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May 3, 2024
SAYAN CHAKRABORTY, Nikkei staff writer
Bengaluru, 2 May 2024
India’s packaged spice manufacturers MDH and Everest are under regulatory scrutiny in several countries after their products were allegedly found to contain carcinogenic elements, barely a year after cough syrups made in the South Asian nation were linked to the deaths of over 140 children in Africa.
Countries like Australia, New Zealand and the U.S. are weighing investigations into the packaged spices made by the companies after Hong Kong authorities raised a red flag over their quality. This isn’t the first time that the two — among the largest such companies in India — have faced these kinds of issues, with the U.S. Food and Drug Administration ordering a recall of Everest spice mixes in 2023 and some MDH products in 2019, both due to salmonella contamination.
The Centre for Food Safety (CFS) in Hong Kong said in a statement on April 5 that it found ethylene oxide (ETO), a pesticide that can cause cancer if consumed in large amounts, in three types of packaged spices manufactured by MDH and one made by Everest. The products were taken off the shelves and recalled, the CFS said.
Taking its cue from the Hong Kong authorities, the Singapore Food Agency (SFA) a couple of weeks later recalled the Everest Fish Curry Masala product, saying in a statement that consumers who had purchased it were “advised not to consume it.”
The SFA also said, “As the implicated products [in Hong Kong] were imported into Singapore, the SFA has directed the importer to recall the products.” The agency clarified that “although there is no immediate risk to consumption of food contaminated with low levels of ethylene oxide, long-term exposure may lead to health issues.”
India’s Spice Board, a government agency that oversees spice exports, said that the limit for ETO varies between countries, from 0.02 milligram per kilogram of spices in places like the U.K. and Norway to 7 milligram per kilogram in Canada and the U.S.
Pesticides are widely used in agriculture in India, often leaving traces in food products. According to Indian government estimates, the cultivated area where chemical pesticide is used grew 33.4% from the fiscal year ending March 2019 to fiscal 2023, reaching 108,216 hectares. That was about seven times the area cultivated with biopesticides in 2023.
“We tend to look critically at the end product, but even more rigor is needed at the level of the ingredients,” said Devangshu Dutta, CEO at consultancy firm Third Eyesight, referring to the use of pesticides in cultivation. “Otherwise, we will end up kind of catching the product at the last point of control, which is not enough.”
Hong Kong and Singapore did not disclose the amount of ETO content in the recalled products. MDH and Everest had not responded to requests for comment by the time of publication.
Authorities elsewhere have also taken note of the allegations. “Food Standards Australia New Zealand is working with our international counterparts to understand the issue with federal, state and territory food enforcement agencies to determine if further action is required in Australia, e.g., a food recall,” the agency told Nikkei Asia in an email statement on Wednesday.
The regulatory scrutiny in the U.S., Australia, New Zealand, Hong Kong and Singapore, raises questions over an export market worth about $700 million, research firm Global Trade Research Initiative (GTRI) said in a report on Wednesday.
“Swift investigations and the publication of findings are essential to re-establish global trust in Indian spices,” GTRI said, adding that the “lack of clear communication [from government agencies] is disappointing.”
Indian food has been under scrutiny in Europe as well. The European Commission Rapid Alert System for Food and Feed estimates that since the beginning of 2023, Indian food products were deemed to pose “serious” risks in 166 instances. These included nine cases of ethylene oxide found in food supplements and spices in countries including Sweden, Greece and Italy.
Chinese food imports were found to pose serious risks on 115 occasions and those from the U.S. on 152 occasions.
The recalls come at a time when New Delhi is rolling out incentives to support local manufacturers and exporters in transforming India into a $5 trillion economy. India is the world’s largest exporter of spices with shipments worth $3.9 billion in 2023, followed by Vietnam and Mexico, according to data provider Tendata. Those figures give India a market share of 37.2%, with Vietnam at 28.1% and Mexico at 9.6%.
The issue with food products follows an outcry over the quality of medicines manufactured in India. Since 2022, the World Health Organization has linked the deaths of at least 141 children in Gambia, Uzbekistan and Cameroon to cough syrups made by India’s Maiden Pharmaceuticals, Marion Biotech and Riemann Labs that it alleged contained toxins.
But while the pharma companies are small local players, MDH and Everest made revenues of $260 million and $360 million respectively, in the fiscal year ended March 2023.
Poor food quality in India stems from a general lack of awareness about food safety and insufficient resources to track ingredients, among other reasons, said U.S.-based food and beverage consultancy AIB International in a report in October.
The Food Safety and Standards Authority of India found 16,582 samples unsafe in the fiscal year 2022, the latest such data available. That was a threefold jump from the previous year.
“Most of the food and beverage manufacturers in India are focused on reducing costs to make their product affordable to the public,” the report said. “As a result, many cannot prioritize food safety as a pillar of their business because it could prevent them from meeting their profit margins.”
“Food manufacturing and processing facilities can lack the resources to maintain proper hygiene,” it noted, adding that food-borne illnesses in India is estimated to top 100 million every year.
(Published on Nikkei)
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April 24, 2024
Mumbai, 24 April 2024
Sharleen Dsouza, Business Standard
With the Supreme Court cracking down on Patanjali over misleading advertisements, the advertisement industry is concerned. While industry players acknowledge that some degree of exaggeration in claims is common, the Supreme Court’s firm action signals an impending shift.
On Tuesday the SC said that its interest was not limited to Patanjali but all those Fast-Moving Consumer Goods (FMCGs) and drug companies that mislead consumers through their advertisements.
And Patanjali is not the first one to have crossed the line of puffery. There have been many cases in the past, like Horlicks Ltd versus Zydus Wellness Products where the former sought for a permanent injunction against Zydus for the broadcast of false advertisement.
Similarly, in Rajendra versus Union of India, the Bombay High Court restrained any good or service sale claiming it had supernatural and miraculous powers.
“Puffery in advertising is as old as advertising. There is always an element of exaggeration. Over the years, the government has looked the other way. Guys on the ground should take companies and brands to task and have largely been in cahoots with most of the brands,” said Sandeep Goyal, chairman and managing director of Rediffusion Brand Solutions.
Goyal believes that the SC coming down heavily on Patanjali would be a deterrent for other brands. “Puffery or not is for someone to figure out. In most food products, FSSAI doesn’t care. Who is to identify these ads? I think the SC has done something. This won’t deter other brands and get them to make claims which are within the realm of what is correct,” Goyal said.
A question of ethics
Industry experts point out that the primary objective of advertisement is to stimulate desire in the consumer’s mind. This happens by hook or by crook.
“Misleading a consumer has become inherent in advertising to a certain extent. I think this is dangerous when it comes to food, as it is basic nutrition. If you are embedding misleading information or mis-stating facts in ads then it has a real impact on whoever the customer or consumer is of that product. It is good that the issue has been highlighted,” said brand expert Devangshu Dutta, founder of Third Eyesight.
Then there is the Advertising Standards Council of India and discussions about ethical standards within the industry.
But Dutta believes there is a clear disconnect between what advertisements should say and what actually transpires. “I hope it gets acted upon from the government’s side as well. Self-regulation doesn’t seem to work. We all wish that it works, but it doesn’t. If it becomes more stringent, then it will be good overall,” he said.
While FMCG players are concerned about the stringent action of the Supreme Court, they believe that this will lead to improved advertisement regulation.
Ensuring compliance
Speaking on condition of anonymity, a senior executive of a leading FMCG company said, “The industry is already disciplining itself due to the growing consumer awareness, stringent ASCI guidelines and the impact of influencer marketing. This will further ensure that misleading ads will be few and far in the future.”
Some companies also ensure that their ads adhere to ASCI guidelines before launching them. “We run our ads with ASCI before we release them. This practice has worked in our favour,” said another executive on condition of anonymity.
In its hearing, the SC had said, “We are of the opinion that the issue relating to implementation of the relevant provisions of the Drugs and Magic Remedies Act and the Rules, the Drugs and Cosmetic Act and the Rules, and the Consumers Act and the relevant rules needs closer examination in the light of the grievances raised by the petitioner…not just limited to the respondents before this court but to all similarly situated/ placed FMCGs who have… misleading advertisements, and (are) taking the public for a ride… affecting the health of babies, school going children and senior citizens who have been consuming products on the basis of the said misrepresentation.”
(Published in Business Standard)
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February 23, 2024
Kailash Babar & Sagar Malviya, Economic Times
Mumbai, 23 February 2024
Tata Group and Reliance Industries, two of India’s largest conglomerates, are vying for premium retail real estate in Mumbai as they extend their footprints, creating rivalry in a city starved of marquee properties. From Zara and Starbucks to Westside and Titan, the Tata Group occupies nearly 25 million square feet of retail space in India. That is still no match for Reliance Industries that control three times more at 73 million sq ft for more than 100 local and global brands.
But in Mumbai, they are evenly matched, having nearly 3 million sq ft of retail space each. That is a quarter of what is considered the most prime retail real estate in the country, and both the retail giants are looking for more.
“In a modern retail environment, most visible locations contain more successful or larger brands. It just so happens that many of those brands are owned by either Reliance or the Tatas,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm.
“Tatas have been in retail for longer but also slower to scale up compared to Reliance which had this stated ambition of being the most dominant and put the money behind it,” he said.
In a market where demand is much higher than supply, developers and landlords seek to separate the wheat from the chaff, experts said. Ultimately, success in Mumbai’s retail real estate scene hinges on a delicate equilibrium between accommodating industry leaders and fostering a vibrant, varied shopping environment, they said. “In the competitive landscape of retail real estate in Mumbai, commercial developers and mall owners often face the strategic challenge of accommodating prominent retail brands,” said Abhishek Sharma, director, retail, at commercial real estate consultants Knight Frank India.
“These big brands, with a significant market share of 40-45% in the Indian retail sector, can easily be termed as industry giants and possess the potential to command 45-50% of space in any mall,” he said. According to Sharma, there may be perceptions of preferential treatments, but the dynamics are complex, and developers must balance the demand from these major brands with the need for a diverse tenant mix.
Tata Group entered retail in the late 1980s, initially by opening Titan watch stores and a decade later by launching department store Westside. So far, it has about 4,600 stores, including brands such as Tanishq, Starbucks, Westside, Zudio, Zara and Croma.
While Reliance Retail started in 2006, it overcompensated for its late entry by aggressively opening stores across formats. Reliance has over 18,774 stores across supermarkets, electronics, jewellery, and apparel space. It has also either partnered or acquired over 80 global brands, from Gap and Superdry to Balenciaga and Jimmy Choo. A diverse portfolio of brands across various segments through strategic partnerships and collaborations helps an entity like Reliance to leverage synergies and enhance retail presence, especially in malls, experts said.
“The array of brands with Reliance bouquet allows it to enter early into the project and set the tone and positioning of the mall,” said a retail leasing expert who requested not to be identified.
“This positively helps the mall to set its own positioning and future tenant mix. It also helps Reliance place their brands in most relevant zones within the mall. This will emerge as a clear differentiator in a city like Mumbai where brands are already jostling for space, which is the costliest in the country,” the person added.
(Published in Economic Times)
admin
February 15, 2024
An insightful must-watch discussion, moderated by Devangshu Dutta (Founder, Third Eyesight), with venture capital fund managers, investors and entrepreneurs in retail on what factors attract investors to retail businesses.
The panelists included Vikram Gupta (Founder & Managing Partner, IvyCap Ventures), Amar Nagaram, (Co-Founder, Virgio), and Vikram Gawande (Vice President, Growth, Blume Ventures).
admin
January 8, 2024
Yash Bhatia, Afaqs
8 January 2024
In the 10th episode of Zerodha co-founder Nikhil Kamath’s YouTube podcast series, WTF, Aadit Palicha, co-founder, Zepto, says that consumer goods are the fastest-growing category for its quick commerce business. Initially, quick commerce brands just focussed on serving impulse grocery needs, but now they have changed their way to serve regular planned purchases too.
Major players like Zepto, Blinkit, Swiggy Instamart, and BBNow are expanding their offerings in gifting, makeup, ready-to-eat, baby care, pet care, meat, poultry and more to cater to a wider range of consumer needs and preferences.
Through our interviews with brands like Bombay Shaving Company, Bevzilla and Plum, it is evident that Q-comm business contributes approximately 10-25% of online revenue for different brands.
Also, according to a report by Redseer, the Q-comm market is expected to reach almost $5.5 billion by 2025. The report highlights, that these platforms can up their game by going beyond just grocery and extend their offerings to other consumables, electronics, newspapers and more.
It shows that quick commerce players would focus on other categories to reach this milestone. But, are brands ready for it? If yes, how is their strategy different for this model?
Aditi Handa, co-founder of The Baker’s Dozen, an artisanal bakery, states, “In our category, once the customers figure out a product in the physical store, then they tend to buy again on the quick commerce platforms rather than visiting a store. It works well in our category, as there is no need to touch and feel the product.”
Baker’s Dozen makes 60-65% of its online sales on Q-comm platforms.
Devangshu Dutta, founder of Third Eyesight says that quick commerce has spread across various product categories and he believes, “It is driven more by buzz than customer needs. Unless we meet a core demand with a large consumer market, there’s no sustained road to profit.”
Deepti Karthik, fractional CMO, SuperBottoms, says, “In the diaper category, there are a lot of unplanned purchases. We target customers who’re buying other products, and eventually get trails from them.”
She points out that a lot of gifting happens in the quick commerce segment. “Gift packs can be a great solution our brand can leverage.”
She predicts that for the baby-care brand, quick commerce will contribute 3-5% of overall revenue, led by gifting as a category.
Apart from the reduced delivery time, is there a reason that customers are opting to shop on quick commerce platforms?
Handa answers that two factors work in favour of Q-comm platforms: discounts and convenience. “As these players are expanding their portfolio, customers will find more reasons to go on these apps.”
Is the quick commerce business driven by celebrations?
India is renowned for its diverse festivities. Quick commerce platforms capitalise on this by selling event-related or topical assortments. For instance, they offer flutes for Krishna Jayanti, Ganesha idols for Ganesh Chaturthi, Christmas decorations for the holiday, decorative items for Diwali, and gold and silver coins for Dhanteras.
These platforms are also curating special web and app pages for such occasions, even for regional festivals like Chauth Puja. In 2023, Blinkit curated a specific page dedicated to the wedding season.
Karthik states, “The major business of this sector is driven by consumables and FMCG products. On special occasions, e-commerce brands used to curate specific products, which Q-commerce is now doing. The market share of the other modes is now being taken by the quick commerce players on festivals. That’s why every e-commerce is looking to launch its version of Q-commerce, like Amazon Fresh by Amazon, and BBnow by Big Basket.”
Handa believes differently and states that quick commerce is not taking up the market share of any other modes. “Currently we’re buying more than what we need. Quick commerce is creating some new markets, and people are spending more money as it is easy to spend now.”
Will Q-commerce take over e-commerce?
As the country embraces digital commerce, the battle between e-commerce and Q-commerce is intensifying. While e-commerce has a well-established presence with a vast user base, Q-commerce offers unmatched speed and efficiency. As Q-commerce players foray into other categories, will they take over e-commerce?
Ritesh Ghosal, former chief of marketing at Croma believes that Q-comm will not replace e-commerce. He says that Q-commerce will only be a successful mode for urgently needed products like trimmers, headphones etc.
Handa predicts, “In our category, Q-commerce will replace e-commerce purely based on better service. The only advantage that e-commerce holds is a variety of stock keeping units (SKUs). Like, some products will have a presence in e-commerce only like English Cheddar cheese, it will not be there in Q-comm, a customer can only get it through e-commerce.”
She says that quick commerce also provides a fast way to experiment with new products.
Kartik, says e-commerce will always be at the main stage for the brand and believes Q-commerce will be an incremental business for them.
She has observed that in quick commerce if a product gets listed, it starts to sell faster and gets a quick start as compared to the e-commerce route.
Challenges
While the benefits of quick commerce are evident for customers, these players in the backend face a lot of challenges including warehousing, labour expenses, and, most importantly, the orders are low-value, therefore the margins are less.
Balasubramanian Narayanan, vice president, of Teamlease services points out that the consumer preferences and buying patterns in the quick commerce segment evolve rapidly, making data collection and analysis a crucial aspect.
“Balancing data collection with user privacy is a key challenge. The data insights can help to create personalised experiences, predict demands, and improve operational efficiency. But this can be a challenge in this mode.”
Handa says in quick commerce, the biggest challenge is the stock keeping unit (SKU) mix, SKU selection is critical.
“Brands like Amazon, and Flipkart allow a plethora of SKUs, while quick commerce just allows a limited number, due to limitation of warehouse space and delivery time. The SKU selection by the brand becomes a critical aspect.”
In the physical realm, shelf presence plays an important role in reaching customers, in the online world, optimising the online presence is crucial to get the customers’ attention. She highlights that in quick commerce, the fight is to be at the top of the search bar.
“To be at the top, the brand should generate organic sales, secondly it’s about keyword bidding. A keyword that would search customers to find the product from the brand. The brand pays quick commerce players for this.”
Ghosal also agrees with this and states, “In the Q-commerce arena, most searches are by category rather than by brand. The brands have to tick more boxes in terms of categories/searches so that customers tend to look at them.”
(With additional inputs: Ruchika Jha)
(Published in Afaqs)
