Being required by the Food Standards Agency to issue a public recall of products is a major setback for any food or drink producer. On the one hand, it will agree it does not wish to pose any risk to consumers and to ensure that they are not exposed to harm; but a public notice of product recall can have a devastating effect on public confidence in a brand. While many producers will have insurance in place, that is to cover the cost of the recall and does not protect them against a devaluation of their goodwill or loss of future sales.

The publicity given to the recent recall by Muller of some of their Cadbury dessert product range is a prime example, but raises public concern over not one, but two well-known brands. But while described as “Cadbury desserts”, they are not manufactured by Cadbury at all – the producer is Muller who has been granted a licence to manufacture them in return for what is assumed to be quite substantial royalties. The owners of the Cadbury brand Mondelez (Kraft Foods), must now stand back and look on as Muller control the process for product recall as the manufacturer; but if there is any negative impact it will affect not only the Muller brand but also Cadbury – after all they are described in news reports as “Cadbury desserts”, not “Muller desserts”.  Will consumers see this as a Muller problem or a Cadbury problem? 

The fact that the products are manufactured under licence may come as a surprise to many consumers. But granting a licence to generate royalty income from a well-known brand is common practice – just think of character merchandising.  And what about franchising? For fast food, franchising is the go-to structure with outlets opening under the management and ownership of local operators paying their monthly franchise fees to the franchisor in return for access to the brand, the marketing and the background support. Franchisors know more than others of the risk of bad publicity. While they set very high standards, particularly for food production, there can be occasions where things go wrong and bad publicity about one outlet will not name the operators, but the franchise brand. In such circumstances, franchisors may step in and look to control the response and process.  Just as they set down how the franchised business should operate and the standards it should meet, they want to ensure any issues are dealt with correctly.  And they will have the advantage that where they are successful franchisors, the nature of the franchise model should ensure that bad publicity is, given the restricted geographical area of franchise operation, kept relatively local.

For Muller and Cadbury, however, that is not an option. Both are multinational players so the fact affects the brand accordingly.  As the producer, Muller will be coordinating the product recall  and has responsibility for any claims. If there were any consequences Cadbury as the licensor will have no liability – but are left to look on knowing that while they are unlikely to have any part in the recall process, it is their brand as much as Muller’s which may suffer. A glass and a half full or a glass and a half empty?