The deliberate mislabeling, adulteration or tampering of food products for economic gain — otherwise known as food fraud — is on the rise, costing upwards of $40 billion a year. Geopolitical conflicts, shifting consumer preferences scrutinizing the sustainability of raw ingredients, and an evolving yet often unclear regulatory framework have all contributed to the problem. The question for suppliers and food and beverage brands: What can be done at the supply chain level to reverse the trend?

Blind spots in sourcing and a lack of due diligence and industry oversight have made it easier for food fraudsters to penetrate the supply chain. From selling horse meat as beef to diluting olive oil with cheaper oils, using cheaper species of fish but labeling them as premium types, and adding melamine to falsely increase the protein content of milk, consumers are being cheated — not to mention the health and safety concerns. 

Trust within the industry is eroding, necessitating urgent and comprehensive regulatory reforms, and better transparency and collaboration across the entire supply chain. Brands and their suppliers share the responsibility to take proactive measures now, not only to demonstrate their commitment to ethical business practices but also to safeguard their reputation and competitiveness in an increasingly discerning market.

Following are five steps that brands can begin taking now to safeguard the future of our fragile food and beverage supply chains.

Embrace environmental, social and governance (ESG) compliance — don’t fight it. While food fraud and sustainability are often thought of as separate issues, there is substantial overlap. Creating a sustainable supply chain requires deep familiarity with suppliers, and a high degree of visibility into complex supply chains all the way back to the point of cultivation. Likewise, eliminating economically motivated adulteration of food products requires effective strategies for traceability and supplier transparency. Some issues encompass both food fraud and sustainability, such as seafood fraud, which often results in vulnerable species being harvested illegally and intentionally mislabeled. Brands and suppliers that embrace the technology and process evolution required to address sustainability may find themselves better equipped to address food fraud as well. 

In a 2023 report, TraceGains found that 64% of brands acknowledged the importance of being ESG-compliant. Today, less than a year later, that recognition is turning into action, with 44% placing greater emphasis on supply chain traceability, 42% using sustainable ingredients in product formulations and packaging, and 37% demanding more from their supply chain partners.

Sustainability regulations continue to move forward in many jurisdictions, particularly in the EU. Its Regulation on Deforestation-Free Products, in particular, will push the industry toward lot-by-lot traceability in ways that will likely have impacts on both fraud and sustainability initiatives. There’s global recognition that the sooner brands get on board, the closer the industry gets to mitigating many of the risks associated with food fraud.

Monitor each step of the supply chain. Multiple regulatory themes are now converging for supply chain traceability, which remains an important topic and vexing issue for the food and beverage industry as a whole. Food safety initiatives such as the U.S. Food and Drug Administration’s FSMA 204 Order for Traceability are creating additional urgency for greater transparency.

Traceability ensures that products are sourced from legitimate and reputable suppliers, reducing the risk of counterfeit or adulterated ingredients entering the production process. By closely monitoring suppliers and ingredients, brands can verify authenticity, quality and compliance with regulatory standards, preventing fraudulent activities like mislabeling or substitution. Traceability also helps detect any anomalies or discrepancies in the supply chain, empowering brands to take immediate corrective actions and prevent potential fraud before it reaches consumers.

Develop strong relationships with suppliers. This is essential to fostering trust and accountability throughout the supply chain. Due diligence enables brands to verify supplier reliability, compliance with regulations and commitments to ethical practices.

By regularly auditing and inspecting suppliers, brands can closely monitor their performance and adherence to quality standards. Both parties can work together on proactive risk-management strategies, such as sharing best practices, conducting joint training programs, and implementing more effective traceability measures. Suppliers that prioritize transparency and integrity are a brand’s strongest allies in the fight against food fraud.

Implement comprehensive testing protocols. Thorough protocol testing at various stages of the production process is essential for brands to verify the authenticity, quality and safety of their products. This includes ingredient testing to ensure accuracy and purity, product testing for contaminants or adulterants, and packaging testing to prevent tampering or counterfeiting. Regular and systematic testing helps brands detect potential fraud or irregularities early, allowing for prompt corrective action and preventive measures. When testing is performed externally and a certificate of analysis (CoA) is provided, it’s equally important to ensure that processes and capabilities are in place to review CoAs comprehensively, and compare them to relevant product specifications in real time.

Put technology ecosystems to work. To truly fortify their efforts against food fraud, brands must harness the power of networked ecosystems. Networked technologies enable transparent recordkeeping, ensuring the traceability and authenticity of products from farm to fork. AI-driven analytics can analyze vast amounts of data to detect patterns and anomalies indicative of fraudulent activities. Internet of things (IoT) sensors can monitor environmental conditions during transportation and storage, ensuring product quality and preventing tampering. Most importantly, when valuable network data is standardized and shared across an ecosystem of brands, manufacturers, and suppliers, it creates a powerful incentive for good behavior. Suppliers with strong performance scores and a track record of transparency and diligence can achieve meaningful competitive advantages within networks, accelerating growth and taking market share.

The food and beverage supply chain is arguably the most critical and fragile in the world, given its downstream effect on human health and well-being. At the center of it all, brands play a pivotal role in combating food fraud. They increasingly realize that prioritizing consumer safety and environmental stewardship through transparency, traceability, and strong ESG initiatives isn’t merely a gesture of goodwill, but a strategic imperative. Taking proactive steps to validate standards, partner with suppliers, and build a more transparent global supply network will be essential to safeguarding product integrity and building enduring trust with consumers.

Paul Bradley is senior director of product marketing with TraceGains.