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Food Safety Becomes a Massive Consumer, Industry and Regulatory Issue, Business and Industry Trends Analysis

The onslaught of food safety concerns seems endless.  While consumers have long been accustomed to hearing of occasional outbreaks of E. coli in ground beef or salmonella in limited quantities of food, bad news has grown more frequent, more worrying and more diverse over recent years.  This is a growing issue on a global scale that is creating significant challenges for food producers.  At the same time, however, it creates significant business opportunities for companies that can successfully position their food products as safe alternatives.

The U.S. government estimated that one in six Americans becomes ill from contaminated food each year.  In January 2011, President Obama signed the Food Safety Modernization Act which shifts the focus of the FDA from reacting to contamination crises to preventing them.  Under the law, food manufacturers are required to develop and implement written food safety plans.  The FDA was directed to establish science-based standards for production and harvesting of fruits and vegetables and also increase the frequency of inspections.  The major rules under the Act are were finalized in late 2015.  They include the establishment of federal standards for how produce is grown, harvested, packed and stored.  Farmers must test water for harmful bacteria and train workers in health and hygiene practices.  Importers are to be held accountable in meeting U.S. safety standards.

China made unwanted headlines in 2008 when Chinese-made baby formula laced with the industrial chemical melamine caused the deaths of four infants as well as illness in tens of thousands of others.  The Chinese government announced strong commitments to food safety and manufacturing quality, and firms in violation of safety regulations have been closed or severely punished.  Despite these actions, melamine-tainted milk products were again found in markets throughout China in early 2010.  Similar scandals continued through 2014, when workers at Shanghai Husi Food, a meat supplier to McDonald’s, KFC and other fast food restaurants in China and Japan, were filmed using out-of-date chicken and beef to make nuggets and burger patties, and meat that had dropped onto the floor was scooped up and thrown back into the processing machine.  The problem has become a major issue in China, where a recent survey in 16 major Chinese cities found that 81.8% of surveyed residents’ most worrisome concern was food safety.

In North America, Europe and elsewhere, producers and retailers of foods (including restaurants) are now faced with the challenge of positioning their brands to represent consistent quality and safety.  The year 2013 saw a scandal in Europe when horsemeat was found in beef products, resulting in action taken against a number of suppliers, including Burger King’s cancellation of its contract with Irish meat producer Silvercrest Foods (Burger King operates a large number of restaurants in the UK).  Companies that rise to this challenge will have significant competitive advantage.  This food “safety” positioning will go hand-in-hand with growing demand to satisfy additional consumer concerns about environmentally sound food production methods, fair trade, fair use of labor and humane treatment of agricultural animals.  All food processors, grocery distributors and retailers, including supermarkets and restaurants, would do well to study the practices of the handful of companies that have successfully boosted their brands in this regard, particularly Whole Foods and Starbucks.

In the U.S., the Grocery Manufacturer’s Association, a major trade association, is taking the lead by seeking increased federal scrutiny of imported foods and ingredients in addition to more funding for the FDA.  Other leading food organizations are making similar proposals.  Meanwhile, some major purchasers of food products, such as Wal-Mart and McDonald’s, have upped their own standards, requiring independent safety inspections at their suppliers.  Produce growers’ associations are also investigating the potential use of advanced technology, such as global positioning systems and RFID, to help track produce from the exact field where it was grown through the distribution network.



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