Recalls are set for closer scrutiny ... and costly hike

Product recalls are set to rise because of greater media and regulatory attention, according to the leading risk and insurance broking firm Marsh.

This situation will be made worse as pressure on costs forces more firms to buy cheaper ingredients and packaging from outside Europe and from Asia in particular, claimed Marsh following a survey of 232 European food firms.

"This will lead in turn to a higher vulnerability of the supply chain of food and beverage manufacturers, increased exposure to different local quality and regulatory standards and potential inefficiency of the subrogation process [where one company assumes the legal responsibilities of another] in case of negligence of a supplier in a remote country," it said.

Marsh's survey found that, while product contamination was rare, regulators were more likely to issue withdrawal notices. One in five UK companies had experienced a loss of more than £3.38M in the last five years.

"The launch of the General Framework Law for Food Safety Regulation in 2005, which stipulates that regulators must be involved at the first sign of a product being unsafe, has resulted in 60% of recalls of all food and non-food related products being government enforced - with major variations between different countries," said Marsh's practice leader for cost recoveries, Jeremy Moore.

By November 22 this year the UK's Food Standards Agency had issued 63 food alerts - 58 for information, where firms had already instigated recalls, and five requiring enforcement action. In the same period in 2005 there were 51 information and 17 action alerts. In the full 2005 there were 65 information and 17 action alerts, mostly for Sudan 1 Para Red.

Latest recalls include Heinz Toddlers' Own Sweet Potato & Beef Casserole, due to a labelling error, and Batchelors' Chicken Flavour Super Noodles because of possible contamination.

Moore said that regulators were "becoming more cautious", making little distinction between safe and unsafe contamination. "Combined with greater media interest and uncertainty in supply chains, recalls will rise," he said.