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By Christine Murray
LONDON, Feb 13 (Reuters) - Companies that specialise intesting food ingredients stand to gain from increased scrutinyof meat products in the wake of the horsemeat scandal that hasspread across Europe since the beginning of the year.
French-listed Eurofins, the largest food testingspecialist in Europe, and British firm Intertek bothsaid they had already seen a pick-up in demand.
Customers that routinely send samples to check on the typeof meat in products don't seem to be affected, said BertPopping, director of scientific development at Eurofins. "Butwe're seeing more samples coming now from companies that havenot previously tested those parameters."
Eurofins did the tests which helped to confirm the presenceof horse in Irish-produced burgers that sparked the scandal.
The discovery of horsemeat in imported beef products inBritain, blamed by government ministers on "an internationalcriminal conspiracy," has prompted investigations into productsand suppliers and calls for tighter regulation.
British and European Union officials will meet in Brusselson Wednesday to decide how to deal with the situation involvingseveral countries in a complex supply chain across thecontinent.
British Environment Secretary Owen Paterson held meetings onTuesday with the British Institute of Grocery Distributors todiscuss standards for the regular testing of meat products byretailers and what will happen in future.
Any new regulation or tougher enforcement of existingEuropean rules would be a boon to the highly-specialised foodtesting sector.
"Within the support services group as a whole, regulation iswhat they thrive on ... it's what drives the whole industry,"Robin Speakman, an analyst from Shore Capital, said.
British retailers have already been told by regulators toconduct more authenticity tests on beef products, such asbeefburgers, meatballs and lasagne, by Friday. As a result,Intertek has seen more business at its food laboratoryin Stoke-on-Trent.
"The current demand we are seeing is focused aroundidentification of the cause and scale of the current issue,"Chetan Parmar, Intertek vice president of food services, said.
"The medium and longer-term effect on our business, as withall quality scares, depends on the sustained response by theindustry and regulators," he added.
Food testing currently accounts for less than 5 percent ofbusiness services group Intertek's global revenue. In 2011, thecompany spent 7.3 million pounds on two food testing businessesin the UK and Chile, and opened a new laboratory in Turkey.
SHARES RISE
Will Kirkness, an analyst from Jefferies, said that thescandal could lead to a single-digit upgrade in earnings pershare for Eurofins, which focuses exclusively on food testingand has an extensive network of labs and offers the greatestrange of tests.
Kirkness said it would probably not move the dial for thethree largest European firms SGS, Bureau Veritas and Intertek, which offer food testing along with otherservices. But he said it was positive for industry sentiment.
Shares in each of the four companies have risen by more than5 percent since January 15 when British retailer Tesco withdrew the first batch of beef burgers from its stores.
Eurofins' Popping said that although he believed currentfood labelling regulation was adequate, better enforcement andincreased awareness on the part of the companies that sourceproducts would drive new business for the company.
Speakman from Shore Capital said that although there couldbe changes in the UK, the biggest opportunities lay in thecountries where the meat originates.
"Those specialists that have capability at the source ofproduction are going to have the greatest opportunity, becausethey will be best placed to control, monitor and ensurecompliance within the food chain," he said.
But the business services sector's biggest competitors canoften be its customers which can decide to do their own testing.
"If it becomes a necessary part of compliance for the foodretailers themselves, there's a fair chance that they will wantto take control themselves and perhaps have it in house,"Speakman said.
