Food fraud could be costing the UK economy as much as £2 billion a year, according to new research from the University of Portsmouth – putting the spotlight on the economic as well as food safety risks facing manufacturers and the wider supply chain.

Food fraud is not simply a consumer protection issue. New research from the University of Portsmouth suggests it is a significant economic crime, costing the UK between £400 million and £2 billion every year.

The study, published in the Journal of Economic Criminology, is the first to calculate the wider economic impact of food fraud by looking at entire criminal operations rather than individual incidents. It covers practices including food substitution, false labelling and document fraud carried out for financial gain.

For food and drink manufacturers, the findings reinforce why fraud prevention needs to sit alongside food safety, quality assurance and supply chain resilience.

A cost beyond the counterfeit product

One of the most significant findings is that around three-quarters of the estimated economic cost comes from fraudulent products replacing legitimate products in the market.

That means the damage extends well beyond the immediate value of a fraudulent transaction. Genuine manufacturers can lose sales when cheaper or misrepresented products compete with their products, while businesses can also face reputational damage and increased costs associated with investigation and assurance.

The researchers use the example of smoked salmon being marketed as Scottish when it has actually been sourced from Norway to demonstrate how substitution and misrepresentation can distort legitimate markets.

The consequences can also become considerably more serious where fraud creates a direct food safety risk. The University of Portsmouth points to cases involving fake spirits containing industrial chemicals as an example of how economic crime can potentially become a public health issue.

“It undermines honest businesses, distorts markets and, in the most serious cases, puts people’s health at risk,” said Dr David Shepherd of the University of Portsmouth.

Supply chains are the first line of defence

The research offers a more positive finding for the UK food industry: food fraud appears to be comparatively uncommon when measured against other forms of fraud.

The researchers attribute this in part to the industry’s extensive network of controls. Manufacturers, retailers, regulators and certification bodies collectively create multiple barriers that make it harder for fraudulent products to enter legitimate supply chains.

Professor Lisa Jack said these overlapping controls have created a system that “squeezes out fraudulent products” and makes it harder for rogue traders to operate.

For manufacturers, this underlines the importance of maintaining – rather than simply having – robust supplier approval, traceability, testing, certification and product verification systems.

It also highlights why fraud risk cannot be treated as a static compliance exercise. Changes in commodity prices, supply shortages, geopolitical disruption and increasingly complex global sourcing can all create opportunities for substitution or misrepresentation.

Prevention could pay for itself

Perhaps the strongest commercial argument for tackling food fraud comes from the study’s assessment of enforcement.

Based on the cases analysed, the researchers estimate that prosecutions could generate a return on investment of more than 400%. In other words, greater investment in investigation and enforcement could potentially pay for itself while reducing the wider economic damage caused by fraudulent activity.

That could strengthen the case for greater investment in intelligence sharing and targeted enforcement, rather than relying solely on businesses to identify fraud within their own supply chains.

The research also provides a framework for policymakers and industry to better identify where resources should be concentrated. Its model introduces the concept of ‘market cost’ – the impact fraudulent supplies have on legitimate businesses – alongside the direct costs associated with crime.

Business resilience

The findings give manufacturers another reason to view food fraud as a business resilience issue, rather than simply a regulatory concern.

For procurement and technical teams, that means understanding where vulnerabilities exist across the supply chain and ensuring controls are proportionate to the risks. For manufacturers sourcing higher-risk ingredients or commodities, intelligence, authenticity testing and supplier verification can become important parts of protecting both margins and brand reputation.

The study’s central message is also one of collective responsibility. The UK’s relatively strong position has been built through collaboration between businesses, regulators and assurance organisations – and the researchers warn that this should not encourage complacency.

As Professor Jack puts it: “Continued investment in prevention and enforcement is essential if we are to maintain public confidence in the food we buy and protect businesses that play by the rules.”

For an industry already managing rising input costs, complex international supply chains and increasing regulatory scrutiny, the £2bn estimate is a market risk that can directly affect competitiveness, profitability and consumer trust.