The allegations, whether true or not, led to the full shutdown of the company’s West Midlands facility. Bad enough as it is, especially with hyper-food-safety-sensitive customers such as Aldi, Tesco and Marks & Spencer, but video footage then emerged which allegedly shows an employee at the same plant picking up raw chicken from the floor and placing it back onto a production line.
The facility closure is reportedly costing 2 Sisters £500,000 per week. However, costs will not stop there. Marks & Spencer, Aldi, Lidl, Sainsbury’s and Tesco will all bill 2 Sisters for their own costs of informing customers and pulling products from shelves, and may also impose contractual penalties. If the supermarkets source chicken from alternate sources during this episode, there is no guarantee that they’ll return to 2 Sisters for supply once the plant resumes production. One would imagine that the Food Standards Agency (FSA), having audited the facility nine times with no negative findings, will be slightly irked at the highly publicised reports and will be keen to be seen as a forceful and cautious regulator in the aftermath of this event – a further pressure upon 2 Sisters. The final cost of this fiasco is still to be determined, but it’s likely to be substantial. So how could a recall insurance policy help in a situation like this?
Taking the 2 Sisters case as an example, CFC’s product recall policy would not only have indemnified the company for their costs to clean and recalibrate their plant, but also their customers’ costs of recalling the chicken products as well as any loss of sales. However, and perhaps most importantly in this case, they could have made use of our crisis consultancy service, which is provided up to the full limits of the policy. This would have given them access to expert crisis consultants and training, assisting them in the handling of the regulatory, public relations and brand rehabilitation aspects of this event. We also offer a separate rehabilitation costs coverage – financial support for promotional activity designed to rebuild the company’s brand and get sales back up to pre-crisis levels.
To find out more about how our recall policy can help manufacturing and food processing companies, get in touch today. You can reach us at CrisisManagement@cfc.com or call our mainline on 0207 220 8500.
The above serves as a guide only, coverage is subject to underwriting and the terms, conditions, and limits of the issued policy.
Sources:
http://www.bbc.co.uk/news/uk-41440020
http://www.bbc.co.uk/news/uk-41462549
https://www.theguardian.com/business/2017/oct/03/2-sisters-west-bromwich-chicken-plant-food-group
