Latest food recall by McCain underscores the importance of recall insurance cover

The recent spate of high-profile recalls of food products should not be a matter of concern for the public but should reassure consumers that the standards of food production quality remain very high in South Africa.

The country has seen at least five major recalls of food products this year alone, with McCain South Africa being the latest brand to announce that it is recalling some of its frozen green beans, and Spar-branded French stir fry, after glass fragments were found in some bags.

In February, food and beverage group Nestle announced that was initiating a voluntary recall of some of its Kit Kat chocolates, for fear that they too may contain pieces of glass. In the same month, US-based Abbott Laboratories-Nutrition announced a recall of its Similac Alimentum 400G baby formula globally, including in South Africa.

However, Catia Folgore, senior underwriter at specialist risk insurer iTOO, says there is little for consumers to be concerned about, as each of these recalls was initiated by the manufacturer, proving that these companies uphold the highest food quality standards.

Pre-emptive move
“I think we should congratulate McCain South Africa for taking the pre-emptive step to initiate a voluntary recall as soon as they realised there was a defect in their products. They have acted responsibly and took the decision for the benefit of the consumer,” she says.

Folgore stresses that while McCain is not a client of iTOO, the incident does underscore the importance of food and beverage manufacturers taking out food recall insurance policies in cases such as these.

“Products such as iTOO’s Contaminated Products Insurance (CPI) policy are becoming increasingly important as recall incidents seem to be increasing in South Africa. A product recall can have a disastrous impact on the company’s reputation and public’s confidence in the affected product,” she says.

“In addition to having to rebuild public confidence in the brand name, companies can incur huge costs in both the recalling and replacing of the affected product. We’ve seen many Incidents that have resulted in a full-scale and often unnecessary recall, leading to catastrophic financial losses, a loss of consumer confidence and loyalty and a loss of supplier/distributor confidence.”

Conducted effectively
A food recall policy commonly includes the services of specialist consultants to ensure that the entire recall process is conducted effectively, while also keeping the impact on the company to a minimum and ensuring that the situation is resolved swiftly.

Folgore explains that these specialist services are designed to add value to very step within the food and beverage manufacturing value chain – from production and product inspection to pre-call inspection and recall management, if needed.

This is not a once-off exercise that is conducted at the inception of a recall insurance policy, but an on-going process that ensures that the client’s products remain safe and fit for consumption.

“In case of a recall, companies such as iTOO will provide the services of specialist consultants to ensure that the entire recall process is conducted effectively, while also keeping the impact on the company to a minimum and ensuring that the situation is resolved swiftly,” she says

Financial protection
“The policy provides financial protection for recall costs, loss of profits and rehabilitation costs following either accidental or malicious contamination. The cover also includes the services of specialist consultants who will manage the process.”

Policyholders get access to a suite of global services and expertise that enable the rapid deployment of local capabilities, an in-depth understanding of the local food-safety regulatory environments, loss mitigation/prevention consulting and best-in-class research and analytical capabilities.

“Specialist consultants will collaborate with the policyholder through each phase of a crisis, from product recall planning and prevention to post-recall consulting and recovery. We will provide a specially-selected team of crisis prevention and management experts with relevant expertise to address the policyholder’s specific needs and challenges,” says Folgore.

“Food and beverage companies simply cannot afford not to consider the devastating effect a full-scale recall could have on their business. Recall cover could be the difference between closing your door or getting your product back onto the shelves quickly in case of an incident.”