Food Fraud: A Guide to What Food & Beverage Distributors Need to Know

What Is Food Fraud?

Food fraud is a deceptive practice that involves the intentional tampering, misrepresentation, or adulteration of food and food ingredients for economic gain. It can include adding non-authentic substances to products, mislabeling their origin or quality, or substituting ingredients altogether. Food fraud is often referred to by other names, including food adulteration, food counterfeiting, or economically motivated adulteration (EMA).

While not always immediately dangerous to health, food fraud undermines trust, safety, and transparency in the food supply chain. An awareness of the warning signs and increased traceability with a software platform like Foodist can be the first steps in protecting your business.  For food and beverage distributors, the risks are real: damaged brand reputation, regulatory penalties, and even legal liability.

Get a jump start on shoring up your supply chain by downloading our FREE PDF Guide: 7 Key Steps to Strengthen Supply Chain Resilience.

Types of Food Fraud: A Closer Look

There are several forms that food fraud can take, and understanding them is crucial to prevention. Here are the most common types:

1. Adulteration
Adulteration involves adding inferior or unauthorized substances to food to increase volume or mimic quality. A classic example is the dilution of olive oil with cheaper vegetable oils. In 2008, Chinese milk was found adulterated with melamine—a chemical used in plastics—to artificially inflate protein readings, leading to the death of six infants and illness in over 300,000 children.

Another common case involves spices. Ground turmeric has been found laced with lead chromate, a bright yellow chemical used to make the spice appear more vibrant. Lead is a toxic heavy metal, and long-term exposure can have severe health implications.

2. Substitution
Substitution is the replacement of a high-value ingredient with a lower-cost alternative. A notorious example is the use of horse meat in products labeled as beef in Europe in 2013. The scandal rocked multiple countries and led to widespread recalls and a loss of consumer trust.

Another substitution case is seafood mislabeling. Studies have shown that over 20% of seafood sold in markets and restaurants is mislabeled. For instance, farmed tilapia might be sold as wild-caught snapper. This not only deceives consumers but can also violate dietary restrictions and sustainability efforts.

3. Mislabeling
Mislabeling refers to providing false or misleading information about a food product on its label. Honey is one of the most commonly mislabeled products—often diluted with sugar syrup but still marketed as 100% pure honey.

Wine and spirits are also frequent targets. A wine labeled as being from a prestigious vineyard may actually be from a lesser-known region. Mislabeling can involve organic claims, gluten-free claims, or even country-of-origin labeling—each of which affects consumer choice and regulatory compliance.

Related – Food Traceability: Why It Matters and How to Get It Right

Why? The Economics of Food Fraud

The motivation for food fraud is almost always economic. According to the U.S. Grocery Manufacturers Association, food fraud costs the global food industry an estimated $10 to $15 billion annually. Other estimates suggest the figure could be as high as $40 billion per year when considering associated losses and recalls.

Criminal organizations and unscrupulous suppliers see food fraud as a low-risk, high-reward activity. In some cases, the profit margins rival those of drug trafficking. With global supply chains becoming more complex, the opportunities for food fraud have multiplied, making traceability and transparency essential.

Top Adulterated Foods and How They’re Targeted

1. Olive Oil – Often diluted with cheaper oils like sunflower or soybean oil. Fraudsters may also manipulate acidity levels to pass off low-grade oil as extra virgin.
   
2. Honey – Frequently adulterated with sugar syrup or high-fructose corn syrup. Testing has shown that up to 30% of global honey supply may be fraudulent.
   
3. Milk – Watered down or mixed with detergent and starch to mimic texture and taste. In some severe cases, like the 2008 melamine scandal, toxic chemicals were used.
   
4. Spices (Turmeric, Chili Powder, Paprika) – Colored with industrial dyes or mixed with cheaper fillers like brick powder or flour.
   
5. Seafood – Substituted with different, lower-cost species. For example, escolar (a cheap fish that can cause digestive issues) is often sold as white tuna.
   
6. Fruit Juices – Diluted with water or sweetened with cheaper sugars. Some juices are even artificially colored and flavored to mimic premium blends.
   
7. Coffee and Tea – Mixed with husks, stems, or even other plant matter to bulk up volume.
   

The Consequences: Health and Business Impacts

Public Health Consequences

Food fraud can pose serious health risks. Adulterants like melamine, lead, or industrial dyes can cause long-term health issues, including kidney damage, neurological disorders, and cancer.

In 2016, over 80 people in Bangladesh died from consuming toxic bootleg alcohol labeled as legitimate spirits. In another case, toxic syrup was linked to kidney failure in children across several African countries due to diethylene glycol contamination.

Allergens are another major concern. A mislabeled product that contains undeclared peanuts, soy, or gluten can lead to life-threatening allergic reactions, which have, in some instances, resulted in death.

Business Consequences

For food and beverage distributors, the business impact of food fraud is devastating. It can result in massive recalls, loss of consumer trust, regulatory penalties, and even class-action lawsuits. The 2013 horse meat scandal led to multimillion-dollar losses across the EU and caused permanent reputational damage to several major retailers.

Brand equity is difficult to rebuild once consumer trust is broken. Moreover, retailers and distributors may find themselves liable even if the fraud occurred upstream in the supply chain. This underscores the need for rigorous supplier vetting and ongoing quality assurance.

Preventative Measures and Food Defense Plans

Preventing food fraud requires a multilayered approach involving regulations, industry collaboration, technology, and education. Several key organizations and frameworks play an instrumental role in safeguarding the food supply chain:

Food Safety Modernization Act (FSMA) 

The FSMA, enforced by the FDA, mandates that food facilities develop and implement food defense plans. These plans must include vulnerability assessments, mitigation strategies, and monitoring procedures. The FSMA’s Intentional Adulteration Rule specifically targets acts of food fraud and requires companies to establish procedures for detecting and responding to intentional threats.

Distributors can comply by conducting vulnerability assessments using tools like the FDA’s Food Defense Plan Builder, a free software that walks users through the process of building a food defense strategy tailored to their facility.

Global Food Safety Initiative (GFSI) 

GFSI is a global industry-driven initiative that promotes continuous improvement in food safety management systems. Certifications such as SQF (Safe Quality Food), BRCGS, and FSSC 22000 include requirements around food fraud vulnerability assessments and mitigation plans. By aligning with a GFSI-recognized certification, distributors can ensure their suppliers are held to rigorous standards.

Participating in GFSI benchmarking and training programs can not only strengthen internal protocols but also position distributors as preferred partners in the global marketplace.

EU Food Fraud Network & INTERPOL/Europol 

In Europe, the EU Food Fraud Network facilitates cross-border cooperation between member states to detect and respond to fraud cases. INTERPOL and Europol conduct annual operations (like Operation Opson) targeting counterfeit and substandard food and beverages. These actions have seized thousands of tons of fraudulent products and dismantled complex criminal operations.

Distributors with international suppliers can stay informed and engaged by subscribing to alerts from agencies like the EU RASFF (Rapid Alert System for Food and Feed) and collaborating with customs authorities.

U.S. Pharmacopeia (USP) Food Fraud Database 

The USP maintains a comprehensive database of food fraud incidents and adulterants. Distributors can use this resource to identify which ingredients in their supply chain are high-risk and adapt their sourcing and testing protocols accordingly.

Regularly consulting the USP database enables proactive risk management and helps guide targeted testing strategies.

Industry Collaboration and Information Sharing 

Organizations such as the Food Fraud Think Tank, the Institute of Food Technologists (IFT), and the Food Protection and Defense Institute (FPDI) offer valuable research, best practices, and collaborative forums. Distributors can join these groups to gain insights, share intelligence, and stay ahead of emerging threats.

Taking part in industry-wide alert systems or blockchain pilot programs can enhance data transparency and create a unified front against food fraud.

5 Ways Distributors Can Protect Themselves Against Food Fraud

1. Strengthen Supplier Relationships and Audits 

Developing trusted relationships with vetted suppliers is foundational. Regular audits, both announced and unannounced, help identify potential issues before they reach your supply chain. Requesting Certificates of Analysis (CoA), conducting random product testing, and requiring compliance with recognized standards such as GFSI can add layers of assurance.

Real-world red flags to watch for include sudden changes in supplier pricing, vague or incomplete documentation, and inconsistent product characteristics (color, smell, texture). If a supplier hesitates to share their quality assurance processes or testing results, that’s a signal to dig deeper or consider alternate vendors.

Strong supplier partnerships also help in times of disruption. Suppliers who value long-term relationships are more likely to communicate transparently during shortages or crises—reducing your vulnerability to opportunistic fraud.

2. Implement Traceability and Transparency Tools 

Technology offers a powerful defense against fraud. Blockchain-based traceability systems can provide immutable records of product origin, processing, and movement. Platforms that integrate with ERP systems can allow distributors to trace a product’s journey back to its source within seconds.

Traceability tools help identify where issues originate, and reduce downtime in investigations. A lack of product origin transparency, mismatched barcodes, or outdated inventory records are all warning signs of potential fraud. End-to-end visibility not only builds consumer trust but protects against liability.

3. Use Food Authentication Technologies 

Spectroscopy, DNA testing, and isotope analysis are now accessible tools that can confirm product authenticity. Portable testing devices allow for on-site verification of seafood species or detection of adulterants in spices and oils.

Unexpected changes in product composition, variations in taste or performance, or negative customer feedback may all indicate a need for authentication testing. Regular use of authentication tools—even on a random basis—serves as both a deterrent and a quality assurance measure.

4. Train Staff and Build a Food Fraud Culture 

Training employees to recognize red flags in procurement and shipping is essential. Establishing a culture that values food integrity—from procurement teams to warehouse staff—helps prevent internal and external fraud.

Warning signs your team should be taught to flag include incomplete shipment paperwork, inconsistencies between invoices and goods received, and suppliers requesting to bypass formal processes. A fraud-aware team is often your first line of defense.

5. Leverage Predictive Analytics and AI Tools 

Modern supply chain management software now includes predictive analytics and AI to flag unusual patterns or high-risk shipments. These systems can identify anomalies based on historical data and supplier behavior.

If a shipment deviates from standard timing, sourcing location, or cost parameters, software can flag it for further review. One large beverage distributor identified recurring invoice irregularities through AI-powered review, preventing over $500,000 in losses. Smart tech doesn’t replace human oversight—but it dramatically enhances it.

Fighting Food Fraud with Knowledge and Technology

Food fraud is a growing concern, but it doesn’t have to be a losing battle. For food and beverage distributors, the key to prevention lies in education, vigilance, and the smart use of technology. By investing in traceability, testing, and supplier verification—and fostering a culture of integrity—distributors can protect their brands and ensure customer trust.

The road ahead requires commitment, but with the right tools and strategies in place, the industry can move toward a more transparent, trustworthy, and fraud-free future.

We Can Help

If you’re ready to take the first steps towards a faster and easier way to manage your food and beverage business, Foodist provides a simple and flexible solution to streamline operations, increase visibility, and improve communication across departments. Our mission is to serve growing distributors and wholesalers by providing a single, affordable solution that automates inventory management and integrates it with daily business processes for increased productivity and lower overhead. Contact us today to learn more!