Do you know what you are really selling?

January 2016

Co-written by Julia Leong, Partner, Food Supply and Integrity Services and Desiree Beeren, Manager

Food scandals have been on the rise in recent years. When news of horse meat being sold as beef broke, even consumers outside of the affected region exercised caution in their future purchases. It has been three years since the scandal, but it remains vividly remembered by consumers globally.

Closer to home, we have seen fake herbal tea imported from China being sold here in Singapore[1] and it was reported that the Malaysian government had seized RM250, 000 (S$94,058) worth of imitation products of a popular chocolate beverage in a raid last year[2].

According to the Global Food Safety Initiative, food fraud refers to a deception of consumers using food products, ingredients and packaging for economic gain and involves any substitution, unapproved enhancements, misbranding, counterfeiting, and stolen goods.

Hence it is vital that companies continually ask themselves - What am I really selling?

Beyond the economic cost, estimated by the Grocery Manufacturers Association (GMA) to be US$10- to US$15-billion annually, a single food fraud incident can lead to serious health risks for consumers[3] and adversely damage your business’ brand and hard-earned reputation. It can make a company go out of business.

Yet, food counterfeiting is expected to flourish. The rising cost of food production, coupled with intense competition in the retail sector, has driven food companies to aggressively cut costs – resulting in the increased complexity in food supply chains which present many opportunities for food adulteration.

As the awareness of food safety and integrity continues to rise among consumers and the industry, tackling food fraud gets more demanding as it faces these challenges: a lack of upstream supply chain visibility, poor supply chain risk management practices, low margins and the presence of complex and constrained regulatory frameworks.

While food fraud is not new, regulators, food companies and consumers are beginning to uncover how extensive the problem is and are taking it very seriously. Food is an industry where customer trust and confidence is paramount. It is critical for governments and the industry to take a more strategic and innovative approach to tackle the problem effectively.

How confident are you in the integrity of your food products? Here is a checklist of questions that you need to continuously ask yourself:

How confident are you in the integrity of your food products?

  • Is fraud considered a significant issue in your industry and company?
  • How simple is it to adulterate or counterfeit your products?
  • Do you have reliable detection methods in place?
  • Are you able to rapidly report incidents?
  • How would you describe your production lines and process activities?
  • How transparent is your part of the food supply chain?
  • Do you know your suppliers, and beyond tier one suppliers?
  • Do your suppliers have counter food fraud strategies in place?
  • How robust is the recall process you have in place?

Companies are losing money and customers are losing faith. Trust in food is being challenged as your fraud risk increase. Current food safety management systems are not designed for fraud detection or mitigation, but new food safety guidelines will require it. To ensure resiliency in your end-to-end food supply chain, it is essential that your company takes a proactive approach to tackle food fraud.

Your first step may be to assess your company’s vulnerabilities using our free-to-use Food Fraud Vulnerability assessment online tool. Jointly released by PwC and SSAFE, completing this online assessment will provide you with your company’s potential food fraud vulnerability which can form the basis for the development of controls to reduce identified vulnerabilities.

At the end of the day, you want to confidently tell your customers that you know what you are really selling.

[1] The Straits Times, “Fake China herbal tea being sold in Singapore”, October 2014
[2] Asia One, “Fake Milo found in Malaysia”, March 2015
[3] Consumer Product Fraud and Deterrence 2010 study by the Grocery Manufacturers Association

Contact us

Julia Leong

Partner, Southeast Asia Food Trust Leader, PwC Singapore

Tel: +65 9756 2123

Tan Hwee Ching

Senior Manager, Food Trust Specialist, PwC Singapore

Tel: +65 9627 8602

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