Regulation is traditionally seen as the enemy of business, but in this tech-savvy, information-empowered age, regulators are getting better at regulating, and businesses are becoming better at responding.
Now more than ever, as the new Food Information for Consumers (FIC) regulations show, businesses can use regulation to flourish and innovate – improving their service, sustainability and social impact.
And as technology gets slicker and data builds up, there are more apps and services around that can help companies be compliant and play to their strengths. One such innovation, is FoodTrade Menu, our smart menu management tool that not only offers allergen labelling compliance, but allows food businesses to connect to suppliers that match their ingredient list.
In this article, Ed Dowding, CEO and founder of FoodTrade, discusses how to respond to regulation and offers tips for policy-makers to design it more effectively.
What’s with all the red tape?
Politicians will often try to win over a crowd with a promise to ‘cut red tape’. But as with any overused phrase, it’s worth questioning if the speaker has actually considered it’s true meaning.
The phrase ‘red tape’ originates from the fact that legislation documents used to be tied into bundles with red ribbon. Typically, politicians are calling for less regulation. But should the focus be shifted to creating smarter regulation, rather than less of it? Or even sliding-scale regulation so that different sized businesses can respond efficiently and effectively? Or regulation with a sunset clause so that it has to be revisited every 10 years to make sure it’s still valid?
In truth, regulation has a very long way to go to be as efficient as we need it to be in a highly responsive, globalised, fast-moving age, but it’s certainly making progress.
Take the example of the new FIC regulations. Over the next three years, food businesses will have to show if their food contains allergens, display origin of any meat contents, and detail the nutritional content.
On one hand these appear like another compliance burden that small businesses are going to find it proportionately more expensive to respond to. There aren’t that many allergens, nor that many allergen sufferers, very few people pay attention to nutrition labels, and most of us expect meat to be sourced responsibly now – especially since BSE and Horsegate.
But think how hard it must be to get approval for food-tracing legislation – a transparent supply-chain from farm-to-fork. Big businesses would lobby, complaining that it will add costs, that food quality will suffer and they’ll have to cut jobs…so instead of ending up in an endless battle of lawyers, the EU-led FIC regulations uses the individual’s health – something that everyone cares about and few people will argue against – as a lever to create this change.
And the benefits go far beyond transparent supply chains – there’s also substantial public health benefits in the deal because businesses are forced to be transparent and thus responsible for the impacts of their foods. If people can easily see you’re serving a heart-attack in a box, it reduces sales and prompts menu-reformulation.
At FoodTrade we believe that every problem is an opportunity, and that by thinking creatively we can come up with far better ideas than we had before. (There’s a very good Lars von Trier film called The Five Obstructions all about this, in which he challenges a filmmaker to remake the same film 5 times but subject to a ridiculous new rule each time – and he makes a great film, every time.)
Making regulation easy to use
Scale is important in legislation: small businesses carry less risk and impact because because they deal with fewer customers, and don’t suffer the cross-contamination problems of scale, so we’re seeing more sliding scale regulation.
Take baby steps: the FIC laws are being phased in over three years, meaning that if businesses start ahead of time (especially with the right tools) they can be ready for each new phase with minimal effort.
Take advantage of online services which can do a lot of the work for you by being connected and social. FoodTrade Menu, for example, quickly creates FIC compliant menus by pre-filling ingredients lists, sends automatic alerts if a supplier makes changes to a product, and pulls in nutrition information about different food types.
The value range & the benefits of transparency
There’s a great saying that “awareness is the greatest agent of change” – after all if we don’t know about something, we can’t change it. The new labelling laws mean companies can no longer use generics like “vegetable oil” when it’s actually “palm oil”. This allows customers to make more informed about the types of business they support, which in turn can change the supply chain very quickly.
We know that more and more, people are wanting to support local independent companies who source locally and act responsibly. Whilst FIC requirements for transparency are still a few years away, the most progressive companies are already making a virtue of their provenance by showcasing their suppliers to add margin, value, and customer support.
The market has matured since Horsegate and customers are aware they have to buy not from the value range, but buy a range of values. Companies who can clearly show that they add value to their community develop repeat footfall, better survive recessions, and can charge higher margins.
It’s tough being an allergen sufferer – imagine having to check ingredient small print every time you eat, or constantly missing out on dinner parties because your requirements are too much of a hassle. Make your allergen-aware menu discoverable, and you’ll have customers lining up to give you their loyalty.
How to work collaboratively
Regulation is great at helping harmonise standards so that people can work together or exchange information more effectively.
For example in sustainability reporting – a precondition for working with some companies – each different company enforces its own standards on suppliers, deliberately making it hard for them to switch to work with a competitor, and thus driving down the purchasing price.
A regulator who can enforce a basic harmony here can decrease market friction and make it easier for quality suppliers to find a fair price, and start a race to the top for quality.
In the example of FIC, new compliancy services are taking collaboration to the next level. The FSA has released its ratings database, people are using nutrition information tied to barcodes, some are working with health apps to record nutrition information, others are sharing menu information with TripAdvisor and FourSquare to help drive footfall.
There’s collaboration back into the supply chain, too. FoodTrade Menu has recognised that by listing allergens you’re listing ingredients, and that’s basically a trade shopping list – which means the service not only helps you be compliant, it also alerts you with produce offers.
Building relationships with inspections
The FIC is the biggest change to food regulations in some time, and mirrors a power shift between regulators, inspectors and businesses – EHOs are being seen more as allies than policemen, more a source of support than a harbinger of terror.
With this shift to collaboration, and in a more tech-savvy and information-empowered era, it’s going to be interesting how this plays out – will companies who keep their menu data up-to-date be inspected less? Will they share risk profiles with inspection agencies so that EHOs can visit only when something changes?
Whatever happens, we welcome this shift to the market, embrace the red tape, and look forward to the changes it creates.