By Ashish, Faculty of Law, The ICFAI University.
Nestle India is facing the biggest crisis in last three decades as its product maggi is at controversy for not satisfying the quality of the product. Maggi, India’s best known comfort food after staples such as rice, dal and wheat but the sale of Maggi is decreasing day by day after the Food & Drugs Administration of Uttar Pradesh said it contained lead and mono sodium glutamate (MSG) beyond the permissible limit.
Since then, three state governments – Maharashtra, Gujarat and Karnataka also said that they too will test samples of the product, which gives Nestle India almost 30 per cent of its revenues whereas on the other hand Bihar and Uttrakhand government banned sale of maggi. The central government said that it will look into the matter and so will the country’s apex food regulator, the Food Safety & Standards Authority of India. Maggi sales are estimated to have been hit severely since the news of the contamination broke out few days ago. Some retailers assure that there has been a drop of 5 to 10 per cent on the purchase of maggi. While others put it to as high as 35 to 40 per cent. Most of this fall has been in organised retail, a key channel frequented by Maggi’s core target group of the middle and upper-middle income consumers. Retailers attribute this to the heightened awareness about the product’s quality concerns among consumers who are on social media, watch TV and read newspapers.
A senior executive from Spencer’s Retail recently said that till the 14th of this month, there was no impact on sales and after that we are seeing a 5 to 10 per cent drop. Maggi is important for us as 70 per cent of what we buy from Nestle is Maggi.
Devendra Chawla, group president (food & FMCG), Future Group said that he would have to assess the loss to business because of the issue. An analysis shows that there has been an impact on brand trust as a result of this crisis.
N Chandramouli, chief executive officer, Trust Research Advisory, a Mumbai-based company which comes out with the annual Brand Trust Report said that one must understand that it is a government body that came out with these findings and it’s not a random allegation made by an aggrieved consumer on social media. While an email sent to Nestle India elicited no response whereas people fond of maggi said that the company is likely to launch an advertising campaign in the next few days to counter the findings of the Uttar Pradesh Food & Drugs Administration. The campaign will use all outlets – social media, print and TV – to assure consumer concerns over the product’s quality.
Bollywood actor Madhuri Dixit, who already endorses Maggi’s Flour Noodles and is likely to helm this campaign, in the same way which Amitabh Bachchan did during Cadbury’s worm-in-chocolate controversy, or Aamir Khan did when Coca-Cola was hit by the pesticide-in-cola issue a decade ago.
Few say that Dixit is suited for this task since she is a wife and mother of two, and appeals to the middle class.
Amit Lohani, convener of the Forum of Indian Food Importers said that what needed is a strong rebuttal from Nestle, so far, it has initiated phase one of its damage control exercise by engaging with regulatory authorities to convey its viewpoint, speaking to retailers and conducting an internal probe. But it will have to move to the second phase since it is a perception battle at the end of the day.
When the crisis first broke out, Nestle said that we use hydrolysed groundnut protein, onion powder and wheat flour to make Maggi Noodles, which contain glutamate. We believe that the authorities’ tests may have detected glutamate, which occurs naturally in many foods. It also said that in its routine tests done over the years, it never found Maggi containing more than 0.03 ppm of lead, adding that the batch that was tested was an old one (February 2014).
Not everyone is convinced by Nestlé’s arguments though Chandra Bhushan, deputy director-general of Delhi-based Centre for Science & Environment said that whether samples are of the current batch or an old batch, high levels of lead and MSG are simply not acceptable. Why should we have products such as these?
Its high time stringent action was taken because packaged food consumption is on the rise in India. Authorities as well as consumers should know what is going into these food products.
High level of lead in food is known to be harmful, MSG is a flavour enhancer commonly added to Chinese food. To most Indians, it is known as Ajinomoto, because of the Japanese company of the same name that has been manufacturing it for over 100 years.
Bhushan of CSE also said that MSG is a non-essential salt that should not be added to food at all. However, food processing as well as catering industries have for long used MSG to enhance the flavour of food. If the regulatory authorities get serious then there will be so many more violations that will be detected.
Bejon Misra, a noted consumer activist said that while the Food Safety & Standards Act is stringent, enforcement of it has been weak.
Instant Trouble for Nestle:
India is Maggi’s biggest market in the world
30 per cent of Nestle India’s revenue is from Maggi
For 32 years, Maggi has dominated India’s instant noodle market
Maggi has been pitched as a healthy food option
Taking a “serious” note of quality issues related to global giant Nestlé’s famous noodle brand Maggi, the government has asked the Food Safety and Standards Authority of India to look into the matter.
In April, the UP Food Safety and Drug Administration asked Nestle India to withdraw a batch of Maggi noodles which were manufactured in February 2014, after it found high levels of added MSG, a taste enhancer, in the noodles and lead beyond permissible limits.
Disputing the claim, Nestle India said that the company does not agree with the order and is filing the requisite representations with the authorities.
Consumer Affairs Minister Ram Vilas Paswan told the reporters on the side-lines of an event in New Delhi that it is a serious issue and the matter is referred to the Food Safety and Standards Authority of India (FSSAI). Under the current law, FSSAI has the power to take action, including imposing fine and hefty punishment. He further said that there are different authorities to handle different complaints related to different consumer items and FSSAI under the Health Ministry handles food related issues.
Besides FSSAI, the Consumer Affairs Ministry has also asked the National Consumer Disputes Redressal Commission (NCDRC) to take action against FMCG major Nestle India on the Maggi issue.
Paswan said that it is a serious issue but the Commission has limited powers. It cannot take suo moto action. It can file class action suit only after someone files complaint against the company. NCDRC President Justice D K Jain said that till now no one has filed a complaint against Nestle related to Maggi.
Somebody has to approach us so that we take class action suit. Jain also said that NCDRC does not have jurisdiction to take suo moto action. Jain further said that there is a provision for class action. NCDRC is ready to take action after an NGO or any consumer body files a formal complaint.”