Wine Product Recall Insurance Is your business protected?

Monday, May 27, 2019

Product recall made headlines in Australia last year when a half-billion dollar strawberry market was thrown into chaos by a contamination.

Over the past 10 years, there have been 626 recalls of food and beverage products in Australia. Undeclared allergens, microbiological contamination and glass fragments are some of the threats faced by our wine producers.  These can be difficult to control and are expensive to fix – and with more processed and packaged foods hitting the shelves, the risks are very real.

Why worry about recalls?

The impact of a recall has been felt by the smallest companies right through to the largest brands in Australia. All aspects of the food and beverage industry have been affected in some aspect. This includes dairy, meat, vegetables, fruits, seafood, bottled water – even beer, although wine and other alcohol products have not been as prominent at this stage.

Recalls cause significant impact on a business as costs can run into the millions. The company turnover is not a protection and the reality is that recalls are expensive to any business. Damaged reputation followed by a hit to the bottom line can cause a business to fail.

What can cause recalls?

There are a wide range of causes behind recalls including terrorism, ransom and then microbiological contamination, foreign matter, biotoxins, chemical contaminants, mislabelling, undeclared allergens and the presence of disease. These claims often arise from contaminated ingredients being supplied to manufacturers, only to be discovered when a third party has tested the products or someone has fallen ill.

The business risks

A business owner needs to review the following:

  • Conduct a risk analysis - What controls are in place to manage risks upstream and downstream?
  • Do you have a product recall plan in place?
  • What risk management plans are documented and are all Directors aware of the strategy?
  • Can you qualify the maximum foreseeable loss caused by business interruption due to contamination or recall?
  • How do you manage negative publicity and deal with complaints?

Protecting your wine business

A simple way to protect from the financial impact of a product recall is to have a Contaminated Product Insurance policy. The policy can provide cover for:

  • Removing an unsafe product out of the stream of commerce, which includes advertising in local, state and national media.
  • Transport charges when products are returned from retailers and customers
  • Expenses from destroying or safely disposing of any recalled products
  • Payments imposed by retailers to take a product off their shelves
  • The costs to replace the products and supply to customers and retailers
  • Fees for public relations or crisis consultants to help manage a recall
  • Loss of gross profits.

SAWIA’s Wine Industry Partner, MGA Insurance Group, can help you ensure your business has the right cover and product to suit your needs. Contact Phil Keenihan or Paula Rapisarda for a free consultation.

Phil Keenihan | Senior Insurance Broker

Adelaide Office

176 Fullarton Rd Dulwich SA 5065

Locked Bag 4001 Kent Town DC SA 5071

P: 08 8177 8301 | M: 0414 331 489

E: phil.keenihan@mga.com | W: www.mga.com