Hospital devices Medical devices

The online source of the food & drinks industry in Europe

The growing challenge of food crime

Food crime is Big Business, with annual revenues estimated to be in the neighbourhood of 50 billion US dollars (over 42 billion Euros). The business is also growing, potentially much faster than its legitimate counterpart. Nevertheless, new market forces after the financial crisis are likely to exacerbate the problem further. Among them are declining brand loyalty, the internationalization of supply chains and the emergence of online shopping.


Scandals underline global scale
The global scale of food crime and the sophistication of its practitioners are underlined by a series of high-profile scandals. Some examples include the discovery of melamine in milk powder in China in 2008, and of horse meat in ‘pure’ beef in Britain in 2013. This year witnessed a ban on beef produced at several Brazilian plants after the discovery that bribes had been paid to clear shipments of rotten or contaminated meat, and more recently, an outcry about the contamination of Dutch eggs with the insecticide fipronil.


Olive oil: top target for fraud
Olive oil was identified in 2013 as one of the largest targets for food fraud by the European Parliament’s food safety committee. One reason is the near 5-fold price differential between pomace olive oil, extracted from residue, and extra virgin. The Parliament’s warning could not have been more timely. At the end of 2015, Italy announced an investigation into seven of the country’s leading olive oil companies for allegedly passing off inferior quality virgin olive oil as extra-virgin. The damage was huge. Within months, according to ‘Forbes’, it was “reliably reported that 80% of the Italian olive oil on the market is fraudulent.” 

Wide range of opportunities
Nevertheless, several other food products are vulnerable to adulteration, too. Examples include diluting of honey with sugar syrup, adulteration of vodka with methanol or anti-freeze, switching cheap fish for top line varieties like haddock. In 2016, Oceana released a report stating 33% of all fish sold in the US was fraudulently labelled. In the UK, the new National Food Crime Unit has reported the diversion of offal from slaughterhouses for use in catering, and shellfish obtained from areas dangerously contaminated with sewage. Other problems include takeaways where lamb is replaced by cheaper meat and fraudulent claims by restaurants of ‘organic’ food.

Counterfeiting – another angle in food crime
Fraud is accompanied by counterfeiting, the burgeoning but less sensational side of food crime.
The counterfeit food business is especially vulnerable to a fall in brand loyalty, accompanied by the growth of private label, lack of transparency in supply chains, and the growth of online shopping. For some, it is ironic that rather than the threat to Coca Cola from brands like Coca Colla in Bolivia or to Diageo from Johnny Worker whisky in India, the problem with food and beverages counterfeiting has moved to the heart of industrialized countries.

Young consumers and food crime
According to a 2014 PwC survey, 18% of respondents in Britain admitted to buying fake alcohol. The report found that younger respondents – tomorrow’s consumers – were more willing to knowingly buy counterfeit goods. A closely associated risk here is the transfer of responsibility. A pan-EU survey by MarkMonitor in Italy found a third of respondents stating it was the brand’s job to protect them from counterfeiters.

Low brand loyalty in sector
Brand loyalty in the packaged foods (and beverages) sector is notoriously low, and falling – above all in North America. In 2015, a survey by Brand Keys’ found five vodka and one beer brand in the Top 100 list.  However, a flagship of American brand strength, the breakfast cereal, which comprised eight of the Top 100 brands in 2010, had disappeared altogether. 
The picture is somewhat different in Europe.
In France, for example, brands like Danone, Ferrero, Kinder, Nescafe, Nespresso, Rocher Suchard and Yoplait are ranked in authoritative surveys (e.g. by Cohn & Wolfe’) among the Top 100, alongside leading alcoholic beverage brands. One surprise in France is the inclusion of American breakfast cereals brand General Mills in the  Top 100, a status which has been lost in the US – as we have remarked.  In other European countries, surveys of brand trust - for example by Reader’s Digest, Best Brands and IPSOS - tend to focus on separate market categories.

Price can swing choice
Nevertheless, like in the US, more loyal European consumers too are considering price to be a determining factor in their buying choices. This trend has strengthened after the recession. Growing consumer desires to bargain shop for quality products provides an environment for counterfeiters to thrive – especially when fakes have a similar look and feel.  In addition, in both Europe and the US, millennials are far less loyal to food brands than baby boomers.
In June 2015, a report by European brand consultancy Europanel reported that brand trust and price were not uniformly correlated across Europe. High price brands were generally more trusted in France, Germany, Italy and the UK. The situation was reversed in the Netherlands and Spain, where expensive brands were less trusted, while in Scandinavia, low price brands obtained the maximum trust.

The supply chain, cost control and food crime risk
As a result of the financial crisis (and changes in consumer behaviour), the food industry is also seeking to lower shelf prices by reducing cost. This pressure has transferred down the supply chain, with a search for alternative new sources.
Smaller downstream suppliers (e.g. of primary or semi-processed farm products), who are already at the low margin end of the business, see cutting corners as an element of survival. Several food fraud scandals cited at the beginning of this article have been the result of precisely such pressures. For counterfeiters, too, a search for new suppliers by the food industry offer multiple, untraceable opportunities to undercut traditional partners and make their goods enter the supply chain (often in the form of raw or semi-processed farm products, additives and ingredients).
At the beginning of this year,  Italy’s State-run RAI television reported that over half of olive oil bottles claiming to be ‘100 percent Italian’ actually contained oil made from olives grown in North Africa, the Middle East, Turkey, Greece or Spain.

Retailers versus the food industry
The need for price- and cost-control have impacted directly upon retailers and food companies.
Last year, British retailer Tesco and Unilever settled a bitter public dispute over wholesale prices. Unilever, which makes several food products outside the UK, demanded a 10% rise in prices to compensate for a drop in the value of the pound. Tesco retaliated by dropping some Unilever brands. Eventually, the two resolved their differences.
The spat led not only to the disappearance of several Unilever brands from Tesco shelves. Unilever also removed them from its website, illustrating the growth in importance of the online marketplace. Indeed, five years prior to its tiff with Tesco, Unilever e-commerce director Andy Houghton had noted at the 2011 IGD Online Grocery Retailing conference in London that consumers were “up to 15 percent more brand loyal” when shopping online than at physical retail outlets.
Houghton’s on online branding followed comments by Sainsbury’s commercial director Mike Coupe that consumers were becoming more aware of the prices charged by retailers, driven in part by the ability to compare prices online – which was one of the problems Tesco faced in its dispute with Unilever.

Counterfeits and the Internet
Indeed, the Internet has become a major facilitator for trade in counterfeit food and beverages, by permitting marketing and sales around the world. 
Online marketplaces like China’s Taobao, part of Alibaba, is among the world’s Top 20 visited websites. Counterfeiting on Taobao has become endemic enough for the US to add it to its Notorious Markets List.
Stand-alone websites too offer their own set of challenges, given the lack of control on domain names and trademark infringements, and the mimicking of marketing techniques from legitimate websites. Cross-border efforts at control such as the joint INTERPOL-Europol Operation IOS VI in 2015 led to the closure of just 1,000 sites trafficking fake goods, in spite of participation by counterfeit hotspots such as Hong Kong, China, Panama and Thailand.
Currently, one of the biggest areas for attention is social media. Counterfeiters have begun to set up profiles to lure users out of social media and into online marketplaces in the Internet to sell counterfeit food and beverages. One of their means to attract victims has been advice on areas like health and organic foods.

Health risks range from poisoning to death
The above developments underline the challenges of counterfeit and fraudulent food products.
In addition, there is another consideration - namely health risks to consumers from counterfeit products. These can range from poisoning to death. For example, more than 40 people were killed after drinking methanol-contaminated vodka and rum in the Czech Republic in 2012.
In May 2015, Michael Ellis, head of INTERPOL’s trafficking unit, observed that “Fake and dangerous food and drink threaten the health and safety of people around the world who are often unsuspectingly buying these potentially very dangerous goods.” 

Operation Opsen
Ellis made these comments after the conclusion of Operation Opsen, an annual Europol-INTERPOL initiative launched in 2011, targeting counterfeit and adulterated food and drink.
In April of this year, Opsen VI (to mark its sixth year of operation) reported seizure of 9,800 tonnes, over 26.4 million litres and 13 million units/items of potentially harmful food and beverages. The goods, worth an estimated 230 million euros, ranged from every day products such as alcohol, mineral water, seasoning cubes, seafood and olive oil, to luxury goods such as caviar. In total, more than 50,000 checks were undertaken at shops, markets, airports, seaports and industrial estates.
The results of Opsen are diverse. In 2017, they ranged from seasoning cubes in France and peanut-contaminated hazel nuts in Germany, counterfeit mineral water bottles and wine in Italy to canned sardines nearing expiry date which were repackaged in Portugal. Goods seized during Opsen V the previous year included meat from monkeys, olives painted with copper sulphate and sugar laced with fertilizer.
One of the most interesting aspects of Olsen is the growing number of participants. It involved 61 countries in 2017, up from 57 last year and 47 in 2015.

The menace of transnational, organized crime

The key concern of Opsen participants – and a reason for the involvement of Europol and INTERPOL - is the growing involvement of transnational, organized crime networks in counterfeiting and food fraud. As part of Opsen V in 2016, Ireland’s Food Safety Authority (FSA) released a case study on the production and distribution of counterfeit wine and vodka, connecting the trade in food and beverages to tobacco smuggling, drug dealing, money laundering and tax evasion, accompanied by offshore companies, bank accounts in multiple jurisdictions, and sophisticated logistics methods.

Machinery availability and food crime
This kind of migration up the counterfeit value chain is accompanied by the diffusion of high-quality packing and labelling machinery, in many cases sold online. Opsen III in 2014, for example,  discovered such equipment to be central to an organized crime network in Italy producing fake champagne. Evidence of such practices however go back several years.
In the mid-2000s, for example, US energy drinks vendor Living Essentials found that lower cost Spanish-labelled version of its products from Mexico were being relabelled with English-language labels and sold to US retailers at a deep discount.

From food to medicines
Food and beverages counterfeits are already close to medicines. However, the nearly unregulated area of performance enhancers is becoming a major area of concern. One example is the peptide hormone, GW1516. This  candidate drug for metabolic and cardiovascular disease was associated with serious toxicities during clinical trials. It was abandoned by its developers, GlaxoSmithKline and Ligand in 2007, after animal tests showed that the drug caused cancer to develop rapidly in several organs. GW1516 (also known as GW501516) is available for purchase on several websites as a tablet, liquid and in powder form, for performance enhancement. Another such product are weight loss pills, such as DNP, which have been linked to the deaths of several young women.

On its part, industry has not been idle. Top global food brand owners have joined forces to form a Food Fraud Think Tank at Michigan State University. Founders include Cargill, Danone, Hershey, Mars, Mondelez, and supermarket chain Wegmans. The aim of the project is to develop best practices for managing risks related to food fraud and counterfeit.
MSU says that its think-tank is unique in focusing on the root cause as well as the resource-allocation decision-making needs when it comes to food fraud, which include a broad range of adulteration, misbranding, tampering and overruns or licensee fraud, to theft, diversion, simulation, and counterfeiting. The decision-making coming out of its research could be for individual companies, entire industries, specific agencies, or even entire governments, it adds.


Contact form

Get in touch directly with the above supplier

Pre-fill this form automatically in My FEI

Last name:*
Job title:*
Postal Code:*
Email (confirm):*
Your email address will not be communicated to any third party other than the above supplier for the purpose of fulfilling this enquiry. For more information: FEI's privacy policy
  I would like to receive the electronic publications
Send product data
Send price data
Send dealer data
  I would like to receive FEI's electronic publications
Register now!
Register now!

Alternative content

Get Adobe Flash player

Sponsored links: