Recently, Nestle India CMD Suresh Narayanan was in the hot seat as he fielded questions on the sugar controversy triggered by a recent report released by Swiss investigative organisation Public Eye. Narayanan vehemently dismissed accusations made by the Swiss NGO about Nestle having “double standards” for developed and developing markets. The report alleged that Nestle’s baby food products sold in low and middle-income countries including India contain “high levels of added sugar”, while such products are sugar-free in developed markets.

The report’s claims about the increased sugar levels in Cerelac sold in India has prompted the Food Safety and Standards Authority of India (FSSAI) to kickstart an industry-wide testing of infant food products across brands.

Nestle is no stranger to controversies. The Swiss multinational, which is the largest publicly held food company in the world, has battled critics over its marketing practices, labour handling and product safety over the years. Its baby food and infant formula — in which it is the leading player, with a fifth of the world’s market share — has repeatedly come under the scanner of multiple agencies worldwide. The question is, will this current crisis impact sales?

Quick Reaction

The India chief has lost no time in defusing the crisis. Asserting that the company applies the same nutrition principles globally, Narayanan said there is no local approach to making “nutritional adequacy” strategy. He pointed out how this global approach translates into products locally depends on raw materials, feeding habits and local regulatory norms. “I also want to add very clearly that added sugar products and no-added sugar products are present in Europe as well as in Asia. So these allegations of racial stereotypes are unfortunate but untrue. There is no distinction made between a child in Europe or a child in India or any other part of the world,” he said at a media roundtable. The company has also said that added sugar levels in Cerelac portfolio is at 7.1 gram per 100 grams of feed, which is “well below” the prescribed limit set by FSSAI (13.6 grams per 100 gm). “In the last five years, we have achieved almost a 30 per cent reduction in added sugar in the infant cereal portfolio. We are looking at further ways of reducing “added sugar” and it’s an ongoing process,” Narayanan said.

The controversy comes at a time when consumer activism about healthier food products and claims are gaining ground amidst growing calls for more stringent regulations and enforcement.

Experts say that it’s now for the FSSAI to complete testing to verify the declarations made by the company. They also added that this sugar controversy is unlikely to have long-term ramifications for the company.

Ankur Bisen, Senior Partner and Head-Consumer, Food and Retail, Technopak, says, “It’s not as if this has come as a shock to Nestle. The sugar controversy is not specific to India.

There has been a lot of activism around sugar globally which packaged food companies have been facing for the past few years. It is Nestle’s stated goal that it is working on reducing sugar levels and focusing on adding healthier products to their portfolio. In that context, Nestle has systems and an apparatus in place to address this issue.”

On the other hand, Bisen believes the sugar controversy puts the spotlight on the incapacity of India’s food regulatory framework to deal with such issues more proactively and the need to put in place more stringent norms.

Give consumers choice

But could Nestle have done better? KS Narayanan, food and beverage expert and former MD, McCain Foods, says, “They should have offered both variants with added sugar and no-added sugar as part of their portfolio and should have left it to the consumers to make their choice. Maybe they will do that in the future or may come out with another formulation as a fallout of this controversy.”

“Nestle India dominates the infant food segment. The alternative is home recipes, but the reason consumers seek baby food products is for convenience and brand trust. Also, this category cannot be advertised as per law. In a category that can be advertised, it’s far easier for new brands to emerge with a differentiated proposition,” he adds.

The company said that it has not seen any significant impact on sales of the Cerelac portfolio.

Nestle India had faced a far more daunting challenge in 2015 with the Maggi crisis. Cut to 2024, India has emerged as the largest market worldwide for brand Maggi.

India is after all a priority market for the Swiss packaged food major where it is executing an accelerated investment plan. Irrespective of the recent controversy, the company seems to be going full steam ahead with new bets, announced just last week, with a strong focus on tapping into the growing demand for premium products.

Nestle India is set to launch Nespresso’s premium range of coffees and machines by the end of this year. It will also be launching Nespresso boutiques with the first one slated to open in New Delhi. “The maturity of Indian consumers to appreciate premium coffee products has grown significantly in recent times. So the market is now ready for a product like Nespresso,” said Bisen.

At the same time, Nestle has inked a definitive agreement to set up a joint-venture with Dr. Reddy’s Laboratories by Q2FY25 to scale up its health science nutraceuticals business.

Lessons from Maggi

Narayanan, who is credited for pulling Nestle out of the Maggi crisis, stressed at a media rountable lastweek, “The rhetoric around the allegations need to be scientific and mature instead of hyperventilation of emotions.”

Clearly, the company is leveraging on the learnings from the Maggi crisis. This time round it has been upfront right from the start in engaging with all stakeholders on the issue. “I am talking to you today as a professional would. I am not trying to stay quiet on this and hope and pray nobody talks about the issue. As a leader I am paid to stand up in front. I took the bullets then and I am taking the bullets today. As a leader that’s my job,” Narayanan said at the roundtable.