Zomato’s Food Safety in Question: Future-Dated Mushrooms Spark CEO Clarification

Zomato Faces Scrutiny Over Future-Dated Mushrooms at Hyperpure Warehouse in Hyderabad. Incident sparks public concern and prompts clarification from Zomato’s CEO.

In a recent inspection, the Food Safety and Standards Authority of India (FSSAI) uncovered future-dated mushrooms at Zomato’s Hyperpure warehouse in Hyderabad, raising questions about food safety standards at the company’s B2B food supply division. The incident has sparked public concern and led to Zomato CEO Deepinder Goyal addressing the matter to clarify details and reaffirm the company’s commitment to safety.

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Inspection Details and Key Findings

On October 29, 2024, the FSSAI conducted a routine inspection at Zomato’s Hyperpure warehouse located in Kukatpally, Hyderabad. The Hyperpure branch serves as a B2B supplier, providing fresh produce, meats, seafood, and other kitchen essentials to restaurants, hotels, and catering businesses across the region. During the inspection, officials discovered 90 packets of button mushrooms labeled with a future packing date of October 30, 2024—a day after the actual inspection.

The findings raised immediate red flags. Incorrect labeling, especially with future dates, can indicate a lack of quality control in the supply chain, which could pose risks to consumer health. Additionally, the inspection report highlighted other hygiene concerns, such as houseflies in the warehouse due to inadequate insect-proofing and food handlers not consistently using hair caps and aprons. While the warehouse held necessary licenses, medical fitness certificates, and pest control records, the noted deficiencies put Zomato in the spotlight, leading to negative media attention.

Public Reaction and Media Response

The discovery of mislabeled mushrooms and other sanitation issues quickly became a talking point on social media, where consumers and industry observers expressed concern about Zomato’s food safety practices. Given the rapid growth of online food platforms, ensuring high standards in food safety is of particular importance to consumers. The incident follows similar findings earlier this year at a Blinkit warehouse, another Zomato-owned company, where officials reported hygiene violations.

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The timing of the incident is also significant, as the FSSAI has increased inspections across the food industry ahead of festive seasons when demand spikes. Amid a growing focus on food safety regulations, public concern over such violations has led to calls for stricter oversight, especially from large corporations serving vast consumer bases.

Zomato’s Response and Clarification

In response to the media coverage, Zomato CEO Deepinder Goyal took to X (formerly Twitter) to clarify the situation and address concerns. Goyal explained that the incorrect packaging date on the mushrooms was due to a “manual typing error” by the vendor, a rare occurrence that Zomato’s quality control (QC) team had already identified. According to Goyal, the mislabeled products were intercepted during the warehouse’s inward QC checks and rejected, ensuring they would not reach customers. To prevent future incidents, Zomato has since delisted the vendor responsible for the error.

Goyal also highlighted that Hyperpure follows rigorous quality standards, bolstered by advanced tech systems to detect errors early. The Hyderabad warehouse, where the incident occurred, recently achieved an A+ rating from the FSSAI, the highest industry benchmark, which he emphasized as evidence of Hyperpure’s strong food safety commitment. Frustrated by the focus on the mislabeled mushrooms, Goyal pointed out that the incident involved only ₹7,200 worth of inventory—a fraction of the overall stock in the warehouse—and suggested that media coverage could be disproportionately critical of large companies.

Impact on Zomato’s Brand and Market Performance

The incident has affected Zomato’s brand reputation, particularly among consumers who prioritize food safety. The incident’s timing, amidst heightened regulatory scrutiny, has also added pressure on Zomato to reinforce its safety measures. While the company has been transparent in addressing the issue and reaffirming its standards, any perceived lapse can affect consumer trust, especially when competitors are also vying for credibility in a crowded market.

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The controversy may have also had an impact on Zomato’s stock performance. On November 4, 2024, Zomato shares were trading at ₹241.55 on the Bombay Stock Exchange (BSE), reflecting a 3.01% drop, possibly due to the scrutiny from the inspection report and subsequent media attention.

A Call for Consistent Food Safety Standards

The future-dated mushroom incident at Zomato’s Hyperpure warehouse underscores the importance of stringent and consistent food safety protocols in the food industry. While Zomato has taken steps to address the issue, including delisting the vendor, the incident serves as a reminder of the responsibilities that come with serving a large consumer base.

As food safety remains in the spotlight, companies like Zomato must continuously uphold and enhance standards to maintain consumer trust and protect public health.