How much can you trust the food you eat?

Some of the most popular brands in India and globally have had their share of turbulence in the past. Companies have lost trust, money and reputation and customers have lost faith

By PwC
Published: 20, Sep 2017

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Managing and maintaining brand reputation for safe and high quality products is critical for any food company

Today, all of us travel – whether for work or pleasure or both. Traditionally, drinking water has been a cause of concern among travelers and today “safe” bottled water is commonly available across the globe. Further, many of us use hand sanitizers before we eat, which is again a good hygiene. However, do we stop to think about the food which we eat? Are we paying enough attention to, or should we be concerned about the health & safety and hygiene standards which are followed while producing those delicious noodles, burgers and softdrinks that almost all of us indulge in; and which our children are virtually growing up on?

Be it concerns around higher-than-permissible levels of specific ingredients in noodles or the worms in found in chocolate bars or lizards & rats in fries or be it adulteration of milk, edible oils or spurious liquor, all these are just a few examples of many that have rocked consumer confidence. This, combined with omni--present social media and increasing consumer activism, ensures that nowadays rarely a month goes by without such news of food scandals. Some of the most popular brands in India and globally have had their share of turbulence in the past. Companies have lost trust, money and reputation and customers have lost faith. The food industry is often accused of perpetrating a massive health and economic fraud. It may be in various forms like substitution, dilution, counterfeiting, tampering or misrepresentation ingredients, etc. The causes vary from accidental contamination to pure negligence – but the public outrage is universal.

Food is an industry where customer trust and confidence is paramount. A crisis event can threaten the very viability of a business. Such a crisis event deviates the business from pursuing its strategic growth path and re-allocates almost all its resources from competing in the marketplace to fighting for survival. Companies that have undergone the above food safety incidents have since deviated from their long term strategic plans to remain just about viable to enable re-building of the brand.

Managing and maintaining brand reputation for safe and high quality products is critical for any food company. In the past it may have been enough to produce affordable food, but now only those companies that earn the trust of consumers survive. The collisions of the megatrends and associated consumer demands means companies must not only deliver on quality and transparency but also continuously maintain trust.

Today the consumer is always hungry; hungry for more choice, value and quality information. It’s a challenging (and an important) problem companies need to solve: how do you satisfy a market hungry for more while incorporating consumer demand and feedback? When it comes to health and safety around food products, consumers rightly insist on compliance with measures that ensure their safety. People want to know more about what they’re eating and feeding to their families, its nutritional values / health impact, how it has been grown, processed/ manufactured and much more.

In India the apex Food regulator, Food Safety and Standards Authority of India (FSSAI) implements and enforces food regulation as prescribed in the the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulation, 2011.

Building trust is a winning strategy that all successful food companies are prioritising and investing in to win customer preference and thus market share. This is one of the greatest opportunities for food companies to make a difference. Some of the leading companies have been able to identify this opportunity and have proactively respond to food trust concerns and safeguarded themselves against exposure to potential scandals.

Any agribusiness value chain, from production to final consumption, can only benefit from having greater transparency and credibility along its multiple links. A good case in point is that many companies selling branded tea have started re-looking at their supply chains to ensure ethical sourcing of tea and mention this information on their retail packs.

Food fraud requires a comprehensive action to the issues challenging the modern-day supply chains. Areas where Companies need to be watchful includes usage of third party manufacturer / co-packers, sourcing of alternative raw material, ensuring usage of food grade primary packing material, changes in vendors or usage of one time vendors, existing & upcoming regulations / legislations, maintenance of product shelf life, hygiene and storage norms across the value chain, management of crisis and product recalls. Strengthening internal controls around these aspects and bringing in stringent monitoring mechanisms has become one of the most important requirements for affected companies.

The impacts of a disruption are costly, brand damaging and far reaching. And concernedly, they are happening in an environment of increased regularity and governance – accelerated and exaggerated by the megatrends reshaping society.

Companies now are more alert to these issues and are investing millions to ensure integrity and safety throughout the supply chain. However, the focus of these investments is often diluted for prioritizing short term gains in cost efficiency over long term profits through efficient risk management.

Companies needs to move beyond traditional program based on food science to developing an effective strategy focused on a preventative, risk-based approach to food frauds and effective crisis management. Viewing food trust strategy through a risk-based, preventive lens, with a focus on quality management, product integrity and traceability will help in building and sustaining trust.

As Napoleon Bonaparte famously said, an army marches on its stomach; food is a necessity for life and only the best will do – your customer will not take a perceived or real risk to their own or their family’s health. Trust is everything!

By Neeraj Gupta, Leader – Risk Assurance Services and Pallavi Godbole, Partner (Retail & Consumer), Risk Assurance Services, PwC India.

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