Six years after it's popular noodle brand Maggi was banned in India, global FMCG giant Nestle has found itself at the centre of another "unhealthy food" controversy after admitting in an internal document that more than 60 per cent of its mainstream food and drinks products failed to meet "recognised definition of health and nutrition".
The Financial Times (report behind paywall) reported that only 37 percent of "Nestle's food and beverages by revenues, excluding products such as pet food and specialised medical nutrition, achieve a rating above 3.5 under Australia's health star rating system".
What Did Nestle's Internal Report Say?
According to the Financial Times, Nestle noted that 70 percent of it's products in its food and drink portfolio failed to meet the 3.5 stars threshold which is recognised as a "definition of health". 96 percent of its beverages excluding pure coffee and 99 percent of its confectionery and ice cream products scored below 3.5 stars.
On the other hand, 82 percent of its water products and 60 percent of its dairy products met the 3.5 stars threshold.
"The presentation highlights Nestlé products such as a DiGiorno three meat croissant crust pizza, which includes about 40 percent of a person's recommended daily allowance of sodium, and a Hot Pockets pepperoni pizza that contains 48 percent," the report noted.
"An orange-flavoured San Pellegrino drink, scores an "E" — the worst mark available under a different scoring system, Nutri-Score — with more than 7.1g of sugar per 100ml, the presentation says, asking: 'Should a health forward brand carry an E [rating]?'", the report added.
While claiming that it has made "significant improvements" to their products, Nestle admitted that their products "underperforms against external definitions of health in a landscape where regulatory pressure and consumer demands are skyrocketing", the FT reported.
The Financial Times did not name all the brands and products which did not meet Nestle's health and nutrition standards. The brands that it did mention are DiGiorno frozen pizzas, Hot Pockets, San Pellegrino mineral water and Nesquik.
How did Nestle react?
In a global statement, Nestle said that "it is working on a company-wide project to update its nutrition and health strategy". It added that ratings such as the Health Star Rating and France's Nutri-Score don't cover all of Nestle's products.
"About half of our sales are not covered by these systems. That includes categories such as infant nutrition, specialised health products, and pet food, which follow regulated nutrition standards," a Nestle spokesperson said.
What does it mean for Nestle India?
India is one of Nestle's biggest markets and had reported Rs 13,000 crore in sales in 2020. Nestle India is 11th overall with regards to its contribution to Nestle's global revenue. Some of its most popular brands in India include Maggi, Munch, KitKat, Nescafe, Milkybar and the Nestle A+ brand of dairy products.
Nestle India, along with Unilever, were ranked as the top food and beverage manufacturers in India by the Access to Nutrition India Spotlight Index 2020. The index had also used Australia's health star rating.
However, the report noted that only 19 percent of Nestle's 68 products which were studied for the report met the healthy threshold of 3.5 stars. ATNI also urged brands to do more to increase the health and nutrition profile of their products.
In 2015, Nestle's popular Maggi noodles was banned by the Food Safety and Standards Authority of India (FSSAI) for having monosodium glutamate or MSG in its ingredients. The product was relaunched after a legal battle but Nestle ended up losing a significant portion of it's market share.
However, experts say that due to Nestle's localisation of products and a lack of consumer awareness, the controversy might not impact Nestle India's sales.
"Indian portfolio is different from the parent company's as it is a small sub-set with a lot of localisation for country-specific needs. Also, India is one of the few countries which has had a local research and development facility for a long time," Abneesh Roy, Executive Vice-President, Edelweiss Financial Services told Moneycontrol.
