Food safety and compliance dominate boardroom agendas in India's F&B sector

Synopsis

Spotlight on food safety and compliance is shining brightly in Indian F&B sectors. With regulatory scrutiny reaching CEO boardroom discussions, organizations are shifting marketing resources to fortify compliance measures. Founders of start-ups are stepping up audit frequencies and ensuring transparency, while distributors now navigate a landscape of enhanced regulatory checks for their applications.

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New Delhi: Food safety, compliances, and label claims now dominate the priority agenda at boardrooms of India's packaged food and beverage companies amid increasing regulatory scrutiny, with chief executives to start-up founders busying themselves with outcomes that previously rested with functional heads.

"Safety, compliances and labelling have moved to the board and CEO level, from a functional or quality manager level. A lot is at stake and the risks are huge," said Angshuman Bhattacharya, partner and national leader, consumer products and retail, EY-Parthenon.

With brand image at stake, boardrooms focus on compliance & safety over growth

As enforcement grabs more column inches than ever, brand reputations are at stake.

"There's fear factor among brands because all the hard work done could be eroded. Also, those days are gone when companies could say they control samples at factories, but blame the retailer if the product malfunctioned at the retail level," Bhattacharya said.

Also Read: FSSAI to tighten scrutiny, weighs central ban on non-dairy paneer

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EY-Parthenon consults dozens of food and retail companies.

Executives said the global headquarters of many food MNCs are prioritising risk management amid India's regulatory crackdown on F&B products.

"Only labelling and compliances were discussed at our leadership townhall last week - not growth or inflation," said the chief executive of a large packaged-food company.

Executives said companies are even diverting funds from functions such as marketing to step up regulatory compliance checks in minute detail.

'Survival at Stake'

"Start-up founders of various clean-label or frozen foods are reaching out to personally step up frequency of compliance audits, many to release these online so anyone interested can see these. One mistake that gets called out could even impact the next round of funding," said Ashwin Bhadri, founder of Equinox Labs, a prominent food, water and environmental testing organisation. "We have some founders telling us they're reducing budgets on marketing to allocate toward quality checks, since they believe these are non-negotiable, and they don't want to take risks on vigilance."

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One such example is the mandatory water potability test by the Food Safety and Standards Authority of India (FSSAI). It requires all F&B companies to test water as per an official IS 10500 standard benchmark.

"Most companies had been opting for cheaper tests. But now this is changing, and they're opting for the IS10500 test," he added.

A new report by digital trust and identity verification solutions firm AuthBridge said nearly one in 10 FMCG distributor applications fail critical regulatory checks.

The report highlighted identity mismatches, regulatory non-compliance, and hidden financial risks, which exposed FMCG companies to operational, financial, and reputational losses.

According to the report, nearly 10% distributor applications failed FSSAI licence verifications, ranging from expired licences and invalid certificates to missing product category approvals.