Why India ordered Nestlé to stop selling Maggi noodles

After wrestling with India’s regulatory bodies over the safety of some of its products, Nestlé India says it will abide by a ban and pull its noodle soup products from shelves.

“The trust of our consumers and the safety of our products is our first priority,” the company said in a statement on Friday. “Unfortunately, recent developments and unfounded concerns about the product have led to an environment of confusion for the consumer, to such an extent that we have decided to withdraw the product off the shelves, despite the product being safe.”

India’s Food Safety and Standards Authority said that the soups were “unsafe and hazardous for human consumption” because testing found that the lead content in some Maggi soups samples was about seven times higher than is permissible.

Nestlé argued that Indian authorities had not tested the samples properly.

India’s national food safety authorities have orderedNestlé to stop selling and producing its popular Maggi noodles in the country, saying that its tests had found the food to be “hazardous and unsafe for human consumption”.

 

In an eight-page order, the Food Safety and Standards Authority of India said tests taken from across the country had found lead exceeding the permissible limits in 15 of 29 samples.

“It is clear from the reports received from various states that there is overwhelming evidence of the said food products being unsafe and hazardous for human consumption,” YS Malik, FSSAI chief executive, said in his order.

The Swiss consumer group had pre-empted the ban, announcing earlier on Friday the withdrawal of its Maggi noodles from the Indian market, citing growing public “confusion” about the safety of a product embraced in the country as a comfort food.

“I don’t feel this is the right environment to have the product on the shelves,” Paul Bulcke, Nestlé’s global chief executive, who arrived in New Delhi on Thursday to manage the deepening crisis, said shortly before the government ordered the ban.

But Mr Bulcke insisted that products made by Maggi — which in India has become synonymous with instant noodles and has a 78 per cent market share — posed no health threat and did not exceed the Indian government’s permissible levels of lead.

“Maggi noodles in India are safe for consumption,” he said.

The divergence in views between Nestlé and Indian food safety authorities appears to stem from the different methods of measuring lead levels in the product, which consists of noodles and a sachet of seasoning.

Most big retailers, including Future Group, which has about 400 hypermarkets and convenience stores, and Walmart, had pulled Maggi noodles. The 1m-strong Indian army, reportedly the largest single consumer of the snack, which costs Rs12 ($0.19) for a single-serving package, had also pulled them.

The crisis engulfing Maggi is a blow to Nestlé India, which introduced the noodles to the country in 1983. The company’s $455m packaged food business, which included an estimated $300m of instant noodle sales, was the only part of its portfolio to grow in volume terms 2014, by 3.7 per cent.

Sales of Nestlé milk products fell 2.3 per cent in volume terms in India last year, chocolates 12 per cent and beverages 11 per cent.

Analysts estimate Nestlé sells $300m of Maggi products a year in India, and that sales of instant noodles account for 15-20 per cent of its total revenues in the country.

Nestlé’s woes began in a dispute over monosodium glutamate with food safety authorities in Uttar Pradesh and the accuracy of its claim the product is free of the additive.

The company objected to the local authorities’ assertion that the product contained MSG and was thus mislabelled, and sent samples to a national food laboratory for testing. It was there, UP food safety inspectors said, that levels of lead seven times the permissible limit were detected.

Nestlé said that Maggi noodles would “be back in the market as soon as the current situation is clarified”.

Food safety agencies in several states have begun testing other brands of instant noodle, while authorities in West Bengal said they will also test PepsiCo’s Lay’s brand potato chips.

Shares in Nestlé India fell 9 per cent on Wednesday, their largest single-day fall in almost a decade. They lost 3 per cent on Thursday and 0.2 per cent in Friday trading.

The Financial Times reports:

“According to the FSSAI, Indian authorities have found the lead levels in the seasoning exceed legal standards, while Nestlé argued the lead levels should be measured as percentage of the product’s total content, including the noodles — a perspective authorities have rejected.

“‘The prescribed standards have to be applied in respect of each of these two components independently,’ the FSSAI order said.

“Even before the national ban, four states on Thursday — Tamil Nadu, Gujarat, Uttarakhand and Jammu & Kashmir — banned sales, following the lead of New Delhi’s city government, which stopped sales for 15 days.”

The BBC has a bit of background on the Maggi stronghold in India:

“Maggi has an 80% share of India’s instant noodle market and has been branded the third staple alongside rice and lentils.

“The instant noodles arrived in India in 1983 and can be found in corner shops across the country.

“Nestle’s relationship with India dates back to 1912, when it launched in the country as The Nestle Anglo-Swiss Condensed Milk Company (Export).”

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About the Author: Akhtar Jamal

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