Food and beverage scandals occur almost daily in the APAC region. For the past two years FleishmanHillard followed 400 different F&B crises that have played out in the media across seven countries in Asia – China, Hong Kong, Japan, Australia, Malaysia, Philippines and Singapore.
These are the trends and insights they discovered…
Falling foul of regulations
In 2016 the majority of scandals, almost a third, involved food poisoning or contamination, whilst in 2017 the largest number of scandals were related to failing regulatory standards, tripling the number of similar incidents in the previous year. Almost all (90%) of the regulatory failures monitored were in China where the China Food and Drug Administration has strengthened its scrutiny of regulatory compliance. eCommerce channels are increasing the complexity of Food & Beverage (F&B) supply chains and adding more room for error, with online retailers like JD.com and Tmall found to be selling substandard products.
National vs international
Although incidents involving international brands and products were fewer than national/local ones they received a greater share of media attention. The highest profile crises involving international products were Hong Kong’s suspension of Brazilian meat products following a rotten meat scandal, and the rejection of a number of imported snack brands, such as Korean company Lotte, by the governing authority in China.
Product segments affected
In terms of verticals the confectionery industry accounted for the largest proportion of F&B scandals in 2017, overtaking meat and seafood in the previous year. One of the most notable crises in the confectionery industry is Japan recalling 2.74 million cups of Haagen-Dazs ice cream after pieces of black rubber were discovered inside of the product. The beverage industry has also had a larger share of crises over the past year than in 2016. For instance, batches of distilled water, lemon tea and Vitasoy milk produced by Vitasoy from Hong Kong were prohibited from entering China as they failed to comply with the regulatory standards of the Chinese authority.
Governments across the region have also started to enforce greater transparency around the sugar content of products, reflecting action we have already seen in the west in the interest of public health. Thailand introduced taxes on alcohol and sugary drinks in their battle against obesity and diabetes, while Philippines, Singapore, Australia and Malaysia are considering implementing similar measures.
Singapore beefed up its regulations on the sector through amendments to the Sale of Food Act (Sofa) that included provisions enabling recalls when contamination is suspected rather than waiting for test results. The amendments also tightened up the rules around claims in advertising and on packaging, as well as requiring infant formula companies to encourage breastfeeding on their packaging.
China’s National Food Safety Law is considered to be the harshest in the F&B industry’s history following amendments made in 2015, with 90% of the previous regulations being amended and 49 new rules added. The sharp rise in products failing to meet regulatory standards in China points to a significant rise in enforcement of the new regulations.
The frequency of scandals in this sector suggests that companies are under intense scrutiny from both regulators and the media, and all this at a time of increased consumer interest in the provenance, health benefits and quality of the food and drink they consume.
At FleishmanHillard, we believe that where there is risk there is opportunity. F&B companies that are moving to greater transparency in their supply chain are better placed to satisfy the demands of regulators and consumers alike.
TOP TIPS TO GET CRISIS-READY IN 2018
Ensure that information on provenance is easy for customers to find on your website.
Find engaging ways to communicate your steps to transparency and compliance as this will provide important credit with consumers should a crisis hit.
Consumers have a multitude of channels through which to contact you, ensure customer service complaints are handled equally well across all.
Ensure you have a robust escalation process in place should customers raise concerns that require investigation.
Have social monitoring in place to check for potential issues being raised in forums.
Monitor issues affecting other segments and brands so you can mitigate and prepare should a similar issue affect you.
Develop a crisis response plan with clear escalation and approval processes.
Crisis train your spokespeople. Someone who is good at run of the mill media interviews may not be suited to the role in a crisis.