Before the Recall: 6 Rules for a Product Recall Plan That Protects Your Brand

In February 1990 a laboratory in North Carolina found traces of benzene in bottles of Perrier. Within days the company pulled roughly 160 million bottles off shelves worldwide. The cause, as the company later explained, was almost embarrassing: a filter on a gas line at the Vergèze plant that was meant to be changed every six weeks had been left in place for up to three months. Perrier itself estimated the destroyed stock alone at about $70 million, and the brand spent years rebuilding its position in the United States.

One overdue filter. A recall is rarely caused by a big decision; it is caused by a small routine that nobody owned. And the damage is decided less by the defect than by how fast and how cleanly the company can find, stop and explain it.

We bottle wine and mineral water across our group, so this is not a theoretical subject for me. Here are six rules I would put in place before the phone call that every producer of physical goods hopes never to receive.

What a recall really costs

The numbers are larger than most owners assume. An Allianz study of 367 recall claims across 28 countries found that significant recalls cost companies about $12 million on average, and food and beverage was the second most affected sector, with an average of almost $9.5 million per significant claim. A 2026 survey in the United Kingdom put the average cost of a food recall at almost £550,000, a number that can wipe out a year of profit for a mid-sized producer.

Those figures only count the direct bill: retrieving product, destroying it, replacing it, notifying customers. They leave out the listings you lose, the retailers who quietly move your shelf space to a competitor and the years it takes to rebuild trust. The invoice for a recall is paid once; the bill for a badly handled recall is paid for a decade.

Rule 1: Write the plan before you need it

In the United States, food companies covered by the FDA's preventive controls rules already need a written recall plan. It must describe how you will notify the customers who received the product, how you will warn the public when needed, how you will check that the recall actually worked and how you will dispose of the product. Most producers in other markets face similar expectations from their regulators and their retail buyers.

A plan that lives in a binder nobody has opened is not a plan. Keep it to a few pages and make it specific:

• Who decides to recall, and who is their backup when they are on a plane.
• Who calls the regulator, who calls distributors and who talks to the press.
• The 24-hour checklist: which lots, where they are, who received them.

The most important line in any recall plan is the name of the person who can say "stop shipping" without asking anyone's permission.

Rule 2: Make every lot traceable one step forward and one step back

You cannot recall what you cannot find. Every pallet, case and bottle that leaves your warehouse should carry a lot code that links back to its raw materials, its production date and its line, and forward to every customer who received it.

The regulators are moving in this direction. Under FSMA Section 204, whose compliance date the FDA has set for July 2028, companies handling foods on the Food Traceability List will have to produce full traceability records within 24 hours of a request. Even if your products are not on that list, the 24-hour standard is a good test of your own systems.

The difference shows in the size of the recall. A company with tight lot coding recalls one production run; a company without it recalls everything it made that month.

Rule 3: Run a mock recall every year

The FDA requires a recall plan but does not require you to rehearse it. Do it anyway. Pick a real lot at random, start a clock and ask your team to produce, without warning, the full list of where that product went and how much is still in your hands.

The first exercise is usually humbling. Records sit in three systems, one distributor takes two days to answer and nobody is sure who has the authority to sign the notice. That is the point. Every gap you find in a drill is a gap you will not discover in front of a regulator. Track the time it took and aim to cut it in half the following year, and include your key distributors, because in many markets they hold the customer lists you will need.

Rule 4: Decide fast, and recall wider than feels comfortable

When the evidence points to a hazard, the instinct is to wait for one more test. That instinct is expensive. In the United States, companies that confirm a reportable food hazard must notify the FDA's Reportable Food Registry within 24 hours, and the market's patience is even shorter.

The classic lesson is Johnson & Johnson in 1982. After seven people died in the Chicago area from cyanide-laced Tylenol capsules, tampering the company did not cause, it pulled around 31 million bottles nationwide rather than only the affected region. The brand came back. The opposite lesson is Peanut Corporation of America: its 2009 salmonella outbreak was linked to nine deaths and at least 714 illnesses, triggered a recall of more than 3,900 products from more than 360 companies and ended with the company filing for Chapter 7 liquidation that February.

Customers forgive a defect; they do not forgive a company that knew and waited.

Rule 5: Speak first, speak plainly, speak to the trade before the press

The first public statement sets the story. Say what happened, which products and lots are affected, what customers should do and how to get their money back. Skip the legal fog. If you do not yet know the cause, say so and say when you will update.

Then remember who actually keeps you on the shelf. Distributors, importers and retail buyers should hear from you directly, ideally before they read about it. A buyer who learns about your recall from the news will start wondering what else you have not told them. I made the case in why customers pay more for brands they trust: trust is the asset, and a recall is the moment it is either spent or reinforced. The same discipline applies to any crisis, which I covered in how to lead through a business crisis.

Rule 6: Fix the root cause, then check the insurance and the contracts

A recall is not over when the last case comes back. It is over when you can prove the cause will not repeat. Perrier's problem was a maintenance routine; Blue Bell's 2015 listeria outbreak, linked to three deaths, ended years later with a $17.25 million criminal penalty, the largest ever following a conviction in a food safety case. The question regulators and courts ask is not whether you had a problem, but what you knew and what you did about it.

Then look at the money side before the next incident:

• Product liability insurance usually covers claims from people who were harmed, not the cost of pulling your own product. Recall expense cover is a separate policy, often with crisis communication and lost-profit options.
• Read your supplier contracts. If a contaminated ingredient or faulty closure caused the problem, you want the right to recover your costs. This belongs on the list when you negotiate with suppliers.
• Read your retailer contracts too. Large buyers routinely pass recall costs back to the supplier.

Key Takeaways

• Significant recalls cost about $12 million on average, according to Allianz, and food and beverage is the second most affected sector.
• Most recalls start with a small routine nobody owned, like Perrier's overdue filter, so name an owner for every critical control.
• Write a short, specific recall plan that names who can stop shipping without asking permission.
• Lot coding one step forward and one step back decides whether you recall one batch or a whole month of production.
• Rehearse with a mock recall every year and measure how long it takes to find every case.
• Act within hours, recall wider than feels comfortable and tell distributors before the press.
• Close the loop: fix the root cause, buy recall expense cover and check who pays in your supplier and retailer contracts.

Frequently Asked Questions

What are the steps of a product recall?

Confirm the hazard, stop shipping, identify every affected lot and where it went, notify the regulator and your customers, retrieve and dispose of the product, then check that the recall reached everyone. The final step is fixing the root cause and documenting it so it cannot repeat.

What are the three classes of FDA recalls?

Class I covers products that could cause serious harm or death, such as food with an undeclared allergen. Class II covers products that might cause temporary or reversible health problems. Class III covers products unlikely to cause harm but that break labeling or manufacturing rules.

Who pays for a product recall?

The manufacturer usually pays first, but costs can be shifted. Supplier contracts may let you recover costs caused by a faulty ingredient or component, retailers often pass their costs back to you and recall expense insurance can reimburse part of the bill.

Does product liability insurance cover recall costs?

Usually not. Product liability insurance covers claims from people who were harmed by a product, while the cost of retrieving, destroying and replacing your own goods needs a separate recall expense policy.

What is a mock recall and how often should you do one?

A mock recall is a drill in which you pick a real lot and trace where every unit went, against the clock. Many food safety schemes expect at least one a year, and it is the cheapest way to find the gaps in your records before a real recall does.

Before the Phone Rings

Pick one lot you shipped last month and ask your team where every case is today. If the answer takes more than a day, start with Rule 2. To see how we think about building companies that last across generations, explore the Manzanos Enterprises group.