Australian food and beverage companies are under-prepared to respond to a crisis says a new study conducted by the Australian Food and Grocery Council and insurance advisor, Victual.

According to the study, one third of businesses have no spokesperson or have not trained their spokesperson in what to do if a recall is required or a company crisis hits.

All survey respondents said they have a recall plan but only 59 per cent said they frequently review the plan.

Victual and the AFGC said recalls have increased steadily in recent years, largely due to undeclared allergens and microbial contamination.

Insurance cover across the industry was described as alarmingly inadequate.

Director of Victual Recall and co-author of the report, Peter McGee, said the survey highlights the need for industry to better prepare themselves for crisis.

“We have seen time and time again that a poorly managed recall has the potential to turn quickly into a crisis, affecting a company’s reputation and bottom line,” McGee said.

“This is especially relevant with the advent of social media, where issues are rapidly amplified.”

The report wrote that the average cost of a recall is US $10 million. Approximately 60 per cent of survey respondents have insurance that covers less than that amount.

A number of recommendations were made in the report including:

• Businesses need a robust system for monitoring customer sentiment, including through social media
• Take small, relatively cheap measures, such as reducing batch quantities and storing batch samples
• Systems that track components or raw materials through the supply chain can help to pinpoint the source of defects
• Good communication between suppliers and retailers regarding product and packaging changes can reduce the risk of unexpected product issues
• A robust and practised recall and crisis management plan will limit the impact of a recall event

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