Big brands race to reduce reputational harm as more and more horror stories emerge from quick comm dark stores

As more and more horror stories pour out of India's quick commerce dark store landscape, major consumer goods companies are urgently seeking to take back some control of the narrative in order to curb reputational harm to their businesses.

In light of recent food safety violations linked to dark stores operated by quick commerce platforms, several prominent brands have begun taking proactive measures, The Times of India reported on June 27. Companies such as Marico, ITC, Godrej Consumer Products, and Dabur are re-evaluating their contractual agreements with these platforms to mitigate risks and enhance safety protocols, the report (by Asmita Dey) said.

Legal experts note that clauses regarding storage, handling, and hygiene are being revised, particularly concerning dark stores and last-mile delivery processes. Chandan Goswami, a partner at AT & Partners, told the newspaper that many brands are also considering legal options to safeguard against potential consumer claims and regulatory scrutiny arising from negligent practices.

Earlier this month, the Maharashtra Food & Drug Administration suspended the food business licences of Zepto's dark store in Dharavi and another operated by Blinkit in Pune due to violations.

These licences have since been reinstated following compliance checks by authorities. The swift action taken by regulatory bodies underscores the need for stringent adherence to food safety standards.

The drive towards maintaining high standards will shape the future of quick commerce, ensuring that consumer safety remains a top priority, industry experts noted.

Compliance becomes serious business
Brands are increasingly incorporating specific representations and warranties in their contracts to ensure compliance with the Food Safety and Standards Authority of India (FSSAI) norms.

Dheeraj Nair, a partner at JSA Advocates & Solicitors, told ToI that robust indemnity clauses are being added to protect brands from losses and reputational damage caused by lapses on the part of the platforms.

This shift indicates that quick commerce operators are no longer regarded merely as facilitators but as co-custodians of regulated goods, responsible for maintaining high compliance standards, he said.

The FSSAI's guidance emphasises the necessity of formal agreements between brand owners and platforms, affirming adherence to regulatory requirements. This new landscape requires all parties involved to maintain accountability, which is essential as the quick commerce market continues to expand rapidly.

Evolving sector, evolving dynamics

The quick commerce sector in India, particularly in urban areas, is witnessing significant growth as consumers have become more willing to pay extra for the convenience of receiving a variety of products -- including groceries, electronics, and apparel -- within minutes.

According to a report by Kearney, this market is projected to triple between 2024 and 2027, potentially reaching a value of Rs 1.5-1.7 lakh crore.

As this sector evolves, both brands and quick commerce platforms are likely to place greater scrutiny on the representations and warranties within their agreements.

Sahil Narang, a partner at Khaitan & Co, told ToI that compliance with necessary licences under the Food Safety and Standards Act, 2006, and adherence to hygiene protocols is crucial, particularly for perishable goods.