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How to Prepare for a Product Recall

Apr 29, 2016

An ounce of prevention might avert disaster

Well-seasoned crisis managers repeat the mantra they all know well: It’s not if you face a crisis, it’s just a matter of when. Every business eventually encounters a make-or-break moment that defines its future. For food and beverage companies, that challenge often appears in the form of a product recall.

Tightening regulations and increasingly complex food chains are feeding a steady surge in recalls for a myriad of unanticipated reasons. Adding to those concerns is the FDA, which is growing progressively less tolerant of even minor infractions, and the results have been devastating.

Publicly traded companies forced into a recall typically see their stock price plunge 22 percent soon after, according to a study by Deloitte. That same research notes that half of a product’s customer base will switch brands temporarily, and more than 20 percent never return. If it’s a contamination issue, the company will likely never fully recover.

But the recent carnage has imparted some critical lessons for the unscathed. Chief among a new breed of best practices is detailed preparation. Consider the potential for a product recall the way crisis experts plan fire drills, bomb threats and other catastrophes. They include plans, drills and contingencies. Everyone has a specific role, and they know it well.

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