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Recalls in the food industry have hit the headlines in the past couple of years – the most notable being the costly Sudan 1 and Para Red dye recalls. But contamination is not the only reason why a food manufacturer would instigate a recall. For example, 100,000 soft drink cans were recently recalled because of fears that they could explode. More commonly, a wide range of products have been recalled due to incorrect labelling. On the face of it, this may seem to be an expensive exercise in risk management, but the repercussions from incorrect labelling can be significant.
A recent recall involved a product that did not specify in the ingredients that it contained prawns. Therefore, the pack did not show the correct ingredients or allergy advisory statement, making the product unsafe for individuals who are allergic to shellfish. A simple labelling error became a matter of public health and the manufacturer had no choice but to recall the item.
Allergy-related labelling has become a big issue for food manufacturers, and in November 2005 it became a criminal offence to sell prepacked products without the correct allergen information on the label. However, this legislation did not deal with products where allergenic ingredients may have got mixed in by accident. This is why many manufacturers that use an allergenic ingredient have taken to putting a 'may contain' warning on the label as a preventative measure.
Food businesses are increasingly concerned about the risk of injury to consumers stemming from accidental contamination of food products with allergenic ingredients. This risk-averse approach, however, has commercial implications because it rules out a significant number of potential consumers. With this in mind, the UK Food Standards Agency’s (FSA) consultation paper, published at the end of 2005, proposed draft guidance for food manufacturers and retailers on how and when to use such warnings. The proposed guidance will help to build a common standard on the issue. The current consultation proposes that this guidance is voluntary; however, the industry may find that this leaves things too open to interpretation. More definitive regulatory guidance may be preferred.
The food industry is already highly regulated and the legal requirements relating to labelling are under constant review. In this environment, there is enormous pressure on food manufacturers to keep up to date with regulatory changes to ensure that they do not fall foul of the law. Under current legislation, manufacturers are legally required to include certain standard information on a food label, including the weight, ingredients list and product description. The product description can cause some problems for manufacturers - particularly when trying to find a suitably pithy description for a novel or innovative product.
Some manufacturers choose to go further and include additional information that is not legally required, but might help in selling the product. For example, there is a growing trend towards including information about health benefits on packaging: this, however, is a field where the law is uncertain and unsatisfactory. Medicinal claims are banned while health claims are permitted, and the dividing line between the two is far from clear. In relation to health claims, the authorities and the food industry set up the Joint Health Claims Initiative in an attempt to provide some voluntary control and guidance. Under this system, manufacturers can obtain 'approval' for health claims if they can submit adequate scientific evidence to prove them.
The EU is currently considering legislation on the whole topic of health and nutrition claims, but in the meantime the UK authorities may push for a product recall in extreme cases where claims made about health benefits are wildly inaccurate.
The Food Standards Agency
The problem is that, the more complex food labelling becomes, so the margin for error increases. In the last month, the FSA has issued new guidance on labelling in relation to nutritional value. This has sparked a high-profile debate within the industry, with manufacturers and retailers developing their own labelling systems in preference to the FSA's 'traffic light' system. The industry has been concerned that this approach is simply too crude and does not provide a satisfactory solution for consumers or the food industry. However, with myriad systems now cropping up across the industry, there will be no consistency in approach, creating further confusion in an already complex area.
Despite its efforts, the FSA is hamstrung by its lack of power on the issue. Enforceable regulation in this area can only come at a European level. Currently, there appears to be little movement towards Europe-wide legislation on nutrition signposting, but in the interests of clarity for both businesses and consumers, there is a strong expectation within the industry that it is on the horizon.
As consumers seek more detailed information about the food they consume, there is a need for consistency and simplification, not least for the food manufacturers themselves. While companies have sophisticated quality systems in place to ensure that labelling information is correct, the fact remains that the legal framework surrounding food labelling could be more straightforward.
While clearer and more consistent legislation would be helpful to manufacturers, there is also a need for rigorous checks on operational procedures. Communication throughout the supply chain is vital, particularly with those further down the line. Any changes to the labelling information must be cascaded throughout the supply chain to prevent any costly errors. In such a highly regulated industry, the vast majority of food companies adopt best practice and understand the need to invest in building strong relationships with likeminded suppliers to protect the interests of both the business and consumers.
The labelling obligations on food companies to minimise the risk of recalls may appear unduly onerous, but fulfilling them is certainly preferable to facing the cost of a recall, which would not be covered by insurance. Even small-scale recalls can cost businesses hundreds of thousands of pounds to address. Large recalls represent an enormous drain on costs and management time. For example, many of the financial consequences of the Sudan 1 recalls are yet to be finally resolved.
Owen Warnock and Richard Matthews are partners at Eversheds