How FMCG and CPG Companies Can Improve Regulatory Risk Management for Packaging

In the rapidly changing and highly competitive Fast-Moving Consumer Goods (FMCG) sector, labeling and packaging plays an important role in brand identity, over and above its purpose of protecting the physical product. FMCG packaging compliance is also crucial to ensuring consumer safety. For this reason, regulations and good practices have been put in place at state, national, regional and in some cases international level.

With a surge in globalisation from the late 1980s and in the early 21st century, compliance has become even more complex. The consequences of non-compliance are many, but damage to branding and corporate or product reputation are key ones. Legal and financial consequences are also high risks. Regulatory risk management must therefore at the centre of your operations.

When we talk about compliance, we generally mean how a company’s actions and its product adhere to the laws (e.g., food and beverage packaging laws), product packaging regulations, and best practices and standards. Compliance is not a choice; it is an essential element of operations. Non-compliance risks your company’s position in the market, its profitability, and the success of your company.

Why Packaging Compliance Is Critical for Companies in FMCG Sectors

1. Consumer Safety

Labeling and Packaging in FMCG sectors must accurately communicate product contents, such as allergens and nutritional values, and provide instructions for use in some cases. Warnings are another important safety aspect. Incorrect or misleading information can harm consumers and lead to legal liability.

2. Market access

Non-compliance with local and regional regulations can jeopardize market access, handing opportunities to competitors and making it harder to gain a foothold in new regions. Expanding into new markets is challenging enough without the added risk of regulatory missteps. Get compliance right from the start, and your team can focus on what really matters: growing market share.

3. Brand trust and reputation

Consumer trust is fostered through transparency, not opaque, non-compliant practices. Deliberately or inadvertently deviating from regulations damages transparency (e.g., product ingredients) and integrity, or the perception of your integrity. You might have invested years and enormous amounts of capital into creating and promoting your product, brand and corporate reputation. It can unravel with one compliance mistake.

4. Operational efficiency

Compliance is process-driven and a mindset. Implementing efficient, compliance-driven processes can reduce the risk of recalls; avoid having to use cumbersome, inefficient and risk-driven manual workarounds; accelerate your turnarounds (e.g. verification, quality and approval processes); and improve your supply chain efficiency.

Key challenges in achieving regulatory compliance

• Regulations are complex and difficult to navigate. They must be navigated efficiently and accountably. This applies especially to market presence in multiple jurisdictions – US, European Union, Asia-Pacific, and so on.
• Achieving a compliance mindset demands long-term commitment in terms of corporate culture. Factors like empowerment and hierarchy can have impact negatively on a compliance mindset. For example, if employees are not empowered to make suggestions or decisions (i.e., they blindly follow rulebooks without understanding the real purpose of compliance), compliance can be seen as a process delay rather than the legitimation for their company to operate in a market.
• You need to monitor and evaluate the impact of changing rules. It would be great if regulations didn’t change. But they do, because knowledge and conventions change. Allergen and health information on food products or cosmetics was a silent issue in general public consciousness several decades ago. Now allergen statements, detailed nutritional tables and front of package labels for certain foods are either a requirement or coming into effect. Growing concerns over plastic waste and carbon footprints have led to new environmental rules.
• Digital Integration has changed the packaging and labeling landscape. QR codes, NFC tags, and smart packaging are existing – or fast becoming – regulatory requirements. Traceability requirements are an important step here. The is a rapidly evolving field, and companies need to keep on top of it.

Global Regulatory Impacts on FMCG Packaging

US and EU regulations, and ISO standards are three key regulatory frameworks impacting the labeling and packaging of FMCGs. Often, these big three play a leading role in change in other jurisdictions.

U.S. Food and Drug Administration (FDA)

In the FMCG sector, the FDA has a range of guidelines and requirements for labeling for food, beverage and cosmetic products. It does this through the Federal Food, Drug and Cosmetic Act (FD&C Act) and its various amendments, codified in Title 21, Chapter 9. [1]

Today, it is the basis in the US for all labeling and packaging requirements in these sectors, having begun life in the late-1930s with a strong focus on preventing fraudulent branding. It is an enormous document with detailed regulations taking in – and going far beyond – key requirements for ingredient listing (e.g., allergen disclosure, nutritional facts and how these are presented, additives), tamper-evident packaging and sustainability claims.

European Union (EU) Regulations

Like the FDA in the US, the EU regulators and regulations have enormous influence beyond their own national and regional boundaries. One reason for this is because companies exporting to the EU must comply with EU regulations. Again, this is also a factor in trade barriers; often it is a big hurdle in trade agreements. The key frameworks in the EU are Regulation (EU) No 1169/2011 on food information to consumers, EU Cosmetics Regulation (EC) No. 1223/2009, REACH Regulation (EC 1907/2006) for chemicals in packaging materials, and Directive 94/62/EC on packaging waste, which includes recyclability and reusability.

A significant feature of regulations in the EU is the requirement for labeling in national languages. Sustainability regulations also tend to be more stringent than in other jurisdictions, and the introduction of the EU Green Deal [2] and its building block, the Circular Economy Action Plan, will bring about further regulatory change to packaging in future.

ISO standards

The International Organization for Standardization (ISO) provides voluntary but globally recognized standards that guide packaging quality, safety, and environmental impact. Some of the key standards regulating FMCGs are ISO 22000 Food Safety Management, [3] ISO 22716:2007 Cosmetics – Good Manufacturing Practices (GMP) guidelines, ISO 18601:2013 Packaging and the environment (General requirements for the use of ISO standards in the field of packaging and the environment) [4] and ISO 14000 series for environmental management. [5]

10 Best Practices for Regulatory Risk Management in FMCG Packaging

1. Create a cross-functional compliance team that fully understands regulations for each jurisdiction.
2. Implement knowledge bases and designate people responsible for managing these.
3. Monitor regulations and coordinate responses to changes, and establish proactive processes to implement changes.
4. Implement processes to exchange and distribute information on regulatory change (designates in each jurisdiction). Your interfaces between jurisdictions must be efficient.
5. Invest in tools to automate processes and increase efficiency in managing regulatory change and updating labeling and packaging. It is also important that your systems and tools can be integrated into workflow systems, and that they allow you to exchange information efficiently with teams and other knowledge owners in other jurisdictions (globally).
6. Ensure version management processes are watertight (establish a methodology for designating each version with a unique identifier).
7. Implement systems that promote transparency and accountability for labeling reviews and other actions.
8. Conduct regular training and engage with industry organizations to stay on top of trends.
9. Proactively maintain contact with regulatory bodies (these generally have a contact person who will answer your questions before any required or recommended submission).
10. Leverage third-party providers if you lack the resources or knowledge in-house.

Packaging and labeling compliance provides your legitimacy in the market, and those companies that foster a culture of compliance as a valuable asset rather than an onerous market burden are the ones that profit most.

1. https://uscode.house.gov/browse/prelim@title21&edition=prelim and https://www.fda.gov/regulatory-information/laws-enforced-fda/federal-food-drug-and-cosmetic-act-fdc-act
2. https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en
3. https://www.iso.org/iso-22000-food-safety-management.html
4. https://www.iso.org/standard/55869.html
5. https://www.iso.org/files/live/sites/isoorg/files/archive/pdf/en/theiso14000family_2009.pdf