Will the Nestle controversy bring processed foods under fresh scrutiny?

Processed foods were never considered healthy, but in light of a leaked document, there is fresh scrutiny on these products. What impact will this have?

Nestle’s motto is ‘Good Food Good Life’, but recently, news of the contents of the company’s products have cast a shadow of doubt on that. The company recently acknowledged, in a (leaked) internal document, that more than 60 per cent of food and drinks in its mainstream portfolio is unhealthy, and don’t meet the required health standards.

The document did not include the company’s baby food portfolio, but included popularly consumed products, such as Nesquik and the San Pellegrino Orange drink. According to Nestle, it has reduced sugar and sodium in its products by about 14-15 per cent in the past seven years. It added that it would continue to make its products healthier.

According to a Financial Times’ report, from Nestle’s food and drink portfolio about 70 per cent of the food products failed to achieve a rating above 3.5 under Australia’s health star rating system. The report also mentions that 96 per cent of beverages — excluding pure coffee — and 99 per cent of Nestlé’s confectionery and ice cream portfolio did not meet the criteria.

As far as Nestle India’s portfolio is concerned, people are aware about the products being unhealthy – and may continue to consume them. Take the example of Maggi – which has high amounts of sodium, Nestea – which contains a lot of sugar, and so on.

In light of the COVID pandemic, there is an increased interest in boosting immunity and consuming healthy food. Since Nestle is one of the biggest food brands in the world, we wanted to explore the impact of this controversy on processed foods.

Will this bring fresh scrutiny on the processed foods industry in India? We speak to a few industry experts to find out…

Edited excerpts:

Divyapratap Mehta, founder, consulting agency Intertwined Brand Solutions (ex-national planning director at Publicis, with nine years of experience strategy and planning)

Nestle sells more unhealthy food in India than it does anywhere else in the world. But these products contribute to the company’s bottom line – especially Maggi. I don’t think this news will have any immediate impact on Nestle in India. If Nestle wanted to turn healthy and go ‘all-natural’, then it would have to remove those products from its portfolio, and at the moment, I don’t see that happening globally.

Multinationals, like Nestle and P&G, see India as an amalgamation of two, or three different countries – which are referred to as India 1, India 2 and India 3 in the course of the work. Typically, India 1 is the rich consuming class, India 2 includes smaller towns, and India 3 is the population that comprises rural areas of the country.

In India 3, a product like Maggi may even include a meal for an individual who may not be able to access nutritious food otherwise. In India 1 (or India 2), the consumers may be more concerned about the nutrients in their food and this may impact consumption patterns there. The opinions held by the consumers in India 1 have the potential to influence the policy of major companies and can have an impact on the food processing industry.

KS Narayanan, food and beverage industry expert (formerly with McCain Foods and Unilever)

The processed food industry has been going through these kinds of crises for some time now. Around 10 years ago, in Europe, there was a concentrated effort from all food brands, such as Unilever, Heinz, Campbell, etc., to reduce salt and sodium in their products, and they did reduce in a phased manner.

Nestle can also address the health-related concerns in a phased manner, and partner with challenger brands (either through acquisition, or collaboration) to create healthier products and win consumer trust.

In the early 2000s, there was some furore over trans-fatty acids in food, and all processed food manufacturers made an effort to eliminate it from their food formulations. There was also some commotion around sugar in Pepsi, Coca-Cola and other soft drinks. Transparency in ingredients of food products will help – so that the consumers clearly know the nutrition content of what they’re eating.

Thanks to the COVID pandemic, the consumers are keen on eating natural food, food with clean labels, etc. Nestle will have to relook its product formulation, and try and make it better for the consumers.

Kalyan Karmakar, food writer and brand consultant at Finely Chopped Consulting

Traditionally health was not always the first thing in mind when consumers looked at the processed food market. Convenience and taste were. However times have changed, consumer confidence is shaky and the most important thing to everyone now is health.

At a time like this, such news could impact the market. It is therefore important for all in the processed food industry to put the consumer first and restore their confidence by delivering products that take into account the need of the times.

Rajesh Mehta, chief strategy officer, Medulla Communications

It takes a lot for a brand to acknowledge its shortcomings. Nestle, being one of the strongest and the most trusted brands, may already have a plan to update its health strategy.

Having said that, it will most likely create conversations around Nestle and other processed foods, to look at them with a sharper lens. And, hopefully, lead to some measures that make them healthier, especially when it comes to kids-related categories.

Jasravee Chandra, brand building, research and innovation, Master Sun, the consulting brand of Adiva L (she has worked on brand Lifebuoy in the past, during her advertising days)

There are two opposing trends in India. One trend is a heightened need for healthy and immunity boosting foods. Another trend is a need for food options that provide convenience, variety and comfort. These comfort foods are propelled by busy, urban lifestyles and increasing disposable incomes. This has got accelerated by COVID-induced lockdown languish. This is exhibited by high revenue growth that companies selling biscuits, noodles, juices, snacks, etc., have achieved during COVID times.

In many sub-categories, processed foods are a recent addition to an average Indian household’s food menu. Hence, there is a low awareness of the long-term harm that these processed foods may cause. Not many Indians are checking out sugar and sodium levels, much less looking for healthier alternatives.

The Nestle controversy or, shall we say, its felt need to update its portfolio in context of ‘pioneering nutrition and health strategy’, is likely to have a significant impact only in mature markets in the developed world. The relevant product portfolio too is only available in these mature developed markets. It is unlikely that there will be a spillover effect of this controversy in India.

Ruma Singhal, planning head, ^ a t o m Network

There could be a ripple effect in India as well, where brands may have to add health-based products/ingredients in their product portfolio. We are already seeing an effort from brands, wherein they are adding healthy ingredients to amp up their product portfolio and offerings.

The consumer today is also discerning and is concerned about what goes into the label/back of the pack. Given the COVID situation, the focus on health will become a default for both the brands and the consumers.