The Cost of Food Fraud or “Does This Vodka Taste Like Bleach to You?”

by Morgan O'Rourke on June 27, 2013 · 1 comment

vodka

In the May issue of Risk Management, Emily Holbrook reported on the prevalence of food fraud in restaurants and supermarkets around the world. Characterized by counterfeit or purposely mislabeled foods used by unscrupulous producers looking to make a quick buck, food fraud manifests itself in many ways. Sometimes its as unsettling as pig rectum in place of calamari or horse meat for hamburger, while other times its farm-raised fish sold as “fresh-caught.” Regardless of the nature of the deception, customers are put at risk. Not only are they conned into buying more expensive items, but they can also be exposed to pathogens or toxins that they would have no reason to expect in their food.

The New York Times recently reported about instances of fake vodka laced with bleach to lighten its color or olive oil contaminated with engine oil to extend the supply and increase profits. It turns out that food fraud is more widespread than most people realize. 

“Around the world, food fraud is an epidemic — in every single country where food is produced or grown, food fraud is occurring,” said Mitchell Weinberg, president and chief executive of Inscatech, a company that advises on food security. “Just about every single ingredient that has even a moderate economic value is potentially vulnerable to fraud.”

The Times article goes on to cite a report by the United States Grocery Manufacturers Association, which puts the cost of adulteration and counterfeiting of global food and consumer products at $10 billion to $15 billion a year. The study further indicates that a single adulteration incident could cost a company anywhere from 2% to 15% of a company’s annual revenue. To use a bad pun, this is not small potatoes. Even the bleached vodka scheme was estimated to have cost the British government $2.3 million in lost tax revenue.

So given how pervasive and lucrative food fraud has become, companies will need to be more diligent to protect their bottom line and their reputations and to protect public safety, governments will need to fight back as well, either through regulation or prosecution. When there’s this much money at stake, the problem will only get worse. Hopefully it won’t take a widespread illness from food contamination to make it better.

Morgan O’Rourke is editor in chief of Risk Management magazine and director of publications for the Risk & Insurance Management Society (RIMS).

{ 1 comment… read it below or add one }

slftrial June 30, 2013 at 11:27 pm

It’s important for the companies to ensure that their products are safe for public consumption to avoid getting their brand into test and reputation at risks.

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