Horsemeat: Food and drink industry paper reveals growing pressure

07 February, 2013

JLT Speciality (JLT) and Campden BRI have released a joint research paper into the food and drink manufacturing industry in the UK.

The paper, entitled ‘New World, New Risks’, claimed the most widespread response to how to combat growing pressures regarding profit margins was innovation, such as new products or encouraging consumers to shop differently by eating differently.

Head of membership at Campden BRI Bertrand Emond said: “Food and drink manufacturers have faced increasing pressure on their profit margins in recent years. Our research highlighted that volatility, and particularly the increase in the prices of raw materials, which is often exaggerated by fluctuating exchange rates, is a key concern and challenge.

“This is clearly putting pressure on the sector as it is hard to pass these increases on through the supply chain,” said Emond.

The food and drink manufacturing industry plays a leading role in the UK economy as the single largest manufacturing sector. It has a turnover of more than Ł70bn.

Jon Miller, Associate at JLT’s Food & Agri Practice, said: “While most of the companies we spoke to purchase the traditional insurance lines, such as property and liability cover, many professed concern over other risk areas. In particular there was a growing interest in product recall and contamination cover.”

The horsemeat scandal has been one of the contributing factors to heightening concerns surrounding this issue. Recalls in the UK food and drink sector doubled from 35 in 2010 to 70 in 2011, and stipulations requiring product recall and contamination insurance have become increasingly common.

Miller continued: “Manufacturers need to consider purchasing such cover, not just for the first party recall expenses, but also for retailer/third-party charges, as well as pre- and post-loss advice, which addresses key issues such as reputation management through specialist crisis consultants that are written into most policies”.





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