Contamination risks for food and beverage manufacturers
Food and beverage manufacturers have complex and risky supply chains. It is very common to see supply chains cause product issues, even where the company’s controls and processes are best practice.
All manufacturers have suppliers, perhaps hundreds, and each of their suppliers will also have its own supply chain. Exposures in a supply chain are vast and each company must rely on its suppliers' quality assurance. It is very common to see the supply chain cause product issues, even where the company’s controls and processes are best practice.
Food and beverage manufacturers have an even bigger risk, with supply chains becoming increasingly complex. In May 2019 a number of cases of listeria had been diagnosed in hospitals across the UK, in some cases deadly for those who had eaten the contaminated product. The source was found to be sandwiches supplied by The Good Food Chain, a UK based sandwich manufacturer, who voluntarily ceased production as FSA investigations took place. While investigations ultimately revealed that the fault was not a manufacturing error of The Good Food Chain, but rather a contaminated ingredient that they were supplied with, this news unfortunately came too late. The Good Food Chain went into liquidation at the end of June 2019 due to the impact of the FSA investigation.
The Good Food Chain is just one example. In 2019 alone, there were 176 food safety and allergen alerts.
It is more important than ever to maintain strong supplier controls to ensure the survival of a business should a product withdrawal event occur. Companies can no longer stand by their belief that their suppliers will indemnify them, with the following scenarios now commonplace:
- Suppliers may refuse to pay some or all of the costs incurred (for example, loss of sales, brand rehabilitation and third-party costs)
- Suppliers may not have enough money to pay costs
- In some locations, a supplier contamination is considered a purely economic loss, and recovery of these costs against suppliers is barred by the economic loss doctrine
- Suppliers may dispute their responsibility
- Liability may have been waived or limited in the supply contract
CFC’s contaminated product recall wording provides affirmative cover for contaminated supplied ingredients, ensuring that food and beverage manufacturers and distributors have vital first party indemnification should a product withdrawal event occur at the hands of a contaminated ingredient.
A stand-alone product recall policy provides food and beverage manufacturers with the necessary first-party indemnification cover that protects them when a disastrous recall strikes. With coverage for business interruption, product & premises rectification and brand rehabilitation, as well as market-first endorsements to provide cover for religious specification, or animal by-product recalls, CFC’s product recall policy seeks to ensure peace of mind during a manufacturers worst nightmare.