What Every Australian Manufacturer Should Know About Product Recall Risk in 2026

You have two days. That’s the window under the Australian Consumer Law between taking recall action on a product and notifying the Commonwealth Minister, and separately, two days to report a serious injury, illness or death connected to something sold, once a business becomes aware of it. This applies across consumer products generally, food included. If a business doesn’t already know who makes that call internally and how fast it can move, that’s the gap worth closing before a recall forces the question.

Recalls Are Rising, Above Average for a Second Year Running

Food Standards Australia New Zealand, which coordinates food recalls nationally, recorded 92 food recalls in 2025, above the ten-year average of 87. That follows 95 recalls in 2024, a 16 per cent increase on 2023. Since 2016, FSANZ has coordinated 866 recalls in total. The average annual figure has trended upward over the decade rather than settling, putting 2025 above the ten-year average for the second year running.

FSANZ is careful to frame this in context, worth repeating here rather than leaving out: most recalls are precautionary, initiated by the food business itself, not government action, and only a small number are linked to a reported case of illness or injury. A rising count can reflect better detection and stronger internal monitoring as much as it reflects a growing problem. That context matters. It doesn’t mean the underlying causes aren’t worth a manufacturer’s attention.

Undeclared allergens accounted for 38 per cent of all 2025 food recalls, with packaging errors, accidental cross-contamination and failure to communicate an ingredient change identified as the main contributing factors. Across 2021 to 2025, undeclared allergens and microbial contamination were consistently the two leading causes: a labelling and process problem as much as a product safety one. A supplier changes an ingredient. A packaging run uses an old template. A shared production line isn’t cleaned between batches containing different allergens. None of these require a defective product, only a documentation or process gap that becomes a legal and financial event the moment it’s discovered.

This isn’t only a food story. In December 2025, the ACCC required a national apparel retailer to pay $14 million for non-compliance with the mandatory safety standard covering products containing button and coin batteries, part of a broader regulatory focus this year on button batteries, infant sleep products, toppling furniture and lithium-ion batteries across all consumer goods categories, not just food. The two-day notification and injury-reporting clock applies equally across all of these.

The Two-Day Rule

Under the Australian Consumer Law, a business that takes voluntary recall action must notify the Commonwealth Minister within two days. Separately, a business that becomes aware of a serious injury, illness or death associated with a product it has sold or helped supply must report it within two days as well. The ACCC receives these notifications, assesses them, and publishes the recall on its Product Safety website. This isn’t purely voluntary either: the Commonwealth Minister can order a compulsory recall where a product will or may cause injury, doesn’t meet a mandatory safety standard or ban, or where a supplier hasn’t taken satisfactory voluntary action.

For food specifically, the practical process runs slightly differently: a food recall is coordinated nationally through FSANZ, working alongside the relevant state or territory food authority, which liaises directly with the manufacturer, importer or distributor to run the recall. 

A two-day statutory clock doesn’t leave room to build a recall process from scratch once an issue surfaces. Businesses that manage a recall well already know who authorises the decision and what happens in parallel, before day one of an actual event, and food businesses specifically are required to have a written recall plan in place under the Food Standards Code.

Why the Exposure Has Changed, Not Just the Numbers

Barrack Broking’s 2026 risk guide for the sector makes a point worth taking seriously: the rise in recalls isn’t necessarily because products have become less reliable. Regulators, retailers, insurers and consumers now expect a business to identify and respond to a problem far faster than before. An issue that might once have stayed contained can escalate within days: retailers suspending stock, customers sharing an incident publicly before an investigation is complete, and insurers requesting documentation on testing, traceability and supplier controls before a claim can be assessed.

This lands hardest on manufacturers running layered supply chains, outsourced manufacturing, or imported component networks, a large share of Australian food, beverage, toy and electronics production. The more hands a product passes through before reaching a shelf, the harder it is to trace a fault back to its source quickly.

The Financial Picture

Reliable, current per-recall cost data specific to Australia is hard to pin down, and several figures circulating in industry commentary trace back to overseas industry studies rather than Australian sources, worth treating with caution for that reason alone.

What is solidly Australian and current: FSANZ’s most recent estimate puts the annual cost of foodborne illness to the Australian economy at around $3 billion, up from $2.81 billion in the 2023 estimate and $2.44 billion in the original 2019-based study. Most of this cost comes from lost workforce productivity, followed by direct healthcare costs and premature mortality. This is an economy-wide figure rather than a per-recall cost to an individual business, but it illustrates the scale of what’s at stake across the sector.

The direct costs of an individual recall, product destruction, retrieval logistics, notification and compliance administration, are one layer. The costs that surface after a recall is technically over: lost shelf space, damaged retailer relationships, customers who don’t come back, are real but genuinely hard for any business to quantify in advance.

What Recall Insurance Actually Covers

Two points worth building into that rewrite: policy triggers usually require contamination, tampering, or a genuine likelihood of injury, a quality issue alone typically isn’t enough to trigger cover. And third-party recall cost cover matters for manufacturers supplying an ingredient or component into someone else’s product: if that component forces a customer’s own recall, the exposure can flow back to the original supplier.

What’s Changing on the Regulatory Front

The most significant current development isn’t the voluntary marketplace pledge, it’s a formal regulatory response set in motion by a consumer watchdog complaint.

On 3 June 2026, consumer organisation CHOICE lodged a designated complaint with the ACCC, arguing that the growth of online marketplaces has outpaced Australia’s product safety framework, allowing unsafe, banned and dangerous goods to reach consumers at scale. The ACCC published its formal response on 1 September 2026, agreeing the existing Australian Consumer Law has real limitations around online marketplaces. Rather than investigating the specific sellers named, the ACCC backed a bigger structural fix: the Federal Government has now tasked Treasury with leading reform to strengthen mandatory injury reporting, increase penalties, and introduce mandatory obligations for online marketplaces themselves, alongside exploring a new general safety provision that would apply to all consumer goods, something Australia currently doesn’t have.

For any manufacturer competing against, or selling through, an online marketplace, this is the regulatory direction to watch over the next year, considerably more consequential than the existing voluntary pledge, under which Amazon Australia, eBay Australia, AliExpress, Gumtree, Temu and, most recently, Fruugo have committed to 15 product safety measures beyond current legal requirements.

Separately, the ACCC is reviewing e-bikes, e-scooters and other e-micromobility devices, with new regulations under consideration. Manufacturers in adjacent electronics and battery-powered categories should treat this as an early signal.

What This Means for Your Business Right Now

1. Who has authority to initiate a recall, and do they know the two-day notification clock starts the moment recall action is taken?
2. Can an affected batch be traced through the supply chain fast enough to define the actual scope of a recall, rather than guessing conservatively?
3. If undeclared allergens or cross-contamination are the leading cause in your category, when was your labelling and shared-line cleaning process last audited specifically for this?
4. Is there a written recall plan in place, and when was it last actually tested, not just filed?
5. Does the current insurance program cover recall costs and lost gross profit during a recall, or only liability claims that might follow an injury?

That last question is what specialised product recall insurance is designed to answer, worth confirming directly rather than assuming a general liability or product liability policy already has it covered, because for most manufacturers, it doesn’t.

Getting Ahead of It, Not Just Insuring Against It

The businesses that come through a recall with the least lasting damage are the ones that had already thought the process through, not the ones improvising in real time. With recalls running above the ten-year average for a second consecutive year, and the regulatory clock for responding to one measured in days, this is worth reviewing now.

Want to understand whether your current cover responds to a recall event, not just a liability claim? Speak with Knightsbridge Insurance Group about your product recall cover.

Important Disclaimer: This article provides general information only and does not constitute legal or financial advice. Product recall obligations, regulatory requirements, and insurance coverage vary significantly based on individual businesses, product categories, and insurers. Statistics referenced are drawn from Food Standards Australia New Zealand and the ACCC, and reflect the most recently published data at the time of writing. Readers should confirm current regulatory requirements and consult with qualified legal and insurance professionals before making recall risk management decisions. Knightsbridge Insurance Group holds Australian Financial Services Licence 514855.

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