India’s consumer market is around Rs. 200 lakh crores. Now the Food Safety Standards Authority of India (FSSAI) has started taking strict action on this market. Everything from cheese to liquor bottles sold in the market is being scrutinized in detail. From restaurant hygiene to online delivery platforms, regulations are being enforced everywhere. This major action will not have an immediate impact on the earnings of the companies. But their cost of doing business is rising rapidly.

Experts at Elaine Capital believe that this change will make it more difficult for large companies. On the other hand, direct-to-consumer brands will adapt quickly. With a crackdown on fake cheese, people will now switch to good dairy companies. But amidst all this, a big question is being raised that who will pay the true price of this tightening in the market?

The biggest impact on liquor brands

The first blow of FSSAI’s crackdown has fallen on liquor companies. Around 18,000 cases of liquor were seized from United Spirits’ Bengaluru facility in August. This major action was taken due to non-compliance with regulations regarding recycling of old bottles. It directly affected well-known brands like Smirnoff, DSP Black Deluxe and Wet 69. Along with this, questions have also been raised about the addition of flavors to some whiskey and rum brands. After a tough stance by regulators, United Spirits will have to change the formula of many of its biggest brands. Pernod Ricard’s facility has also been inspected. These measures have significantly increased the legal costs of companies.

Famous companies hang on false claims

The situation has also become difficult for FMCG companies manufacturing daily goods. The regulator is closely scrutinizing all products claiming to be 100 percent pure. After the crackdown, companies like Amway India, Emami, Bon Biscuit and Apis India had to withdraw their claims. Dabur, Ferns n Petals and Lotte India also had to take necessary corrective action after receiving the notice. Now companies cannot easily use words like ‘natural’ or ‘premium’. Companies have to spend a lot of money on testing and packaging before launching new products in the market.

Pizza Burger outlets sealed

This action is also very important for those who eat out. The regulator has begun intensive scrutiny of eateries. A KFC outlet in Mangaluru was sealed following complaints of spoiled chicken. The investigation team also found cooking oil with expiry date in the kitchen there. Similarly, in Maharashtra, the state food department has suspended the licenses of four Domino’s outlets of Jubilant Foodworks and one Pizza Hut outlet of Sapphire Foods. Major deficiencies related to sanitation and food storage were observed in these places. It leaves a deep stain on the reputation of the companies.

The tension of online delivery platforms increased

Online delivery platforms like Amazon, Swiggy Instamart, BigBasket, Flipkart India and Zepto are also now on the government’s radar. They are accused of selling spoiled food. The biggest question among all this is who will bear the burden of strict compliance of the rules.

Market insiders say that initially all these costs will be borne by the entire market. Companies have to spend more money on testing and legal fees. But in future its direct burden will fall on the common man’s pocket. If firms’ costs increase, they will increase the prices of their products. This simply means that consumers will have to pay more to eat safe food. At the same time, small businesses may be forced out of the market due to not being able to meet these stringent standards.