Zomato’s Hyperpure business — through which it supplies food items to restaurants — has grown rapidly since the company had acquired it in 2018, but it’s now increasingly coming under scrutiny for the quality of food items it supplies.
After questions had been raised over Zomato selling fake paneer through Hyperpure, a raid in one of its Hyderabad warehouses has found items with a future printed date of packaging. The raid was conducted on 29th October, but officials discovered 18 kilos of button mushrooms which had a date of packaging marked as 30th October. This raised questions over whether Zomato Hyperpure was adding fake packaging dates on older items.
The raids were being conducted by Hyderabad authorities after a woman had died after allegedly after consuming contaminated shawarma from a roadside stall. The raid which found the post-dated date of packaging was conducted on Zomato Hyperpure’s warehouse in Kukatpally. The officials also observed house flies inside the Hyperpure warehouse and noted that the premises were “open directly to the outside environment without a proper insect-proof screen.” Additionally, a few of the food handlers were not wearing hair caps and aprons.
The discovery of the post-dated date of packaging in a Zomato Hyperpure warehouse comes weeks after it was revealed that Zomato was selling fake paneer to restaurants through Hyperpure. A screenshot of Hyperpure’s website which was selling “Analogue Paneer” to restaurants had gone viral on social media. The panner was selling for just Rs. 205 per kg, while real paneer usually costs five times as much. Zomato’s instructions said that the paneer was “fit for tikka & gravy paneer dishes”. Fake paneer is made of vegetable fat unlike real paneer which has milk fats, and could be determinantal to people’s health. There had been considerable outrage over Zomato helping restaurants scam customers by selling fake paneer which is then labeled and sold as real paneer.
Hyperpure is now a sizable part of Zomato’s overall business. It provides ingredients to over 30,000 restaurants in 10 cities across India. HSBC’s latest price target of Rs. 330 on Zomato had attributed a $1.6 valuation (Rs. 13,000 crore) valuation to Hyperpure.
But two cases in quick succession have cast a cloud on Hyperpure’s operations. In the first instance, Zomato Hyperpure was found to be selling fake paneer to restaurants in order to enable them to scam customers, and in the other, Hyperpure seemed to be scamming restaurants themselves with fake dates of packaging on items. Such malpractices don’t sit well with Zomato, which is now a $20 billion company, and could end up seriously eroding the brand value it’s built over the years.