Food and consumer product fraud — or economic adulteration and counterfeiting

In recent years, more than 150 instances of food and consumer product fraud have been documented at a projected cost to the food industry of $10 to 15 billon per year, plus human pain and suffering, and loss of consumer confidence. Food and consumer product fraud, or economic adulteration and counterfeiting, is increasingly a critical problem for the food and consumer products industries.

As a result, The Grocery Manufacturers Association (GMA) Science and Education Foundation engaged A.T. Kearney to conduct the first comprehensive assessment of the problem. The research report, Consumer Product Fraud: Deterrence and Detection, demonstrates that the industry needs to find ways to collaborate to address this problem on a global basis.

A better understanding of the problem and its impact begins with mapping categories of adulteration and counterfeiting, and analyzing significant examples.

Collaboration for safety and quality

Analysis of recent major incidents reveals that pockets of intelligence often existed but that there was no process to connect the dots to raise a clear warning. The study uncovers motivational drivers for economic adulteration and structural weaknesses at both the industry and governmental levels that have inadvertently created opportunities for economic adulteration to thrive.

Detection and deterrence requires companies to collaborate with each other, their supply chain partners, retailers, government agencies, and trade associations.

Study recommendations

The study provides specific direction for industry, companies, suppliers, retailers, and governments on how these organizations can better work together to address the issue of food and consumer product fraud:

Industry, including retailers and suppliers, must take collaboration to the next level in safety and quality by implementing a clearing house model and developing a shared library of ingredient reference samples

Companies should continue to "raise the bar" on their product safety and quality programs by further integrating anti-fraud strategies

Suppliers should implement similar strategies as manufacturers while also considering ways to facilitate appropriate testing procedures, provide increased transparency, and partner with manufacturers in their effort to reduce fraud

Retailers should partner with reputable suppliers and manufacturers that employ the highest standards in deterrence and detection programs while verifying the authenticity of the products they receive

Governments can be facilitators in establishing global standards and sharing intelligence on emerging threats and can protect legitimate businesses through the enforcement of property rights

Learn more

Consumer Product Fraud – Detection and Deterrence: Strengthening Collaboration to Advance Brand Integrity and Product Safety
Download

The report is also available on the GMA website.

See also A.T. Kearney’s perspective on food safety in China.

About the study

The study findings are based on approximately 100 interviews with senior managers in the food, beverage, and consumer product industry; 50 responses to an industry-wide survey; a 150-incident repository; and A.T. Kearney research and expertise. The study analyzes recent economic adulteration cases, motivational drivers, and the resulting cost implications. The study explores leading practices and success stories related to fraud deterrence and detection, and it examines opportunities for manufacturers, industry at-large, and governments to reduce the risk of economic adulteration, protect brands, and enhance consumer product safety.

Media highlights

Companies should collaborate to fight food fraud: Report
8 February 2010 — Food Navigator
Greater collaboration and information sharing could help the food industry tackle food fraud, according to a new report from the Grocery Manufacturers Association (GMA) and consulting firm A.T. Kearney.

Economic Adulteration and Counterfeiting of Global Food and Consumer Products
19 January 2010 - atkearney.com
New study quantifies costs to industry and lays out best practices for responding to this growing challenge.

Contact

Jim Morehouse, Partner in the Chicago Office