Fraud could lead to £12 billion loss annually

FTSE food businesses have been told they could double their profits by reducing fraud losses.

A report from national audit, tax and advisory firm Crowe Clark Whitehill, in conjunction with the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS) highlighted the significant loss the sector could be losing through fraud.

The ‘Minimising Fraud and Maximising Value in the UK Food and Drink Sector 2017’ paper calculates the cost of fraud affecting the sector and details the scale of commercial benefits that are available to companies that manage the cost down.

“Our latest report, shows that the sector could increase profitability by 43%, unlocking an additional £4.8 billion,” said Jim Gee, head of forensic and counter services at Crowe. “Our experience is that the cost of fraud can be reduced by up to 40% within 12 months. Some of the FTSE-listed food and drink businesses could double their profits by reducing their fraud losses.”

The report is designed to provide the food and drink industry with an insight into the benefits of reducing the cost of fraud, highlighting exactly how cutting those costs can boost profitability and financial health. Ultimately, this can reduce the price of food and drink to consumers.

“Food and drink fraud is the crime in our shopping baskets,” explained Gee. “At a time of returning food and drink inflation, the industry is under incredible pressure to manage and reduce costs. Fraud is the last great unmanaged business cost, and reducing it offers forward-thinking businesses the opportunity to improve competitiveness and increase profitability.

“Shareholders and investors should be asking food and drink businesses about their cost of fraud and what is being done to manage and reduce the cost. Businesses that cannot provide a response, or suggest that fraud is not an issue for them, should be a cause for concern.”

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