Errors in the labelling and packaging process are one of the main drivers of product recalls in the global food and drink sector. Where such events occur, their impacts for businesses can be devastating – including consumer harm, financial loss, and reputational damage. As regulation tightens around labelling and packaging, and with a worsening economic climate driving potential errors, businesses must take steps to ensure their processes are robust.
Allergen mislabelling driving recall activity
Labelling errors are a driving factor behind food recalls. According to Sedgewick data, undeclared allergens have been the leading cause of US FDA food recalls (opens a new window) for all but one quarter since Q2 2017, including 52 recalls in Q3 2023 alone (opens a new window). What’s more, the volume of overall food recalls are increasing; there were a total of 506 FDA recalls across 2023, a five-year high for the industry. Notably, the volume of units recalled also increased by 132.8% from 2022 to 2023.
Various factors are driving these trends. Newly introduced legislation has tightened the regulatory framework around food standards, imposing more stringent rules around allergen labelling. In October 2023, California became the first US state to ban four possibly toxic chemical additives (opens a new window), with legislators expressing a desire to ensure consumer safety. Similar legislation has been proposed in Illinois and New York, potentially affecting 12,000 products. In effect, this acts to broaden the scope for potential errors which necessitate a product recall.
In parallel, a worsening macroeconomic climate and inflationary pressures have squeezed profit margins for firms throughout the global food and drink supply chain. As businesses accelerate their operations to maximise turnover, this may come at the expense of quality assurance, thereby raising the likelihood of a recall event.
Across the globe, statistics tell a similar story. According to RQA group, a crisis management consultancy, allergen-related labelling errors (opens a new window) were the top cause of both UK FSA and Australian and New Zealand FSANZ recalls in 2023, and the second-biggest cause of Canadian CFIA recalls. Non-allergen related labelling errors, although less frequent, also contributed to recall numbers.
Case studies: Pret A Manger & Stew Leonard’s
In recent years, there have been some tragic reminders of how vital importance of accurate labelling. In 2017, two people sadly passed away after suffering allergic reactions to mislabelled products from popular British sandwich chain Pret A Manger (opens a new window). The first, Natasha Ednan-Laperouse, 15, had purchased a sandwich from a store in London’s Heathrow Airport. Suffering from a severe sesame allergy, she had read the label carefully beforehand, but the sandwich carried no mention of the fact that sesame seeds were baked into its dough. She suffered a cardiac arrest during her flight, and later died. The incident led to UK Government’s introduction, in October 2021, of stricter legislation around allergen labelling, termed Natasha’s Law (opens a new window).
More recently, in January 2024 a batch of cookies sold at two locations in Connecticut were recalled by company Stew Leonard’s (opens a new window), after 25-year-old Órla Baxendale died from an anaphylactic shock induced by a severe allergic reaction to unlisted peanuts. She was a British native, who had moved to New York to pursue a career as a ballet dancer. The cookies were found to have been made by wholesaler Cookies Unlimited, which had recently changed its recipe.
Determining liability after a product recall
When they occur, recall events can have significant implications for businesses, not only due to the immediate costs involved but more crucially, due to the reputational damage.
Determining who’s at fault for a labelling or packaging error isn’t always easy. For example, businesses may have operational differences, including co-manufacturing and third-party labelling, or in-house production. In addition, was the error due to the brand’s instructed design, or due to an error in the actual production process? That’ why it’s important to have a well-oiled risk management plan.
Risk management – avoiding labelling and packaging errors
Mislabelling can result from a variety of factors and, as such, cannot be resolved by any one means. Rather, businesses seeking to minimise the likelihood of a recall event should conduct a comprehensive assessment of their operations to identify and address potential sources of error.
Actions to reduce labelling errors may include:
Implement a simple label review process – this will help to identify any errors prior to production, keeping initial costs to a minimum and reducing compliance risk. This should include a robust sign-off procedure, making use of appropriate data validation software. This is especially vital when onboarding any new supplier.
Review supplier arrangements – this includes considering whether labelling and packaging operations should be outsourced or brought in house. Specific factors for assessment here include in-house capacity for labelling operations, supplier transparency, and whether the cost-efficiencies gained may offset the impact of a potential recall. Processes should be in place for suppliers to inform businesses of any raw ingredient or product substitutions, and the implications for labelling and packaging.
Ensure relevant equipment is up to date – for instance, a printer fault could result in the application of poor-quality labelling, or failure to apply labelling altogether. Such equipment should also be checked and serviced regularly to proactively identify and prevent faults.
Adequately prepare for promotional runs – often launched at short-notice, these can upset production schedules and increase the likelihood of labelling errors both during the promotion and after its completion. Meeting the necessary quality assurance requirements should be factored in from the outset of any promotional activity.
Combat human error – by ensuring all staff are adequately trained, both to prevent and identify potential sources of error. Best practice should be refreshed regularly. Operations should be conducted with adequate managerial oversight. Businesses may also seek to address potential sources of burnout or overwork, which typically increase the frequency of error.
Keep abreast of changes to labelling and packaging legislation.
Implementing measures to mitigate against labelling errors can be costly, particularly for smaller businesses. The above methods are important to consider and integrate, along with strong contractual language to ensure that your supplier/co-manufacturer can indemnify you in the event that they are the ones liable for the issue.
Of course, errors can still occur despite any efforts to mitigate them. Where these lead to a product recall, businesses who have taken out product recall insurance can seek coverage for costs including rectification, business interruption, and reputational damage. If purchasing product recall & contamination insurance, businesses will also receive a risk management bursary that can be used to fund some of the mitigation methods noted above.
For more information, please visit our Product Recall (opens a new window) page, or contact:
Freddie Schlesinger, Vice President, Lockton Crisis Management & Product Recall
