Nestle win the legal battle in India

 

Although Nestle India, has won a victory in its battle to get Maggi noddles back on to the shelves in Indian shops, at the Bombay High Court who decided that a nationwide ban on the snack was unjustified.,  their troubles are far from over as the country’s Food and safety body may appeal against the Maggi ruling to the supreme court, while New Delhi has separately filed a lawsuit seeking $100m in damages for misleading claims on the noodles.

Bombay High Court ruled that “the Food Safety and Standards Authority of India’s ban was arbitrary and a violation of natural justice” – but ordered a series of tests  before the noodles can return to market. Several Maggi samples will be tested in next six weeks in three major national laboratories. If the tests deem lead levels to be within the legal limits Nestle India will be permitted to restart making and selling the Maggie Noddles.

The food safety regulator in India, said tests conducted on a batch of Maggi was found to contain more-than-permissible levels of lead and high quantities of mono-sodium glutamate.

The Swiss consumer group, the world’s largest food producer by sales, has always denied Indian authorities’ claim that Maggi noodles had dangerous levels of lead. Francois-Xavier Roger Nestle’ chief financial officer said not only the ban had led to “negative organic growth” at its business in India, which will continue into the second half of the year, but also the company’s performance in the wider region was also significantly impacted by the Maggi withdrawal.

Overall Nestle reported a modest increase in sales in the first six months of the year as revenues were up 4.5 per cent year on year in the six months to June 30, to SFr 42.8bn  (£28.47bn) ($43.8bn) in line with analysts’ forecasts.

Nestle India, however, faces the huge task of repairing the financial and reputational damage caused by this episode, as its sales fell 20 per cent year- on –year during the April-June quarter – thrusting the company into its first quarterly loss in 17 years.

New Delhi’s class action lawsuit seeking $100m in damages from Nestle for “misleading” consumers with its packaging that claims Maggi noodles contain ” no additional MSG”. Indian tests have found MSG in the noodles, but Nestle said the MSG was naturally occurring. The instant noodles arrived in the country in 1983 and sold in corner shops around the country, the year when India lifted the World Cup Cricket for the first time. In 1947 Nestle acquired Maggi and in 1961 set up its first factory in Moga Punjab.  Maggi soon was able to command 90 percent of the noodles market in India. India is the biggest market for Maggie Noodles in the world, despite challenges mounted by rival brand Top Ramen in the 90s. Maggi, along with the buffet of complementary products – soup mixes, sauces and cup noodles – contributes more than 20% of Nestle India’s revenue, clocking around 15bn rupees ($235m; £149m) in annual sales.