By Julie Ross, International business development director
As we emerge from one of the most turbulent and uncertain times in recent history, consumers are eager for a return to normal and economists are predicting a boom as we approach the holiday season.
But with so much uncertainty still ahead, it seems the only thing we can really be sure of is the expanding reputational risk across all sectors.
Set against a backdrop of tightening regulation, businesses are striving to achieve more with less resources. Production has been impacted by supply chain issues and business interruptions. A move from physical to digital channels has created global consumer demand for increasingly cheaper goods — opening the door for counterfeit products. Consequently, quality, authenticity, and compliance are all in danger of being compromised.
Our latest Q3 2021 recall index suggests that events are returning to pre-pandemic levels and in several sectors may exceed them. Despite five in seven sectors seeing a drop in recalls from Q2 to Q3 2021, six are still on track to exceed 2020 levels.
As we look to individual categories, this is what our data has unveiled:
- Automotive Q3 recalls declined 14% from Q2 (152 vs 177) but are still 14% above the quarterly average for the past 15 years. Environmental concerns have surged with Q3 events alone equalling the sum of 2020. It’s likely that an increase in electric vehicles and assisted driving will throw up new risks in 2022.
- Food and beverage Q3 recalls increased for the third consecutive month – potentially making 2021 a record year for recalls – from 1,120 in Q2 to 1,178 in Q3 2021. Contamination (other than bacterial) was the leading cause, with Ethylene Oxide topping events. Bacterial contamination, led by Salmonella, was the second most common cause. Packaging and mislabelling each experienced the largest increase, and fruit and vegetables remained the most recalled items.
- Pharmaceuticals Q3 recalls declined 29% from Q2, nonetheless YTD levels are already 11% higher than 2020. At this rate, 2021 will surpass 2018 levels. Safety risks have led for three consecutive quarters, followed by contamination/foreign materials and failed specifications. A third of all recalls originated in France.
- Medical device Q3 recalls increased almost 6% from Q2 with YTD figures already exceeding the 2020 total. Software is the leading cause of recall activity followed by manufacturing defects. New Medical Device Regulation (MDR) went live in May 2021 and could lead to even more recalls as it takes effect.
- Consumer products Insatiable demand, limited supply, and increased adoption of e-commerce is driving the prevalence of fake products. It’s estimated that 6.8% of EU imports, worth €121 billion, are now counterfeit. Proposed changes to product safety laws could place an increasing burden on manufacturers and sellers.
- Clothing Q3 recalls halved from Q2, but remain 11% greater than the 2020 average, indicating that 2021 recalls could exceed the previous year by around 13%. Injuries represent a third of risks, followed by chemical, and physical hazards. Children’s apparel remains the top recalled item.
- Electronics Recalls dropped in Q3 by 5% from Q2, but remain 26% higher than the 2020 quarterly average. USB chargers were the most recalled items and electric shock was the leading cause of recall activity. A new dimension in the recall landscape is the right to repair rules.
- Toys Following two consecutive quarters of decline, recalls plateaued in Q3. However, with the holiday season approaching and buyers flocking to online marketplaces, we expect a noticeable rise. Plastic dolls remain the most recalled item and choking risks the most common cause.
With no let-up in risks and recalls, companies must closely re-evaluate all manufacturing processes and vet supply chain partners. This includes investing time and resources now to review recall management, crisis communications plans and insurance policies in readiness for 2022.
As part of this, expert partners can help provide the insights that can save you from unnecessary regulatory and litigation costs. Given how quickly markets, demand and regulations are evolving, their insight can help you better safeguard customers and smooth compliance. Make sure you know the risks and what lies ahead.
Download your copy of the latest European recall index here.