such as milk in the last quarter. But if the FSSAI (Food Safety and Standards Authority of
India) misadventure with Maggi noodles is leading to trust issues in other product categories,
then Nestl India may have an even bigger problem than what the September results convey.
Investors can only hope this is not true.
The company said sales had dropped 20 per cent year on year because of the
Maggi noodle scandal, which erupted last month when Indian food regulators said
they had found dangerously high levels of lead in several samples. They said the
noodles were unsafe and hazardous for human consumption.
Nestl, which has disputed the test results and insists its noodles are safe, was
ordered by the Food Safety and Standards Authority of India to suspend all sales of
Maggi noodles one of the most popular products in its Indian portfolio with a near
cult following among young, time-pressed Indians.
Nestl was also ordered to recall and destroy all existing Maggi noodle stocks a
massive logistical exercise involving about 350m packets of noodles that the
company has estimated cost it Rs4.5bn during the quarter.
Etienne Benet stepped down as the companys managing director last week, paving
the way for Indian-born Nestl veteran Suresh Narayanan to take charge and steer
the effort to return Maggi noodles to shelves. The product dominated the market with
70 per cent of instant noodle sales.
This quarter has been extremely challenging for the company, Mr Narayanan.
Nestl India is making all efforts and will continue to engage with authorities to bring
Maggi noodles back on the shelves.
Nestl has petitioned the Mumbai High Court in a challenge to the national ban, and
oral arguments are expected to conclude on Thursday.
Doubts over the reliability of the Indian governments test results and the
necessity of the ban have been fuelled by the findings of food safety watchdogs in
developed countries including Singapore, the UK, Canada, Australia and New
Zealand that the noodles posed no threat to human health.
Since the crisis erupted in India, food safety authorities in all these countries have
tested made-in-India Maggi noodle samples, found that the lead levels were below
permissible limits, and allowed their sale to continue.