Food allergies, food fraud and climate change are the major challenges facing the food sector in 2020, according to Victoria Cross from Instinctif Partners, which advises businesses on avoiding reputational risk.
Food allergies risk sinking food brands
Allergy-related food recalls and – worse – deaths can cause huge financial and reputational damage to businesses. Meanwhile, allergies are on the rise, especially in the developed world. By 2025, half of the entire EU population will be affected by chronic allergic diseases, according to Allergy UK. Seven times as many people were admitted to hospital with severe allergic reactions in Europe in 2015 than in 2005. The problem is particularly acute in the UK, where there was a five-fold increase in peanut allergies between 1995-2016. Food allergies now affect around 7% of children in the UK – and hospital admissions for children suffering from allergic reactions have risen every year for the past five years.
According to the Food Standards Agency, 5-8% of children and 1-2% of adults now have a food allergy in the UK. More than 170 foods have been identified as allergenic, but the eight major allergens that are responsible for around 90% of severe reactions are milk, egg, peanut, tree nut, wheat, soy, fish, and shellfish.
Allergy-related food recalls this year have risen 20% on the previous year to a five-year high in the UK amid high-profile allergy-related deaths and concerns about the dangers of poorly labelled foods, according to the law firm Reynolds Porter Chamberlain (RPC). In most cases products were found to contain allergens that were not listed on the label.
Sadly, high profile deaths have highlighted the recent rise in food allergies. The cases of Owen Carey -- who had a dairy allergy and died on his 18th birthday after eating a grilled chicken burger in Byron that contained buttermilk – and Natasha Ednan-Laperouse – who died after an allergic reaction to a Pret A Manger baguette -- have enormous implications for the foodservice sector.
“Food allergies and how businesses should respond to them isn’t something that is going to go away,” said Cross. “This will continue to be a real cause for concern for all sectors of the food industry – not least from calls for tighter legislation following high-profile tragedies such as Owen’s.”
Food fraud faces challenging times
Food fraud, or ‘the deliberate adulteration, substitution, tampering or misrepresentation of food’ is also growing worldwide as a result of our complex global food supply chain and is estimated to cost the food industry $49 billion worldwide each year.
Again, this has the potential to affect business resilience and business continuity in many ways. “Food containing unlisted or impure ingredients can impact on allergies, banned ingredients can make foods non-compliant with regulations and illegal in key markets, and fraudulently labelled food can undermine or destroy companies operating legitimately,” noted Cross.
Blockchain is often held up as the way forward for improving food traceability and supply chain integrity, but there will always be criminal activity that will undermine such efforts and seek to exploit the complexity of the international food system, observed Cross. For this reason, food fraud will continue to be a potential threat to food businesses for the foreseeable future, with food safety experts primed for the next horsemeat scandal.
In February it was reported that sick cows slaughtered illegally in Poland had entered the food chain of 12 other EU countries, while in Malta the local pork industry is on its knees as imported mass-produced pork is falsely labelled and sold as local Maltese produce.
“Incidents such as this are occurring worldwide, costing businesses billions in lost revenue and reputational damage,” said Cross.
Climate change can get food businesses in hot water
Climate change has the potential to impact virtually every aspect of food production, distribution and supply worldwide – reducing the availability of raw materials and ingredients, creating the likelihood of shortages and increasing the possibility of food fraud, warned Cross.
Rising sea levels and worldwide average air temperatures and the declines in sea ice coverage are all well documented and will have a massive impact on the food industry in terms of crop failure or decrease in yields, deforestation, and water or power cuts causing transportation, production and storage issues.
Other potential reputation risks to consider:
- Low resilience in the global food supply chain – Just three of the world’s edible plants – rice, maize and wheat – provide 60% of the world’s food energy intake
- Soil loss –At the current rate of global soil loss we have just 60 years of harvest left
- Fisheries collapse – 30% of global fish stocks are at biologically unsustainable levels
- Meat consumption – Between 1960-2010 world consumption of meat rose from approximately 75 million tonnes to 300 million tonnes, with a huge and growing impact in terms of deforestation for grazing and CO2 levels
Consumers and investors expect businesses to be extolling environmental credentials
Business can insure themselves against the impact of extreme weather events. But the issue for food firms is that failing to address environmental ‘can affect market share, confidence, share price, and reputation’, noted Cross.
Put simply, a failure to act risks heat from consumers and investors. A 2018 study of 60 institutional investors by auditors EY found nearly 8 out of 10 considered climate change to be a significant risk.
What’s more, according to Cross, food businesses need ‘natural disaster preparedness’. “For example, if a food business has a factory or facility in an area prone to disasters or disruption (such as flooding) how resilient is the business? What plans are in place to ensure continuity of production, supply and operation?
"Likewise, how resilient is a business to events in other countries? Are there arrangements in place to source alternative ingredients if there is an interruption in supply from the country of origin?”
She added that Chief Financial Officers must give more attention to better preparing their organisations to deal with increasing incidents of weather-related loss and business interruption.
“It also means they will be held increasingly responsible by boards and shareholders if they don’t anticipate climate change-related disruption – and have not taken any proactive measures to prevent such disruption.”