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Fraud costing UK produce £11bn a year

Date: 26/11/2014

UK food and drinks companies are losing more than £11.2bn a year to fraud and error, according to a new report.

The research reviewed data from 73 listed food and drink industry companies with total annual sales of more than £200 billion.

“Food and drink fraud is the crime in our baskets”, says Jim Gee, co-author of the report and Head of Forensic and Counter Fraud Services for PKF Littlejohn.

“It results in food and drink being more expensive than it should and its reduction can significantly improve value for money.

“By cutting fraud, the price of groceries could be reduced by 5 pence on a loaf of bread, 11 pence on six eggs, 16 pence on a pint of beer and 28 pence on a bottle of wine. I estimate that the cost of food and drink fraud to an average household is as much as £424 over a year."

The report, “Minimising Fraud and Maximising Value in the UK Food and Drink Sector 2014”, will be launched today in London at the Food Crime Conference organised by the Institute of Food Safety Integrity & Protection in partnership with the Chartered Institute of Environmental Health.

“We estimate that of the 58 listed food and drink companies which reported profits, 6 would increase their profitability by between 1 and 9 per cent; 31 would do so by between 10 - 49 per cent; 15 would do so by between 50 - 99 per cent; six companies would increase their profitability by more than 100 per cent. Of the 15 companies which made losses; 3 would make a profit not a loss; 8 would reduce their losses by up to 10 per cent and 4 by over 10 per cent.”

Professor Lisa Jack, co-author of the report and Chair of the Food Fraud Group at the University of Portsmouth, said: "Food fraud is always financially motivated. On the whole, food fraud does not harm public health. It's more that consumers and food businesses are not always getting what they pay for.

"Scientific testing and systems audits have a place but food fraud, like any other fraud, can also be tackled if you follow the money, ask the right questions and have controls in place that make fraudsters think twice before attacking your business.

"Food fraud is about more than just the food: for example, many frauds also evade duties and VAT, and so we all lose out from lost revenues.

"Margins are so tight in the food sector that almost any food can be misrepresented to get a bit of profit for a fraudster."

Following the Elliott Report into the horsemeat scandal, PKF Littlejohn and the University of Portsmouth have worked together to help the food and drink sector better protect itself against fraud.