Beverage sector facing a big fraud problem; survey

Fraud is a widespread issue in the world's beverage sector, with a poll of 100 industry executives revealing that 97 of them had been affected by it in the last 12 months.

The survey by Lloyd’s Register (LR) also found that 80 per cent of the execs felt that fraud was a growing concern for their business, while 90 per cent said they were  experiencing significant supplier issues – which LR says is likely to be connected.

"Confidence in beverage supply chains is not where it needs to be," according to LR.  "The reality is that to tackle the problem, supply chain risk needs to receive more focus at the point of supplier sourcing and constant attention throughout the relationship."

Tellingly, less than a quarter (22 per cent) of respondents were ‘very confident’ that their suppliers meet food safety standards.

According to LR, the findings "point to an urgent need to achieve greater transparency and make beverage supply chains safer, more reliable and resilient, if consumer confidence is to remain intact."

The type of fraud activity observed was split roughly into thirds, between counterfeiting, adulteration and simulation.

Counterfeiting – where beverage products and packaging are copied without the safeguards and standards of the genuine product – came in at 32 per cent.

Adulteration - the intentional substitution or addition of a substance to extend or increase the value of a raw material or product – and substitution where an illegitimate product is designed to look like, but not exactly copy the legitimate product, came in at 30 per cent each.

With such a high level of reporting, one might think that combating fraud would be high on the agenda of the beverage companies, which were split roughly one-third non-alcoholic to two-thirds alcoholic products.

Only 37 per cent of respondents said however that identifying and mitigating fraud was a 'very high priority' and 20 per cent ranked it an 'average priority' or lower.

Meanwhile, just 15 per cent of those polled felt that beverage manufacturers should take the lead on consumer education and awareness, with nearly a quarter (24 per cent) believing that the responsibility sits outside of the industry entirely and should be managed by consumer associations and watchdogs.