Maggi Dead and Back: Lessons for Food Entrepreneurs

One should be really aware of the laws when doing a business or you’ll be like ‘Shit!’.

MAGGI

Here is the full story of Maggi that can give food businesses an insight into what not to do. The Fiasco began for Maggi when a food inspector somewhere in Barabanki, U.P. came across a label on the packet of Maggi saying “NO ADDED MSG”. On seeing the label, the suspicious Inspector sent these samples for inspection at a food laboratory in Gorakhpur, UP. MSG was found in these samples and to confirm the analysis the samples were again tested in Kolkata. The test in Kolkata revealed that other than MSG the samples also contained 17 ppm of lead, way higher than the allowed limit of 2.5 ppm. Thereafter, 72 samples from 3 variants of Maggi were tested for lead. Out of 72 samples, 30 showed the presence of lead in excess of allowed limit.

Even after such incriminating evidence, nestle was able to defend itself in Bombay high court. The defense put up by senior counsel Mr. Chagla was based on procedural laws. Counsel was able to prove in court that procedures followed by FSSAI in testing samples and issuing of ban notice, were arbitrary in nature and lacked the support of the law.

FSSAI’s incautious attitude made defense for Nestle a piece of cake. FSSAI failed to get the samples tested in accredited labs as stated in section 46(4) of the Food safety and standard act, 2000. Moreover, contrary to the principle of natural justice,FSSAI ordered the ban first and then questioned nestle as to why Maggi product should not be removed from the market. Last but not the least the samples which were tested by FSSAI were way beyond their “best use” period which made court to rely upon samples held by nestle rather than that of FSSAI for retesting. Citing these reasons court held the ban to be arbitrary.

Later, although Maggi was given a clean chit on the basis of reports of a reanalysis of samples, its profits took a hit. As a result, nestle for the first time in 17 years reported a loss of Rs 64.40 crore. The damage to its brand name was even more disastrous. Nestle not only went through the trial in the court but also a trial in the media. If instead of nestle, with its very deep pockets and a team of experts to manage such crises, there would have been a food business, smaller in magnitude, and manpower then the situation would’ve been very bad for the food business in question.

On further analysis, we find that Nestle had been quite lackadaisical as it is known that MSG i.e. monosodium glutamate may be present in the natural form in many ingredients, a fact later stated by Paul Bulcke, CEO of nestle. So Maggi had stated “NO ADDED MSG” on its package even after knowing this. Though this will not lead to a ban but nestle may be charged for the violation of section23 (2) of the FSSA for misleading the consumers and also under section 52 of the act for misbranding. In fact, FSSAI has approached Supreme Court against the decision of Bombay high court and has added these violations in their petition.  This might be an important lesson for any new food entrepreneur to be thorough with packaging and labeling regulations.

Additionally, nestle boasted in the initial stages of licensing that their product contains less than 1 ppm of lead though the allowed limit was 2.5 ppm. FSSAI made this a matter of contention in their petition before Bombay high court stating that the element of trust was broken. Although the contention was rejected by the Court, this instance made it clear that there cannot be any good reason in boasting unless one is quite sure and particularly when one is new in the field.

Presently, the ban has been lifted by the Bombay high court and noodles are back in business withstanding a gargantuan loss to its goodwill. The case may have been adjudicated differently if FSSAI would have been careful while collecting the evidence and following the statute thoroughly. This case has also been a lesson for Food Authority as next time they would be more cautious about their approach and defendant may not find the easy way out.

For a free Marketing and Operations Consultation session for your restaurant contact us.

1 Comment

  1. My brother recommended I might like this website. He was totally right.

    This post actually made my day. You cann’t imagine
    just how much time I had spent for this info! Thanks!

Comments are closed.