Still, FDA recalls are increasing to “normal” levels.
USDA recalls included only 10 recalls impacting 383,010 pounds, a 43% decrease from the second quarter, with 69.6% of all recalled pounds due to six undeclared allergen recalls. On the other hand, 106 FDA recalls impacted nearly 9 million units, and a 34.2% increase in events from the second quarter. Of these, 35.8% of events were Class I recalls impacting 63.4% of all units; 52.8% of recalls were for undeclared allergens; 62.1% of recalled units were due to bacterial contamination; and 11 produce recalls accounted for 56% of all recalled units, with most due to bacterial contamination.
Although dealing with the pandemic's impacts has become the norm for the food industry, adding a recall can significantly strain a business’s resources in this already stressful time. And with all expectations being that holiday gatherings and increased indoor activities of the winter months will, once again, increase the spread of COVID, the challenges of managing a recall are likely to increase as well.
To add further complexity, the Stericycle report notes that the pandemic has not deterred class action complaints or other legal action (more on this next week). Thus, food producers moving from restaurant supply to consumer-direct sales to supplement their reduced business face new risks from a recall notification and traceability standpoint.
While adding consumer-direct sales has been a critical business opportunity for many companies that saw significantly reduced sales due to COVID-19 stay-at-home/business closures, these altered business plans also require companies to update their recall plans, particularly as it applies to notifications. Whereas the producer could previously inform its direct customers (restaurant chains, foodservice accounts, etc.) of the recall and leave it to them to inform its customers (the end-user), the notification – and withdrawal – now lies solely in the realm of the producer. So the action needed can escalate from a few restaurant chain notifications/withdrawals to those needed for hundreds (or more) consumers. There is no longer a food service intermediary responsible for consumer notification; the producer’s brand reputation, rather than the restaurant’s reputation, is now at stake.
Because of situations such as this, it is essential that businesses that have made changes to their business strategies due to COVID-19 (or any other reason) reassess their risks, mitigation processes, and recall and crisis management and response to fit their new business strategies. Not only is it critical to protect your consumers, products, and business, but, as the report states, your insurance underwriter will want to you have done this to ensure you are appropriately prepared to handle any new risks.
With a wide range of experience in risk mitigation, recall and crisis management, COVID-19 challenges, and even insurance and liability assessments, TAG can help ensure you are prepared no matter your current, or planned, business strategy.