Food & Beverage

From farm to fork, Marsh collaborates with food and beverage companies to identify and mitigate the various risks they face.

As consumers become more health, social, and environmentally conscious, food and beverage companies around the world are evolving their business models to meet these needs.

Companies are increasing their adoption of technology and expanding supply chain structures to maintain market share, while facing challenges from severe weather events, increasing regulations, and cyberattacks. The COVID-19 pandemic accentuated and exacerbated many of these risks as some supply chains failed or were severely curtailed.

While these evolving trends carry significant risks, they also create new opportunities. Choosing cost-effective risk financing alternatives and implementing risk management practices that exceed industry standards is critical for many food and beverage businesses, especially while capital is tight as they emerge from the lowest points of the pandemic and seek to capitalize on new commercial possibilities.

Marsh helps food and beverage companies – from manufacturers and processors to distributors, wholesalers, and restaurants – anticipate the risks they face, understand their impacts, and implement comprehensive plans to mitigate them.

The food and beverage industry and the restaurant industry are confronting dramatic changes amidst globalization and trade liberalization. The public’s concern regarding food safety is rising and national regulations and safety standards are being tightened. The Internet continues to expand, and harm to the reputation as a result of foreign substances in food, food poisoning, and so on can cause greater damage to companies than ever before. Under these circumstances, mitigating significant risks such as harm to reputation and recalls and minimizing economic losses and damage to corporate image are urgent issues.

Recently, Japanese food and foodstuff makers and restaurant companies have been establishing overseas operations and have conducted numerous M&A in Asia. In many instances, Japanese companies are developing overseas joint ventures and franchises and building large-scale plants. Supply chains and operations are becoming extremely complex. As a result of these developments, risk management and risk hedging from a global perspective have become even more important.

Marsh has extensive experience formulating risk management strategies in the global food and foodstuff industries and offers insurance programs to minimize losses from recalls and other risks. By using its knowledge and information-gathering capabilities relating to overseas recalls and M&A, Marsh is able to broadly provide services to companies that are considering development of business in Japan and overseas. Teams that include food safety and crisis management specialists can tour plants to identify risks and propose risk mitigation measures and improvements.

Restaurant industry

The restaurant industry entails a wide range of risks including food poisoning, foreign substances in food, labor issues, accidents, and involvement in crime. Marsh Japan handles risk management for leading restaurant chain companies in Japan. In addition to evaluating and assessing risks in the restaurant industry and designing and proposing insurance programs, Marsh also provides risk mitigation consulting such as proposals for accident prevention based on its extensive experience and knowledge. Marsh also prepares reports and makes proposals for improvement based on on-site assessments of restaurants and other facilities.

Food an beverage makers

Recalls poses a risk of substantial losses to food and beverage makers. Marsh proposes insurance programs that offer broad coverage from expenses for replacement, disposal, repackaging, and warehouse storage and transportation to additional expenses for business interruption and personnel and expenses for restoring product and brand reputation. Marsh also uses its global network and has its teams of specialists perform on-site surveys of overseas plants to provide global scale risk management support to companies conducting M&A or overseas business development.

Global

Marsh Japan is a wholly-owned subsidiary of Marsh LLC, a leading company in the insurance brokerage and risk advisory industry. Marsh Japan has extensive knowledge concerning risk management in the food and restaurant industries throughout the global environment including information on recall circumstances in North America, which has strict regulations, risks regarding joint ventures and M&A in Asia, and operational risks after establishing tie-ups. By working with consultants that have far-reaching experience overseas and using our global network, Marsh proposes international solutions for mitigating, transferring, and managing the risks posed by global supply chains.

Recall

Recalls, which can impose massive economic losses on companies, have been increasing in recent years. Marsh evaluates corporate recall countermeasures, proposes preventive measures, and provides support to minimize the impact when a recall is unavoidable. Marsh is able to provide support from the perspective of risk mitigation with regard to a wide range of countermeasures including identification of issues regarding recalls, insurance coverage review, assessment of statutory and regulatory compliance, quantitative analysis of sales losses and total recall-related expenses, development of information management systems, development and management of infrastructure for recovering and replacing products, preparations for recovery, and creation of complaint processing procedures.

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FAQs

Some of the top risks facing food and beverage companies include:

Cyber risk: Cyber risk has implications beyond customer privacy concerns. In addition to the possible theft of customer data, companies should be aware of malware and ransomware attacks which can shut down operations.
Property risks stemming from severe weather events: The increasing severity and frequency of weather events can damage crops, shut down processing facilities, or otherwise disrupt the supply chain.
Product contamination: Product contamination can lead to foodborne illnesses and have catastrophic outcomes, including loss of life. Such incidents can damage a company's reputation and affect its bottom line.
Employee safety: Workers in the food and beverage industry are at risk of on-the-job injuries due to operating large equipment or working in often hectic food preparation environments. Medical, return-to-work, and claims costs tend to have the greatest impact on a company's total cost of risk.

The insurance needs of food and beverage companies may vary by geographic location, product type, and other factors.

In many developed nations, companies of any description are required to carry workers’ compensation insurance (sometimes called “workers’ comp”) or its equivalent, in case of accidental injury to or the death of an employee. Due to the inherent risks of working in the food and beverage industry, especially for personnel assigned to production lines with heavy equipment, it is essential that any employer provide this type of coverage where legally obligated.

Other types of insurance may include general liability insurance, which can sometimes be bundled into a general business owner’s policy that includes property insurance, commercial auto liability insurance for business-related transportation, and liquor liability insurance. In the event of international transport or shipping, for example of food commodities or large-scale production of consumer packaged goods, more specialized insurance coverage may also be warranted.

Cyber insurance is an important coverage that food and beverage companies should consider as they are increasingly leveraging technology in their business models and day-to-day operations. A cyberattack can significantly impact your organization, from business interruption to other financial losses.