How certification, testing and inspection can build consumer trust, confidence, brand strength and loyalty for food brands Anna Theil-Gangl Regional Business Manager SGS SGS Consumer Testing Services. February

2 Introduction Food safety issues remain at public attention due to issues such as salmonella in eggs and chicken, melamine in milk, dioxins in animal feed, questions about shelf life Globalization and international trade have changed the way that food is produced, processed, transported and consumed with new challenges to food safety and quality In today's globalization and ever-increasing consumer awareness, there are many initiatives surrounding food quality and safety Food safety and quality programs are increasingly focusing on a farm-to-fork approach to reduce food borne hazards entering the food chain

3 HISTORY In the 90’s we saw the wider adoption of a risk-based approach to food safety through Hazard Analysis and Critical Control Point (HACCP) systems as a basis for food safety The past decade shows the greater adoption of the Farm-to- Fork approach which has lead to Good Farming and Processing Practices Today a growing number of public and private initiatives aim to improve food safety and quality and bring more control on the food chain Globally governments change regulations of control Producers and manufacturers supply to many buyers in many markets with potentially multiple standards requested

4 THE CONSUMER EVOLUTION Today consumers are more and more demanding to companies for appropriate systems in place to ensure that food safety and quality are addressed The trends are that the food industry has to ensure:  Balanced Value (Price vs. Quality)  Confidence and Transparency  Consistency and predictability  Regulatory compliance  Adequate control over product recall and traceability  Above all else that the food consumers eat is safe

5 CHALLENGES TO FOOD SAFETY Companies are being forced to take more ownership for food safety and to protect their brands Tighter controls are being established to safeguard the food supply chain Traceability and integrated management programs are now an essential part of the food chain However problems remain and food safety and security concerns continue to increase globally Governments are tightening regulations, reducing MRL’s (Maximum Residue Levels like pesticides, heavy metals) and engaging more with Third Party Providers to gain better control on the food supply chain

6 EXPRESSED FOOD INDUSTRY NEEDS Customers/Retailers:  Compliant products to legal and own brand image to gain consumers confidence  Avoid bad press and product recalls  Rely on manufacturers regarding ingredients of products (eg. “false cheese”)  Maintain continuity of supply  But increased global sourcing = increased risk with decreased direct oversight of suppliers  Risk reduction throughout the supply chain Suppliers:  Confused as to which “standard” to comply  Keep confidentiality of product know how & market  Support to solve technical/critical issues  Minimum number of audits/tests from competent certification bodies/auditors/laboratories with solid experience, no conflict of interest

7 PRODUCERS With consumers eating habits changing to more exotic flavors and fresher and more natural products, food safety issues will increase With globalization of food chain, farming is often opposite side of the world to consumption and consumers are concerned as to the safety of the farming practices, eg. a producer or retailer can not change pesticides in tomatoes Fish and animal welfare has different importance in different countries, eg. antibiotics in salmon,

8 MANUFACTURERS Many manufacturers still consider that by one control in their food chain their manufacturing chain is under control and their food safety and quality issues are adequately addressed This often is not the case, in fact there is a strong likelihood that a single control would not mitigate risks to an acceptable level – and mystery checks by independent consumers organization detect problems Sometimes manufactures source raw materials from various suppliers. Creating initiatives with suppliers can lead to safer and more consistence raw materials

9 RETAILER DRIVEN INITIATIVES Initiatives such as the Global Food Safety Initiative has paved the way for uniformity in food standards The CIES through the Global Food Safety Initiative have succeeded to reduce the duplication of audits in the supply chain through common acceptance of four GSFI benched marked food safety standards  Retailers such as Carrefour, Tesco, Metro, Migros, Ahold, Wal-Mart and Delhaize all accept GSFI benched marked food safety standards In addition, retailers are driving initiatives to tackle sustainability (eg. packaging), protection of the environment (eg. use of water) and animal welfare

10 WHERE CAN BRAND PROTECTION BEGIN? Supplier Assessments Production & Final Random Inspection Loading Supervision Product Testing Packaging & Labelling Assessment Product Certification Private Label Support Collateral Management Training Technical Assistance Certification Sustainability Services Supplier Assessments Raw Materials Inspection Sampling/Ra w Materials Testing Collateral Management On Farm QA Training Technical Assistance Farm Input Inspection & Testing Collateral Management Sustainability Services Certification Vehicle Hygiene Inspection Supplier Assessments Certification Hygiene Monitoring Storage and Distribution Inspection Sampling Product Testing Training Technical Assistance Collateral Management Certification Store Checks Hygiene Monitoring Retail Product Inspection Sampling Product Testing Private Label Support Packaging & Labelling Assessment / Testing Claims Inspection Training Technical Assistance Sustainability Services Certification Vehicle Hygiene Inspection Supplier Assessments Certification Vehicle Hygiene Inspection Supplier Assessments Certification Primary Production Transport Pack House / Processor Transport Distribution / Wholesale Transport Retail Store / Food Company

11 INSPECTION OBJECTIVES  To avoid costs and delays linked with non-compliance (controlled production)  To check the loading (quantity, quality of containers…)  To have reliable indicators to make the right decisions EXAMPLES  Inspection of origin : to ensure the origin of productions and materials  Visual inspection: initial production check, during production check and final random inspection according to a technical dossier (specifications) and a sample for compliance  Quantity & Assortment  Product compliance (style, material, colour…)  Aesthetic aspect (product defect…)  Tests of functioning  Marking, Labelling  Packaging  Supervision of loading : quality of containers, seals, quantitative checking

12 FOOD FACTORY AUDITS Specs & Raw Materials Physical Plant Worker Health & Hygiene Equipment Sanitation Testing Receiving, Storage & Shipping A Food FACTORY Audit examines the systems in place that ensure the safety and quality of the food product that is produced. Deliverables include a written report, overall rating or score and corrective action recommendations. Can be Third-Party or Second-Party audit Administration & Regulatory Compliance HACCP Recall Food Security Pest Control Foreign Material Control Maintenance Allergen Program Process:

13 What contaminants are associated with food?  Micro-organisms  Mycotoxins  Other biological origin toxicants  Inherent plant food toxicants  Industrial & Environmental Chemicals  Improperly used agrochemcials  Contaminants produced during processing  Improperly used additives  Other potential hazards  Fraud-products (eg. melamine, dioxins)

14 FOOD TESTING Chemical Residues  Antibiotics, Pesticides, Melamine Food Contact/Food Packaging Allergens Additives & Colorants Total Plate Count Coliforms Yeast & Mould Pathogens Shelf Life Studies Nutritional Analysis Label Creation & Review DNA Species Identification FDA Detention Seminars & training Chemical Microbiological Regulatory

15 FOOD CERTIFICATIONS ISO Food Safety Management Systems; FSSC Food Safety System Certification; HACCP Hazard Analysis and Critical Control Points; GMP Good Manufacturing Practices; BRC Global Standard; IFS International Food Standard; SQF Safe Quality Food; GlobalGAP; AHA Allergen Management System Label; Customised Single Food Audit; and Audits against customer-specific criteria

16 SGS Certification and Approval Marks  Competitive advantage : Certification Marks are a recognisable signal to consumers that the product meets recognised safety or performance benchmarks in International or National Standards.  Market access : Compliance with certain standards or specifications can mean wider market acceptance from both customers and regulators.  Reduced risk of product liability claims: Certification demonstrates that the customer has the capability to consistently manufacture a product to meet a recognised standard. And so potentially reducing the risk of product liability claims. If there is a problem, the records resulting from assessment and certification activities may offer evidence of due diligence.

17 SGS Certification and Approval Marks  Ongoing improvement and performance: Continues monitoring of the performance of the product and the effectiveness of the processes in achieving that performance, can lead to production efficiencies and performance improvements.  Marketing benefits: The marks are shown on the product. Help building trust between brand/producer and consumer due to independent and recognized verification which enables wider market access.

18 CONCLUSION To prove that food safety and quality is managed companies must ensure that their supply chain is secured and under appropriate controls Appropriate controls must address key supply chain steps where food safety and quality can potentially breakdown Only holistic and integrated solutions, with multiple controls can provide the confidence that food safety and quality are adequately addressed and Consumer Confidence is increased

19 ABOUT US World’s leading inspection, verification, testing and certification company Experts at:  Protecting brands  Providing competitive advantage  Driving speed to market  Delivering trust  Driving sustainability 60,000 employees, including:  Scientists, engineers, doctors, chemists, auditors, inspectors and project managers. 1,000 offices and laboratories globally including Moscow

© SGS SA ALL RIGHTS RESERVED.