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 After coming under fire for failing to react swiftly and decisively,
Nestle bowed to pressure in the early hours of Friday and announced
an India-wide recall.
In an effort to quell India's most significant food scare in nearly
a decade, the Swiss food giant fielded group chief executive Paul
Bulcke to calm consumers at a televised press conference. Instead,
he faced a rowdy gathering where he was frequently shouted down by
Indian reporters.
Adding to Nestle's troubles, India's food safety regulator issued a
statement just as that meeting ended, accusing the food giant of
violating labeling and other rules in India. It ordered a recall of
the instant noodles it said were "unsafe and hazardous" for human
consumption.
"We are a company that lives on the trust of our consumers," Bulcke
told a packed news conference in New Delhi, repeating that it had
protectively recalled the noodles to ease the minds of "shaken"
consumers, but that there was no safety concern.
Sales of Maggi in India represent roughly 0.005 percent of Nestle's
global revenue of almost 92 billion Swiss francs ($98.6 billion),
but the brand damage could extend further, and Bulcke acknowledged
the company had fallen short.
"If you have confusion there is something wrong with communications.
That's why we are sitting here," he said.
Since inspectors in the northern state of Uttar Pradesh made their
first report two weeks ago, at least six states, several major
retailers and the Indian army have banned Maggi noodles. On
Thursday, Tamil Nadu became the first state to ban several instant
noodle brands, including Nestle's.
MAGGI POINTS
Maggi two-minute noodles, which sell for a dozen rupees ($0.20) per
single-serving packet, are hugely popular in India. The snack is
frequently served to children and eaten at roadside shacks and "Maggi
points" across the country.
With Bollywood superstars in its advertising campaigns, Maggi has
been a market leader for three decades, though it now competes with
rival brands like Hindustan Unilever Ltd's Knorr and GlaxoSmithKline
PLC's Horlicks.
Analysts and industry advisers welcomed the recall but questioned
the firm's strategy of clashing with the regulator and denying the
problem for weeks as headlines proliferated.
"If you ask me everything that Nestle has done is wrong," said
Arvind Singhal, chairman of retail consultancy Technopak.
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"In this day and age of social media, you cannot question the
government and consumers."
Bulcke said publicly Nestle would not challenge the Indian food
testing methods, but the regulator's report indicated Nestle had
contested elements including the fact condiments were tested
separately to the noodles.
The regulator itself, though, when questioned on the matter by
Reuters on Thursday, highlighted failings in a country where there
is a chronic shortage of state laboratories for both food and drugs.
Despite poor public hygiene, to date India has not experienced food
scares on the same scale as China. But analysts say increasingly
affluent, health-conscious consumers and easy access to social media
are likely to mean more incidents capture public attention, and
global brands need to be better prepared.
Employees contacted by Reuters at several multinational food
companies in India reported what one described as a "state of
alert".
"You have to understand multinationals are soft targets," said one
top executive. "If they checked street food, who knows how much lead
and other things are to be found?"
The noodle scare is India's biggest involving packaged foods since
2006, when an environmental group raised questions over pesticide
traces in Coca Cola Co and PepsiCo Inc fizzy drinks.
($1 = 0.9335 Swiss francs)
(Additional reporting by Nivedita Bhattacharjee in MUMBAI and Mayank
Bhardwaj in NEW DELHI; Editing by Douglas Busvine and Christopher
Cushing)
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