Consumer demand driving food chain transparency - SGS

SGS gives us an insight into food testing after its half year results

Food fraud and transparency of the supply chain are important issues being led by consumer demand, according to SGS.

The firm said it can help in several different areas including audits and certification, testing and analytical services, inspection, and training as industry has to address these issues.

It will be opening two sites in the area of chemical and restricted substances in food testing later this year – Odessa, Ukraine in September and Constanta, Romania in August.

Compliance challenge

Naghmeh Raiyat, global business manager food, told that it was a challenge for industry to be continuously compliant.  

“The key drivers include changing regulations, especially around allergens and labelling requirements,” she said after the firm announced its half year results.

The statistics for allergens are relatively high on product recalls with the risk and it is the top reason in North America to do with operational issues and mislabelling.

“The question for us is how do we help industry make supply chain processes more robust, is it hands on training or more information?

“With the horse meat scandal, we asked ourselves how we can support industry in general management of supply chain traceability and transparency.”

Global capability

The firm has food testing sites which work in microbiology and chemical and restricted substances in Kenya, Mauritius, Tunisia and South Africa.

In the Middle East it has a lab in Dubai, UAE for microbiology and chemical and restricted substances and in Karachi, Pakistan just for the latter.

Chemical and restricted substances testing are available in Belgium, Bulgaria, France, Germany, Hungary, Netherlands, Poland, Portugal, Russia, Serbia, Spain and Turkey.

Microbiology services are also at all these sites except St-Etienne-du-Rouvray, France.

In the Consumer Testing Services segment the adjusted operating income margin for the period increased to 22.7% from 22.4% in prior year (constant currency basis).

This was supported by good momentum in food testing for the domestic and export markets in Asia, the completion of the Hong Kong laboratory optimization and positive impact from restructuring measures in Europe during 2013.

Investments are planned to enhance capabilities and expand geographical coverage in South East Asia to align with changing supply chain patterns, said the firm.

Raiyat said there had been many instances of food fraud, giving examples from China such as the melamine incident a few years ago and in India with illegal colours being found.

Rigorous testing for authenticity is needed to be a part of the export markets and for food authentication you need to substantiate claims.

“Foodborne pathogens are still a major issue in the region and there are stringent export requirements with the globalization of the food chain, every scandal brings new rules and regulations.”

Americas and Asia Pacific sites

In the Americas, SGS has sites in Argentina, Brazil, Canada, Chile, Ecuador, Peru and USA with all but the plant in Burnaby, Canada and Brookings, USA performing both microbiology and chemical and restricted substances testing.

Food testing capabilities in Asia Pacific include chemical and restricted substances in Australia, Bangladesh, China, Hong Kong, India, Indonesia, Japan, Korea, New Zealand, Malaysia and Philippines, Sri Lanka, Kaohsiung in Taiwan, Thailand and Vietnam.

Microbiology testing is available at the above sites as well as Singapore and Taichung in Taiwan except New Zealand and Bangladesh.  

The SGS Group delivered a first semester revenue growth of 5.3% (constant currency basis) to CHF (Swiss Franc) 2.8bn, with an organic revenue growth of 4% and an additional 1.3% from acquired companies.

SGS expects to achieve organic growth of around 6%, with an improvement in margin year on year, and reaffirms its intention to maintain its dividend policy. 

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