The number of beverage product recalls is set to increase going forward, according to a risk and insurance services company.

In a report issued today (21 November), Marsh warned that greater scrutiny from the media and regulators, as well as heavy enforcement of recent legislation will see an increase in product recalls. While food and beverage contamination is rare, the company noted that regulators are now faster to withdraw products from the market.

"European and national regulators have become much more involved with the recall process," said Jeremy Moore, practice leader for cost recoveries at Marsh. "The launch of the 'General Framework Law for Food Safety Regulation' in 2005, which stipulates that regulators must be involved at the first sign of a product being unsafe, has resulted in 60% of recalls of all food and non-food related products being government-enforced - with major variations between different countries."

Inconsistency in governments' product recall and withdrawal strategies across the European Union (EU) is also creating uneven competition between multi-national companies. "Companies with multi-country distributions face a problem of inconsistencies during recalls or withdrawals," Moore continued. "For example, in 2004 the Italian government called for a withdrawal of four times as many food products from Italian shelves as the French government."

"More media attention and compulsory public notification of withdrawals means the days of the 'silent recall' are now over," Moore said.

Product recalls will also hit companies' costs as they create higher overheads. "Costs will need to be cut in areas such as packaging or food ingredients, which will create a higher vulnerability in the supply chain," Moore continued. "This could create a cycle where more recalls occur due to increased exposure to different local quality and regulatory standards, which in turn elevates overheads, and means greater pressure on cost cutting."