The True Cost of a Recall in 2025

Every manufacturer knows that product recalls are costly. But few grasp the true scale of the damage — until it's too late.

Let’s start small.

Retailers charge a nominal fee per store just to have staff walk the aisles and pull your product from shelves. Multiply that across hundreds of stores, disposal costs and you’re bleeding money before you’ve even addressed the root cause.

One real-world example? A yoghurt manufacturer faced a seemingly minor issue: a faulty lid. No consumer illness, no contamination — just a lid that wouldn’t seal properly.

Result? $141,000 in retailer withdrawal costs for just 2,000 units.

But that’s just the tip of the iceberg.

Brand trust: The cost you can’t measure

You can quantify freight, retailer fees, and agency costs. But how do you measure the customer who never returns? According to a Harris Interactive poll:

• 55% of consumers said they’d switch brands temporarily after a recall
• 15% said they’d never buy the recalled product again
• 21% would avoid any product from the same manufacturer

Case in point: after major spinach and peanut butter recalls in the U.S., almost three-quarters of consumers stopped buying those products in the first year. Even a year later, one in four were still avoiding them.

Recalls don’t just hurt sales — they delay launches, stall innovation, and drive loyal customers straight to your competitors. Some have knocked millions off company valuations, and that’s before regulatory penalties or class actions kick in. Case in point: after major spinach and peanut butter recalls in the U.S., almost three-quarters of consumers stopped buying those products in the first year. Even a year later, one in four were still avoiding them. Recalls don’t just hurt sales — they delay launches, stall innovation, and drive loyal customers straight to your competitors. Some have knocked millions off company valuations, and that’s before regulatory penalties or class actions kick in.

Where the money goes: 10 hidden costs you can’t ignore

1. Communication & notification: Legal requirements mean multi-channel announcements to state and territory government agencies, industry groups, relevant newspapers, and point-of-sale. These need to be fast, wide-reaching — and expensive. You may need a dedicated team or external support. Many retailers also host recall announcements on their websites (e.g. Woolworths recalls).
2. Product retrieval: Labour, logistics, shipping, and handling, plus paying back retailers for lost sales and shelf space, as well as for physically removing the product from their shelves. 2D barcodes can help retailers pinpoint which specific batches are affected and trace them back through the production line.
3. Disposal: Incineration, landfill, or specialist destruction. This is especially complex (and costly) for multi-component products.
4. Public relations: A robust PR response can significantly limit brand damage during a recall. However, crisis communication requires specialist expertise and a substantial budget. You may need to consider hiring an agency.
5. Legal support: Recalls involving safety risks or allergic reactions? Prepare for claims, litigation, and compliance reviews.
6. Compensation: Both consumers and retailers may need reimbursement, particularly If consumers have fallen ill or been harmed by the product. For example, they may have had an allergic reaction due to undeclared allergens, which was the most common cause of food recalls in Australia between 2020-2024.
7. Manufacturing process review: Whether it’s a labelling error or a quality issue, your processes will need fixing fast.
8. Production downtime: Every minute your line is down is profit lost. Worst case? Temporary plant closures.
9. Re-manufacturing: Once recalled stock is destroyed, it all needs replacing fast before consumers start buying from your competitor.
10. Customer service overload: Hotline setup, social media monitoring, trained staff on standby – it all adds up.

The bottom line

One small error on your production and packaging line can spiral into a multi-million-dollar problem. But remember, these errors are preventable with the right technology and processes in place.

From labelling mistakes to packaging errors, food and beverage manufacturers face relentless pressure to get it right. But advancements in technology mean that, while no system can eliminate risk entirely, you can reduce it dramatically with smarter, automated processes:

• Vision inspection: Check closures for tamper seals; inspect presence, position and formation of codes; validate presence and position of labels; inspect product for fill levels, product content, shape, size etc; and much more.
• Automated label verification and barcode validation: Validate code presence and code quality to ensure each product meets the highest retailer standards, or add a packaging variant scannable code to ensure it is current.
• Ingredient traceability via 2D barcodes: Encode batch, lot or serial numbers into 2D barcodes so you can pinpoint affected stock anywhere in the supply chain, and only recall what’s necessary.

These are no longer “nice to haves” – they're essential.