I was sorry to hear the recent news of the liquidation of the sandwich maker, Good Food Chain (GFC), following an outbreak of listeria linked to contaminated sandwiches which GFC had produced. As a result over 120 jobs were lost. What makes this sadder is that the FSA’s investigation subsequently found that the cause of the contamination was not GFC, but one of its suppliers. During the investigation, however, GFC’s voluntary acceptance of an FSA enforcement notice stopped it from manufacturing its products and drove the company under.

The FSA is not to blame for GFC’s demise; the FSA was doing its job. This situation is, however, a lesson to all food manufacturers about the importance of supply chain management and of doing everything possible to mitigate the risk of product recall and product liability investigations.

As I have previously commented, under the Consumer Protection Act 1987 food manufacturers have a burden of strict liability when it comes to product defects, i.e. if a manufacturer produces a defective food item which, as a result of that defect, subsequently causes harm to a consumer, that manufacturer is liable to compensate the injured party. While defects may be caused by hauliers or any other party in the food supply chain (who may also be liable), manufacturers are naturally the starting point for an investigation.

Rigorous compliance with food safety legislation (and keeping detailed documentary records of such compliance) works to help manufacturers in that, if a manufacturer’s processes and products are found to meet safety standards, it would indicate that its products are defect free. It is not determinative, however, and the FSA will therefore investigate and a court may make adverse findings against food manufacturers despite perfect food safety records.

Perfect food safety records may also hide potential problems with suppliers, as was the case for GFC. It is therefore important for manufacturers to protect themselves. Referring to supplier audit standards can give manufacturers confidence in this respect. However, it is crucial also to use robust supply contracts, which include obligations on suppliers to provide key information on their compliance with safety standards, and indemnities aimed at automatically protecting manufacturers from any losses caused by any contaminated raw materials supplied to them.

Lastly, purchasing insurance to cover product recall or investigation is another way of obtaining protection. Such insurance may be expensive but, against the fate of GFC, it may be worth it. Contingency planning and modelling should answer whether the cost of insurance is proportionate to the risk. In doing so, manufacturers should consider the damage that would be caused by a period of shutdown and what they can do in advance to minimise that period and protect themselves. In this respect, it is vital to have a practised incident response plan which ensures the impact of any incident on the business is managed quickly and carefully from the outset.

At the end of the day, manufacturers and consumers should be confident in the high standards of food safety which are consistently achieved within the sector, but we should not rest on our laurels; unpredictable and damaging incidents may still arise. By contrast, preparing for such incidents and mitigating their risks should allow space for solving the problems that aren’t foreseen. In the age old soldier’s mantra: hope for the best but plan for the worst.