Six key recall factors for the COVID-influenced environment

An essential lesson for the food industry to learn from the first six months of 2020 is just how quickly consumer behavior, preferences and loyalty can change — even when you do everything right. It’s a lesson to keep top of mind as you plan new products or decide to streamline your offerings. It should also drive your recall planning.

COVID-19 created product shortages that drove consumers to alternative products, and they adapted quickly. Likewise, consumers may now be more willing to transfer loyalty to another product when recalls happen and safety comes into question.

Layer in the fact that competition in the dairy category is high. Not just within the confines of a clearly defined product category, but the ever-growing number of alternative “dairy” products. One misstep in outbreak or recall management has the potential shift consumer loyalty from Yoplait to Dannon (or vice versa), or even your local milk provider to plant-based options such as Oatly or Silk. That’s where the real risk lies.

Recent recall activity

As we dive into the impact of COVID-19 on recall risks and management, it’s vital to examine recent recall activity. The Stericycle Expert Solutions Recall Index, which analyzes recall and product safety activity on a quarterly basis, examines all national food recall activity. The latest report found that of the 141 FDA food recalls in the first quarter, 12 were dairy products.

While FDA food recall activity overall remained steady with previous quarters, the number of dairy recalls were the highest seen since the fourth quarter of 2018. Of the dairy recalls, one-third were due to undeclared allergens and another third to bacterial contamination. In terms of units recalled, bacterial contamination accounted for more than 90% of recalled units.

In the first two months of the second quarter — which saw the FDA streamline and even limit its oversight — there were five dairy product recalls impacting 47,000 units.Again, those recalls were largely due to bacterial contamination and undeclared allergens.

Based on history and what we know about the FDA, the number of recalls is likely to rebound once standard oversight activities resume. But the real risk companies face is not whether they have a recall. It is how that event will impact their reputation in an era marked by diminished consumer loyalty, increased competition and changing consumer behavior. And that will be largely determined by how well you manage the event, especially by how you communicate your corrective action.

Prepare for a recall

So how do you prepare for a recall in this new era? The answer lies beyond the basics such as fast and accurate identification of affected product, timely notification and preventive action. Here are six key factors for the next time you review and test your recall plan.

1. Supply chain management. Do you trust your suppliers, manufacturing plants and processing plants to live up to your quality and safety standards 100% of the time? Suppliers play a huge role, particularly when the risks are undeclared allergens and bacterial contamination. You must hold them accountable now, without waiting to be surprised in a crisis.
2. Retail relationships. Grocers are constantly shifting product offerings, and may feel compelled to respond to product shortages, recalls and other supply related issues by reallocating shelf space or discontinuing a product line entirely. Failure to take this into account in working with your customers may keep your products out of the dairy case.
3. Consumer engagement. Reaching consumers is more challenging than ever before. Even when you reach them, the value of their loyalty has been declining. Stay close to them with social media and keep them informed. When preparing for a recall, consider this: how can you turn a recall into an opportunity?
4. Rapid response to customers and consumers. You need to think beyond the reason for the recall. Is your sales team prepared to work with retailers and business partners? Do they have the necessary answers to tough questions? Can your customer service team handle massive consumer call volume?
5. Employee and staff support. The added stress and pressure now felt by individuals up and down your organization make mistakes much more likely to occur. Pinpoint possible missteps that could cause a slip in quality or potential contamination and take action to prevent them. Consider also what your marketing, sales and communication teams need to be effective, particularly if they are remote or short on resources.
6. “Rolling recalls.” When companies have the expand a recall after an initial announcement, they have a much harder time recovering from the regulatory, retailer and consumer fallout. Step one is preventing a rolling recall in the first place; often it’s best to stop production of all products rather than shutting down a line or two in the usually vain hope you contain the problem. Step two is having a plan for managing the response if a rolling recall does become necessary.

Don’t limit yourself to planning for a recall during “business as usual” times. Plan for the recall that happens in case shelter-in-place orders go back into effect and the economy shutters in a second wave of the coronavirus outbreak. That’s where the real value of planning resides.