The role of traceability in food fraud

Notorious wine counterfeiter, Rudy Kurniawan, pocketed an estimated $150 million from fraudulent wine sales in the early 2000’s. Using a DIY workshop, he skilfully modified cheaper wines and relabelled them as prestigious vintages. However, food fraud isn’t an exclusive challenge for premium products.

According to the World Customs Organisation (WCO), seven per cent of global trade consists of counterfeit products. Kurniawan’s wine fraud was dubbed the biggest hoax in the history of wine sales, but for the wider food and beverage industry, fraudulent products regularly cost the sector up to US $40 billion per year globally.

Food fraud describes any product that is deliberately mislabelled, misrepresented, diluted, tampered with or — in the case of Kuraniawan — substituted with a different product. Unsurprisingly, profit is the primary reason that food products fall foul to this crime, but this doesn’t necessarily mean fraud only affects high-end products. Everyday products like olive oil, honey, milk and coffee are among the most commonly counterfeit foods.

Back in 2015, the Italian press revealed large-scale olive oil fraud. Products from seven major olive oil producers were proven to contain significant amounts of lower quality oils and therefore did not meet EU labelling rules for extra virgin oil. A more extreme example is fake alcohol. Counterfeit beverages often contain cheap substitutes for ethanol. These can include dangerous chemicals used in cleaning fluids and methanol, which is usually used in antifreeze — creating a potentially lethal cocktail.

Consumers are expected to trust the ingredients listed on the packaging of food and drink products. However, with such high-profile cases of food fraud, the public’s faith in accurate product labelling is faltering.

Naturally, manufacturers endeavour to protect their own products. Reducing the likelihood of food fraud is necessary for risk management and mitigation, lowering the chance of product recalls and protecting brand reputation.

Everybody recalls the damning headlines about the horsemeat scandal. In 2013, many British and Irish food products were revealed to contain up to 100 per cent horse meat, even though they were labelled as beef or pork. Despite public outrage, many supermarkets and manufacturers remained relatively unscathed by the scandal. The issue was blamed on Europe’s complicated beef supply chain, with food manufacturers using both global and EU sourcing strategies for their supply.

Regardless of the supposed complexity of supply chains, the scandal spurred public demand for greater traceability. As a result, there have been greater efforts to create more effective technologies for product identification.

Beyond the barcode
The most commonly understood method of traceability is bar codes. However, as this technology was introduced in the 1970s, they have been around long enough to become easy to counterfeit. Holograms and steganograms — images embedded in pictures — are a newer form of traceability marking. While they are more difficult to counterfeit, it isn’t completely impossible.

In the extra virgin olive oil sector, a market littered with fake products, a group of producers are working with Norwegian technology firm Thinfilm, to combat counterfeits. By embedding tiny chips into the oils packaging, customers can scan the chip with a smartphone to identify the exact source of the olives. However, this wouldn’t work if the supply chain had been breached, and the original oil had been poured our and replaced.

Advancements in software are now enabling manufacturers to monitor supply chains digitally, allowing them to easily identify areas where traceability could be improved. For example, using intelligent supply chain software, a food manufacturer can view real-time production data from suppliers. By integrating the supplier’s logistics and warehousing data, the manufacturer could identify if the wrong batch of ingredients has been dispatched — before these incorrect ingredients are used for manufacturing.

Looking to the future, technologists are beginning to experiment with new ways to identify whether a product has been tampered with, or whether it is the correct product at all. Examples include implementing genetic labelling, fingerprinting and even putting synthetic DNA onto packaging to ensure a product has not been interfered with during transit.

These inventions may not enter the mainstream for several years —if they take off at all. Some could argue that sprawling supply chains and ever-changing technology means there is no such thing as tamper-proof product. However, there are ways to strengthen traceability efforts without implementing entirely new inventions.

Secure the supply chain
Food manufacturers must have faith in their own traceability efforts and reduce the likelihood of food fraud. However, outside of the factory walls, manufacturers are required to hand this responsibility to the wider supply chain.

The Food Standards Agency has specific General Food Law Regulations that cover every aspect of the food manufacturing pipelines. This includes everything from ingredient production, to packaging and logistics. When selecting suppliers, manufacturers must ensure they are compliant with every article of these regulations.

In fact, manufacturers should only select suppliers they know will reliably adhere to traceability requirements, regardless of how small a contribution they appear to be making to a product. By identifying every commodity, manufacturers can map their material supply chain inputs across all their procurement categories and, ideally, trace every single product back to its origin. This includes raw ingredients, labelling and food packaging suppliers.

When the law caught up with Kurniawan’s fraudulent wine operation in 2012, agents discovered hauls of corks, recipes and counterfeit labels in his make-shift workshop. His efforts weren’t sophisticated, but his operation cost the American wine industry millions in bogus investments and, to some extent, caused a significant amount of damage to its reputation.

Food counterfeiting is a potential goldmine for fraudsters. While traceability takes time to implement, failure to prevent food fraud is estimated to cost manufacturers up to 85 per cent of their total profits. The proof is in the (non-counterfeit) pudding — investment in traceability is crucial.