No Room for Error

News of recalls arrives almost daily: Mushrooms recalled Aug. 18 because of listeria; cantaloupes recalled Aug. 22 because of salmonella; bagged salad recalled Aug. 27 because of listeria. In fact, the U.S. Food and Drug Administration and the U.S. Department of Agriculture issued 22 pathogen-related food recalls during July, compared with 14 in July 2011 and 15 in July 2010.

Recalls are not only essential to protecting public health, but they're also crucial to preserving a company's reputation. With food safety and traceability a hot topic among shoppers, retailers and consumer packaged goods companies increasingly are erring on the side of caution. But, experts say, grocery retailers are facing a tremendous burden as the number of food-safety incidents escalates.

Upward Trend

Food recalls in the second quarter of 2012 totaled 169, up 19 percent from the prior quarter and 16 percent from the year-ago quarter, according to ExpertRecall. About 40 percent were related to salmonella and listeria contamination. The Food Safety and Modernization Act (FSMA) could help alleviate the situation, but implementing it has been delayed.

Companies shouldn't wait for the FSMA to begin putting in controls and improving record-keeping surrounding food safety, experts say, because they are likely to be required in the future. Having records on hand for an FDA inspector will speed the process and save money.

The average initial cost of a recall to the involved companies is about $10 million, according to a 2010 Deloitte study, "Recall Execution Effectiveness: Collaborative Approaches to Improving Consumer Safety and Confidence." However, that doesn't include the potential long-term reputation damage to a business, nor does it take into account the impact on consumers who become ill. Food-related illnesses affect about 76 million Americans each year, including 325,000 cases requiring hospitalization and 5,000 deaths, the report says, citing data from the Centers for Disease and Prevention. Consumers are aware that food-related recalls are on the rise and are more concerned about what they eat as a result, according to the Deloitte report. In response to growing consumer demands, retailers are increasingly pulling any potentially questionable products even when they haven't been found to be hazardous.

Damage Adds Up

"The frequency of recalls causes a great deal of hardship to retailers," says Jennifer McEntire, senior director, food and import safety at Leavitt Partners Center for Food Safety in Salt Lake City. "I receive recall notices and rarely does a day pass that something isn't recalled. Even if retailers are reimbursed for the recalled product, it's a lot of effort to ensure that the product is handled appropriately at the [distribution center] and store levels."

"I receive recall notices and rarely does a day pass that something isn't recalled. Even if retailers are reimbursed for the recalled product, it's a lot of effort to ensure that the product is handled appropriately at the [distribution center] and store levels."

–Jennifer McEntire,

Leavitt Partners Center for Food Safety

Swift identification and communication can control the damage from food contamination, Deloitte reports. Large manufacturers require 32 hours on average to identify the problem and announce a recall, while small manufacturers can act more quickly, with most responding in between 30 minutes and 17 hours, according to the Deloitte report.

The urgency of recalls is greater than in the past for two reasons: The speed and complexity of today's food supply chain means a contaminated food product can quickly spread throughout the system, potentially sickening many more people than in earlier periods; and in an aging population, more people have compromised immune systems, so they are more susceptible to food-borne illnesses, Deloitte reports.

Furthermore, improved and increased testing potentially catches some pathogens that might have been overlooked before. "I think the FDA's Reportable Food Registry was a game changer," says Hilary Thesmar, vice president of food safety programs at the Food Marketing Institute, referring to the registry established in 2007 for food companies to report potential problems. "You have to report to the FDA anything that might be a public health problem. When food companies think they have a problem, they report it and are more likely to recall it in an abundance of caution than to wait and see what the actual result is."

A Large and Small Problem

The U.S. agricultural system faces potential pathogen problems on both ends of the spectrum. Large "factory" farms are widely criticized for spreading pathogens by providing inadequate space for animals and opening routes to cross-contamination between animal waste and produce. But small farms are not in the clear. While they may have fewer crowding problems, their safety procedures may not be as well developed. And the "buy local" movement is compelling many grocery retailers to source their produce from small, local farms, increasing the risk that contaminated food from those farms may enter the system.

"This really creates a challenge," says Martin Bucknavage, senior food safety extension associate in the Penn State University Department of Food Science. "How do you know if their food safety systems are adequate?"

The FSMA aims to improve the recall process by standardizing it and improving traceability. However, the legislation, signed into law by President Barack Obama on Jan. 4, 2011, has not been fully implemented because the U.S. Food and Drug Administration has not completed the accompanying regulations. The reasons for delay include the complexity of the law and, possibly, political considerations, since the law's implementation will presumably add expense and burden on many businesses, a fact that Republicans could use in their campaign against President Barack Obama. "Most people feel nothing will happen until after the election," McEntire says.

A Frustrating Delay

The delay concerns some retailers, says Greg Ferrara, vice president of public affairs for the National Grocers Association. "As business leaders, we are always interested in understanding what we may be facing operationally in the future, so a delay in issuing regulations that impact operations can be frustrating," he says. "What is most important, though, is that FDA issues regulations that take into account the input from the supply chain community, who are ultimately responsible for implementing the regulations."

Even without the accompanying rules, FSMA states that grocery stores need to post information in at least one conspicuous location in the store, though many grocers already do more than this, says Thesmar. "Our members have many ways to communicate recall information," she says. "They post signs, call customers, email customers and use social media.... They also put notifications of recalls at point-of-purchase locations and on customer receipts."

At Giant Food, a chain of 173 supermarkets, news of a recall sets an extensive procedure into motion. The retailer distributes a press release, notifies key store personnel, posts a message on the chain's Facebook page and website, identifies buyers of the product through the store's loyalty card program and puts out a robo-call announcement. It also removes product from store shelves and programs cash registers to prevent customers from purchasing the recalled item. "The health and well-being of our customers is a top priority," says Jamie Miller, manager of public and community relations for Giant.

Food Recalls by Quarter
According to FDA Enforcement Reports
Leading Causes of Food Recalls
According to Recall Announcements on FDA Website
Source: Stericycle ExpertRECALL™

Central to the recall process is authorities' ability to determine where contamination originated. "A farm-to-shelf traceability system that is efficient, cost effective and not burdensome to wholesalers and especially retailers is an area that we are interested in," says Ferrara, who is on the task force making recommendations to the FDA.

Technology could affect traceability. For example, the FDA announced in July a five-year project to create a database of genetic codes of 100,000 types of bacteria found in food. Scientists could use the free database to identify specific pathogens and track the sources of them.

In the best-case scenario, food that poses a health risk is pulled from the supply chain before it reaches consumers. If the supplier identifies the problem with its own testing, recalls are typically faster than when illnesses drive the process. "In the latter instance, it's generally several weeks and up to months before the problem is realized and a recall is issued," McEntire says.

"Time is very important when dealing with a recall, but so is being accurate, and that can be a delicate balance."

–Greg Ferrara,

National Grocers Association

Speed is essential, Ferrara says. "Time is very important when dealing with a recall, but so is being accurate, and that can be a delicate balance," he says. "Ideally, a recalled item is put on hold at the distribution center and never gets on store shelves, but in cases when a product may have made it through the supply chain to retail stores, it is important that retailers have timely, complete and accurate information to remove the affected product from commerce."

Food recalls are a part of business for grocery retailers today, and barring amazing improvements up the food chain, they will probably remain that way. While the extra work may be onerous, the sheer volume of recalls means retailers are becoming more accustomed to them.

"I've learned that retailers are very adept at recalls," Thesmar says. "They are not fazed by them. I think that's because they deal with them all the time."

Ed Avis is a freelance writer and editor in Chicago who has written for Crain's Chicago Business, the Chicago Tribune, Specialty Coffee Retailer, Tea Magazine and many other consumer and trade publications.