F&B Firms Shift Focus to Compliance Amid Regulatory Scrutiny

Food safety, compliance, and label claims now dominate boardroom agendas at India's packaged food and beverage companies. This shift comes amid heightened regulatory scrutiny, moving these issues from functional managers to the CEO level, according to industry executives.

Angshuman Bhattacharya, partner and national leader for consumer products and retail at EY-Parthenon, said the risks are huge. "Safety, compliances and labelling have moved to the board and CEO level, from a functional or quality manager level." he stated. Brand reputations are now on the line as enforcement actions receive unprecedented media attention.

Executives report that companies are reallocating resources, even diverting funds from marketing budgets, to strengthen detailed regulatory compliance checks. The chief executive of a large packaged-food company revealed that a recent leadership meeting focused solely on labelling and compliance, not on growth or inflation. Global headquarters of multinational food corporations are also prioritizing risk management in response to India's regulatory crackdown.

Start-Up Founders Take Personal Charge

Start-up founders in sectors like clean-label and frozen foods are personally intervening to increase the frequency of compliance audits. Ashwin Bhadri, founder of testing firm Equinox Labs, said many founders aim to publish these audits online for transparency. They fear that a single compliance mistake being called out could jeopardize future funding rounds. Bhadri noted that some founders are explicitly reducing marketing budgets to allocate more toward quality checks, viewing them as non-negotiable for survival.

One specific area of increased rigor is the mandatory water potability test mandated by the Food Safety and Standards Authority of India (FSSAI). Companies must test water according to the official IS 10500 standard. An executive noted that while many firms previously opted for cheaper tests, they are now uniformly adopting the more stringent IS10500 benchmark.

Distributor Vetting Reveals Widespread Failures

A new report from identity verification firm AuthBridge highlights significant risks in the distributor network. The report found that nearly 10% of Fast-Moving Consumer Goods (FMCG) distributor applications fail critical regulatory checks.

The failures, which include identity mismatches and hidden financial risks, expose FMCG companies to potential operational, financial, and reputational losses. This data shows why companies are intensifying scrutiny across their entire supply chain, from their own factories to the retail partners who sell their products.

Bhattacharya of EY-Parthenon observed that the old practice of blaming retailers for product issues found at store level is no longer tenable. The fear of eroding years of brand-building work is driving a comprehensive, top-down focus on compliance and accurate labelling throughout the retail channel.