Testing, Inspection and Certification are the operational components of quality control and the most crucial factors in any company's survival. TIC plays a substantial role in ensuring that infrastructure, services and products meet safety regulations and quality standards. TIC industry offers a gamut of services including supply chain certifications, industrial site inspections, food testing, management system certification, quality and safety control assessment, consignment-based conformity assessments and related auditing, consultancy and training services. TIC services are aimed at helping organisations increase their productivity while meeting global standards, manage risk and improve the quality, safety and compliance of their products or services.
Certification services also include system and process certification (e.g., ISO 22000, BRC, SQF, IFS, Halal, Kosher, Free-From Certifications and so on). Companies operating in the TIC services industry serve manufacturers, traders, consumer retailers and governments across a variety of industries globally. TIC in food industry serves in Meat, Poultry, Seafood, Dairy, Infant Food, Beverages, Bakery & Confectionery and other segments. According to BlueWeave Consulting, global market research and consulting firm, the global market for TIC services is lucrative and current market size is estimated to be above US$210 billion. The market is further expected to grow by more than 4.8% CAGR in the next five years.
Certification of processed meat products stays in demand
As demand for processed meat products rising, meat fraud cases are on the upswing. The growth in malpractice worldwide, and several over-sized frauds, and cases of contamination of meat & meat products have resulted in limited growth of meat product certification market. Non-secular issues drive the demand for halal and kosher certification for meat & meat merchandise among shoppers, particularly monotheism and Jewish populations. Also, the demand for meat testing & certification is driven by regulatory bodies, increasing stringency over meat safety and credibility. The same, in turn, is driven by growing demand from the shopper for certified merchandise.
In the North American region, the certification bodies certify that the organisations engaged in food and alcohol production follow appropriate food safety processes through follow-ups and comprehensive audits. Strict regulatory USDA regulations compel manufacturers to comply with the laws and continue to propel the market.
Food trade is extremely supervised by new FSMA rules, and when it includes food consumption, shoppers demand greater transparency. Such incidences are also expected to advance food certification demand. For instance, Somerdale International, the leading British cheese and farm merchandise businessman of the US launched British cheddar-the principal-fully-accredited and non-GMO cheese. And, as per increased transparency sought by it from the regulatory body, the new "Westminster Sharp" has been licensed as non-GMO by the independent international agency.
The developed regions such as Europe and the US have stricter consumer products laws and regulations. Several international organisations and agencies have emerged for stating food quality parameters and their importance. It, in turn, offers several opportunities for market growth, even in developed countries. Asia-Pacific is expected to experience more robust growth shortly, led by dominant nations.
The major emerging markets in the region such as China, India and South Korea have become highly attractive to TIC companies due to the sheer growth of indigenous industries, the subsequent acceleration of exports, the establishment of strict standards and rapid urbanisation. For instance, the Chinese government is building robotic testing, inspection, and certification systems and encouraging alliances in the form of testing, inspection, and certification activities to steadily improve the robots' product quality and promote the industry's healthy and orderly growth.
Complex supply chains due to rapid globalisation
Globally, the TIC market is bifurcated into in-house services and outsourcing of these services to TIC companies. In terms of market share, outsourcing services stood at nearly 42% in 2019 and is expected to rise quickly. Complex supply chains due to rapid globalisation, privatisation of state-owned laboratories and increasing standards of end-user efficiency have surged the demand for outsourcing TIC services.
Moreover, large corporations and state-owned establishments are gradually outsourcing their TIC activities to reduce their expenses and focus on core business competencies. Evolving regulatory landscape and growing demand for independent TIC services have triggered a transition from a voluntary risk management approach to mandatory testing services, and it has emerged as a significant trend contributing to the outsourcing of TIC services.
Aimed to increase efficiency and create opportunities
Technological advancements are continuously reshaping the traditional TIC processes and physical testing methods. For instance, automated systems, drones, integrated sensors, and so on are replacing physical inspection, which is labour-intensive and prone to human error. Technological innovations are affecting existing TIC processes but are aimed to increase efficiency and create opportunities for new entrants.
The key players in the industry include Dekra North America Inc., Intertek Group Plc, DNV GL AS, SGS SA, Eurofins USA and other leading players. Testing, Inspection and Certifications in the food industry are highly fragmented, and key market players are looking at alliances and start-up acquisitions to extend their business outreach. For instance, in September 2019, the Norway-based private equity firm Norvestor Equity sold Sweden-based Nomor Holding, a provider of pest control, food safety and related services and inspections, to ServiceMaster.
In August 2019, NormecFoodcare, a Netherlands-based company engaged in providing food testing, inspection and certification services, and a subsidiary of the Normec Group, acquired AS4, a Belgium-based company engaged in providing food testing, inspections and certification services.
Rapid urbanisation in developing economies, high adoption of outsourcing service models by global manufacturers, and surge in illicit trading enhances the need and growth of testing, inspection and certifications in the food industry. Also, trade wars and growth fluctuations have challenged the end-user food industry.
Role of TIC crucial during Covid-19
Due to recent outbreak of Covid-19, the role of testing, inspection and certification becomes crucial in ensuring that the products and services offered to customers, particularly in the food segment, meet the fundamental standards for safety and health. With rising disposable income (DPI) among the urban population, families in metropolitan cities are obsessed with hypermarkets, convenience stores and supermarkets marketing prepackaged foods.
Increasing awareness of health concerns has made consumers search product labels carefully to recognise whether the merchandise is properly accredited or not. The ongoing shopping pattern helps the food certification market accelerate. Manufacturers and importers across industries globally are required to guarantee food safety, quality and acceptability throughout the supply chain.
Growing globalised demand for regulation of materials, products and processes, increasing foreign trade, globally integrating supply chains, increased corporate outsourcing of R&D activities, as well as quality assurance to third parties, are expected to drive the long-term expansion of the TIC in the food industry in the coming times".
(The author is research director, BlueWave Consulting. He can be contacted at laltusinha@blueweaveconsulting.com)