Nestlé’s Maggi noodles bore the brunt of food regulations in India when officials banned the product, citing concerns over lead levels. Unilever and Japan’s Nissin Foods recalled their Knorr Chinese noodles and Top Ramen, while other companies quietly stopped selling other products. Not that these foods were withdrawn because of safety concerns, but were pushed off from shelves for fear of falling short of the standards set by the Food Safety and Standards Authority of India.
“It was a commonly accepted practice for food companies to apply for a licence and simultaneously launch in the marketplace, assuming they would get it,” said Nitin Mathur, an industry analyst for SG Corporate and Investment Banking. “But Nestlé was an eye-opener for everyone. What they thought was an accepted practice wasn’t acceptable any more.” Data shows that Indians consume $ 63 billion worth of packaged food each year as compared with $220 billion in China. But sale of packaged foods are set to rise rapidly in India, an estimate $88 billion by 2019, according to KPMG.
Western companies are closing in, with both, Coca-Cola and rival PepsiCo in the midst of $5 billion Indian expansions. Mondelez International, is in works for a $190m, 54-hectare plant in India; its largest in Asia. Chocolate-maker Mars International is spending $160m on its first plant in the country, while Kellogg, the US cereal maker, has invested $100m in the past 18 months. “All the big food manufacturing companies are looking at India as a high potential market because the penetration of categories is very, very low,” says Rajat Wahi, a partner at KPMG, the professional services firm. “All the fast-moving consumer goods companies are looking at significant growth in the next 10 years.”
All these companies, however, have to go through the ultimate guard, that is on a mission to promote safe and healthy food, and will not settle for anything less. In the recent times, the FSSAI has rejected a number of Starbucks’ syrups and sauces, one of its decaf coffees and a spiced tea. It has also banned Kellogg’s Special K Red Berries, a General Mills Choco Lava Cake, and mayonnaise and salad dressings made by Field Fresh, Del Monte Foods’ Indian joint venture. Imported foods, including perishables such as cheese, have often faced long delays in ports because of the regulator’s objections over the food or its labelling. Defending its approach, the FSSAI is clear on what it wants. “If industry is coming out with a product, it has to be safe food, and it has to be wholesome,” says Yudhvir Singh Malik, chief executive. “My plea to industry is: whatever you are putting out, please think that your child is also eating it.”
