Nestle India buckles, pulls Maggi noodles

Bureau, Financial Express

Mumbai, 6 Jun 2015

In a belated attempt to salvage its reputation, Swiss FMCG major Nestle on Friday decided to recall its Maggi instant noodles from the market to end the ensuing confusion in the minds of consumers, which it said did not provide a conducive environment for the product to be in the market at this point of time.

The company’s group CEO Paul Bulcke flew down to India and addressed a crowded press conference to reiterate that its products are safe to consume and that it applies the same quality standards and the same food safety and quality assurance system everywhere in the world. “We felt unfounded reasons resulted in confusion and the trust of consumers was shaken,” Bulcke said.

Though sales of Maggi in India account for roughly 0.005% of Nestle’s global revenue of almost 92 billion Swiss francs ($98.6 billion), Bulcke acknowledged that the recent developments had damaged its brand and the company was in for a long haul. “If you have confusion there is something wrong with communications. That’s why we are sitting here,” he said.

However, the company’s troubles do not seem to end. Even as Bulcke’s press conference was on, the food safety regulator, Food Safety and Standards Authority of India (FSSAI), ordered the company to recall all nine approved variants of the instant noodles from the market, terming them “unsafe and hazardous” for human consumption. It ordered it to stop further production, processing, import, distribution and sale of the product with immediate effect. It even said that Nestle launched the Maggi Oats Masala Noodles without approval and, therefore, ordered its recall as the company did not undertake a risk and safety assessment for the product. The regulator also said that Nestle violated labelling regulations on taste enhancer MSG and ordered the company to submit compliance report on its orders within three days.

After reports of presence of mono-sodium glutamate and lead in excess content in some samples surfaced in Uttar Pradesh around two weeks ago, till Thursday five states — Delhi, Gujarat, Tamil Nadu, Jammu and Kashmir and Uttarakhand — had banned its sale pending tests in government laboratories. Major retails chains as well as small eateries had also withdrawn the products from their stores and menu. However, with the FSSAI’s order on Friday the company’s woes are expected to increase and the crisis may get prolonged.

Referring to the reports of high lead content in tests by certain government laboratories, the Nestle global CEO said that the company needed to find out the methodology adopted by the government’s test centres. Denying that the company added MSG in Maggi, Bulcke said that MSG was found in the product because of natural ingredients like groundnut oil, onion powder and wheat flour which contain glutamate naturally. However, to remove any confusion the company has decided to remove from now on the “Contains no MSG” labelling.

While analysts welcomed the recall of Maggi by Nestle, they questioned the delay in doing so and even clashing with the regulator and denying the problem for weeks. “If you ask me, everything that Nestle has done is wrong. In this day and age of social media, you cannot question the government and consumers,” said Arvind Singhal, chairman of retail consultancy Technopak.

“Nestle India should have given higher priority to the interest of the consumer and should have done a nationwide recall right at the beginning instead of confronting the situation. In this case they have managed to lose trust of their consumers. Nestle India needs to understand that a brand lives on the trust of the consumer,” Devangshu Dutta, chief executive at Third Eyesight said.

(With inputs from Sharleen D’Souza in Mumbai.)

(Published in Financial Express.)