Widespread food fraud and significant supply chain disruption are driving greater risks for global beverage brands, a report by Lloyd’s Register (LR) says.
A survey of 100 senior executives in the beverage sector found 97 per cent had been affected by food fraud in the past 12 months, and 80 per cent agreed food fraud was a growing concern for their business.
LR said that despite the risk to brands and potential serious consequences for people’s health, only 37 per cent of those surveyed regard managing fraud as a ‘very high priority’, with a minority (one in five) in the alcohol sector rating it as an ‘average priority’ or lower.
LR global technical director Kimberly Carey Coffin said COVID-19 had highlighted deep-rooted issues in beverage supply chains.
“With food fraud occurring almost universally across the sector and supply chain performance under pressure, it is hard to believe that the two aren’t linked,” Coffin said.
LR found 92 per cent of beverage manufacturers reported ‘significant’ supplier issues in the last 12 months, with 70 per cent of confirming they had been forced to change at least one of their suppliers in the past year.
Coffin said the stakes were high when a brand’s reputation is at risk. Food fraud is not an easy fix due to the dynamic nature of where and how fraud risk arises, but “doing nothing is not an option”.
“A systematic assessment of the vulnerabilities across supply chains is essential to understand where weaknesses lie, but there is clearly a long way to go, given that industry standards are currently being overlooked when vetting suppliers.
“The simple step of adopting Global Food Safety Initiative (GFSI) benchmarking is a solid first step towards much needed peace of mind in times of growing uncertainty and risk,” Coffin said.
LR’s findings showed only 32 per cent confirmed they check suppliers against a recognised GFSI benchmark standard. Almost one in five (19 per cent) admitted that either no food safety checks are made as part of sourcing decisions, or that meeting regulatory requirements is considered sufficient, it found.
LR’s Confidence and Supply Chain Risk in the Beverage Sector report said the findings showed an undermining of confidence in supply chains and said food safety had to be given.
Its survey revealed only half of respondents reviewed supplier performance at least annually, with 40 per cent reviewing performance every one to two years. A further 10 per cent confirmed their reviews take place every two years or more. Additionally, when an issue does arise, only around one third (32 per cent) address the issues in collaboration with the supplier.
Coffin said: “The key point to understand when managing risk, is not all suppliers are equal and one size does not fit all. Being able to flex how performance is managed across suppliers with different risk profiles can ensure a more appropriate mix of proactive and reactive measures to build confidence levels.”
The full report is here.