Let’s dive deeper into Falvey’s Product, Defect, Recall, and Contamination (PDRC) coverage! For this article, we’ll break down how PDRC protects food and drink manufacturers and suppliers from financial and reputational damage in the case of a recall. 

Recalls are a common occurrence in the food and drink industry. FDA food recalls experienced a 700.6% increase in the number of units impacted in 2022. With 416.9 million units recalled, this represents a 10-year high. While the United States Department of Agriculture (USDA) food recalls held steady in terms of the number of events, the volume of units recalled decreased significantly (87.0%) from 13.4 million pounds in 2021, to 1.7 million pounds in 2022.

Examples of Significant Food and Drink Recall Claims

Peanut Corporation of America (PCA): In 2009, PCA issued one of the largest food recalls in history after knowingly releasing products contaminated by salmonella. The contaminated products resulted in more than 700 reported illnesses and nine deaths across the country. This massive recall included 3,900 products across more than 360 companies that used PCA’s peanuts. Within 24 hours of announcing the recall, PCA filed for Chapter 7 bankruptcy. The total cost of the recall was estimated to be well over $1 billion. 

Granola and breakfast cereal manufacturer: Even as a third-party contractor, this cereal manufacturer was liable for a pricey recall due to food product contamination. The FDA contacted the manufacturer to notify them of a salmonella outbreak associated with imported nuts they were using from a supplier. The manufacturer determined it could kill the salmonella during the cooking process, but some contaminated raw products still reached consumers. The total cost of the recall was approximately $3 million, which was split evenly between recall costs, the manufacturer’s business interruption, and third-party loss costs. 

Sweets manufacturer: Food and drink recalls aren’t strictly associated with contamination, though. In one case, a manufacturer of jelly sweets suffered a large loss due to a design flaw. The novelty candy encouraged children to squeeze and pop the treat until it oozed into their mouths. Yet, the sweet did not pop until the child exerted extreme pressure—something the FDA determined was a choking hazard. As a result, the company recalled and discontinued the product. Between recall and business interruption costs, the recall cost approximately $1.5 billion. 

Falvey’s PDRC Coverage For Food & Drink Products

When it comes to the food and drink recalls, there is a wide range of triggers, from accidental contamination and malicious tampering to extortion and adverse publicity. Falvey’s PDRC policies cover processed foods, beverages, bakeries, canned goods, and confectionaries, protecting you from:

  • Recall costs

  • Business interruption

  • Brand rehabilitation 

  • Extortion

  • Third-party recall contractual liabilities

  • Extra expenses

Read more about our PDRC coverage for consumer durables, pharmaceutical & medical devices, and automotive components.

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To find out more about how PDRC coverage can work for your specific business needs, contact us. We can help.