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Is the Indian Food Industry in Danger? The Debate Over Right & Wrong

Created on 29 Apr 2024

Wraps up in 8 Min

Read by 8.1k people

Updated on 01 Jun 2024

India's Food Industry: Challenges, Scandals, & Growth Potential

India’s food industry has been in the headlines in recent months, with stories ranging from allegations of ethylene oxide in spice products to misleading advertisements. These stories have garnered attention not only in India but also worldwide.

Big brands like Nestlé India, Patanjali, Everest, MDH, Horlicks, and more are facing one or another kind of regulatory checks from the authorities. Every day, we hear news of this variety, causing fear in people’s minds.

With a market size of $307.2 billion (around ₹25.4 lakh crore), why is the FMCG sector becoming the target of such allegations so frequently?

Who is at fault here: the negligent authorities, regulatory measures that aren’t strict enough, or the companies that refuse to learn from their mistakes?

Or are there other concerns that could hinder the sector's growth?

And what are some lesser-known dangers facing the food industry that are causing significant harm? Let’s dive into the world of the food industry and take a health checkup of the ongoing scandals.

Food Industry Outlook in India

FMCG, aka Fast-Moving Consumer Goods industry, is accounting for 21.5% of India's GDP. It consists of items that could be packaged and sold easily. It can include food items, beverages, toiletries, cosmetics, etc. Among these, the food & beverage section makes up much of the industry.

FMCG Sector
Source: TakeDistributorship.com

India has multiple brands thriving in the market to meet the demand of the largest population on the planet. Not only international brands like Nestlé and HUL, but domestic brands like Amul, Britannia, etc. have established fulfilling businesses in the nation. Demand and supply for these companies are growing rapidly, with the present 141.72 crore people to satisfy.

Brands from all over the world are attracted to the Indian market and are setting up camp here, keeping the nation’s tariff, import, and other policies in mind. Amidst all that, whispers of danger await as news from all over the world keeps arising, questioning the quality of food products.

Let’s discuss some of the big names who have and are still facing allegations of either having a dangerous ingredient mixed or not following the safety measures properly.

Top Food Safety Concerns & Companies

Some of the names in this list might shock you as these food products are being used in every other home on a daily basis.

1. Everest & MDH: Cause of Cancer

Spice makers Everest and MDH are currently facing inspection from India’s spice export regulator due to a ban outseas. Food regulators in Hong & Singapore found elevated levels of ethylene oxide, a pesticide, in some spice mixes from MDH and Everest.

Ethylene Oxide is classified as a carcinogen (cancer-causing agent) by the International Agency for Research on Cancer. It is also believed to be a cause of breast cancer. The Centre for Food Safety, aka CFS, advised consumers not to consume the affected products and instructed vendors to stop selling them.

Ethylene Oxide is classified as a carcinogen (cancer-causing agent) by the International Agency for Research on Cancer. It is also believed to be a cause of breast cancer. The Centre for Food Safety, aka CFS, advised consumers not to consume the affected products and instructed vendors to stop selling them.
Source: Finology Insider Instagram

Their Food Safety Authority requested a recall of the specific spice mixes in question. Everest disputed this, claiming it wasn't a complete ban but a request for further testing. This led to the Indian government taking notice and seeking details from both countries and the companies involved. The Food Safety and Standards Authority of India (FSSAI) also began collecting samples from various spice brands for quality checks.

As of now, there's no official information on whether the products re-entered the markets in Hong Kong and Singapore after resolving the ethylene oxide issue. But, FSSAI did its tests on over 300 spice samples and came out with the conclusion that MDH & Everest products does not contain ethylene oxide.

2. Patanjali & Horlicks: Misleading Ads at its Finest

Have you heard the name Revant Himatsingka? If not, then you might recognise this person as the social media influencer “Food Pharmer”.  

Food Pharmer
Food Pharmer "Revant Himatsingka"

This influencer is responsible for a big scandal in the food industry with his eye-opening video content about some supposed health drinks in India. Food Pharmer brought big names like Horlicks and BournVita to their knees with a single Instagram reel.

He called out these companies' products using their fishy marketing technique as they sold products with large amounts of sugar. This led to Revant receiving a legal notice from Cadbury, which forced him to delete the video. But, then Apex child rights body NCPCR asked Mondelez (BornVita-owned company) to withdraw the misleading ads.

Hence, Revant received a big sigh of relief and thousands of followers for his social media page. What started then is still ongoing, with the authorities double-checking the ingredients of the health drinks and other beverages and reviewing advertisements to point out any fault.

One of the biggest rows that’s still going strong in this area is Patanjali’s ad case. The IMA accused Patanjali of running misleading advertisements for some of their products, particularly those claiming superiority over established brands like Horlicks. The specific claims in question weren't publicly revealed, but the IMA alleged that Patanjali ads exaggerated the benefits of their products and downplayed the effectiveness of competitors.

The IMA then filed a case against Patanjali in the Supreme Court of India. This case highlighted a broader concern about misleading advertising in the Indian consumer market. The court took a tough stance on Patanjali. They questioned Baba Ramdev, co-founder of Patanjali, about the scientific basis for their claims and demanded an apology.

Apology by Patanjali

This was the first apology published in a newspaper by Patanjali on 22 April 2024. But the court questioned its sincerity due to the size and placement compared to the original ads, which brought another unconditional apology on 24 April 2024:

Apology by Patanjali

The Supreme Court can be really hilarious sometimes. But, this tactic sent a strong message to all companies in India, particularly those in the health & wellness sector, that their advertising claims need to be backed by scientific evidence.

There are some other cases in India that have caused caution from the big brands’ products like Maggi. Read the article Kissan Vs Maggi to learn what took place.

3. Nestle: Dangerous Sugar Quantity

Nestle has been criticised for the sugar content of its baby food products sold in developing countries. An investigation by the Swiss NGO Public Eye and the International Baby Food Action Network (IBFAN) revealed high levels of added sugar in Nestle baby cereals and formula marketed in low—and middle-income countries.

The report found that some products contained the equivalent of a cube and a half of sugar per serving, exceeding WHO recommendations for infant diets. 😲

The controversy stems from the fact that Nestle offers similar baby food products in developed countries with significantly lower or no added sugar. Critics argue this creates a double standard and unfairly exposes infants in developing countries to potential health risks associated with excess sugar consumption.

Nestle has defended its practices, stating their products comply with local regulations and Codex Alimentarius, an international food standards code. They've also highlighted past reductions in sugar content and ongoing efforts for further reduction.

Curious to know more about similar food scandals over the years. Click on this link and get a free downloadable document for safekeeping.

Beyond the Headlines: A Hidden Danger in the Food Industry

If you keep the internal threat to the industry aside, some external factors have been causing harm. Our planet's climate, significantly India’s, has been slowly yet continuously endangering agricultural practices.

Rising temperatures, changes in precipitation patterns, and more frequent extreme weather events like floods, droughts, and heatwaves can significantly impact agricultural production.

  • Droughts can lead to water scarcity, making it difficult for crops to grow.
  • Floods can damage crops and farmland, leading to harvest losses.
  • Unpredictable weather patterns can make it challenging to plan planting and harvesting seasons.

These disruptions can lead to decreased crop yields, affecting the overall food supply and potentially driving up food prices. This is a major threat to India's food security, with unpredictable weather patterns impacting crop yields and overall production.

Let’s not forget disruptions caused by factors like pandemics, which can affect ingredient availability and transportation. These kinds of factors often lead to price fluctuations and supply chain issues.

Strengths & Weaknesses

This leads us to a crucial portion of our discussion:

Strengths

Weaknesses

India is a major producer of agricultural products, ranking first in milk, pulses, and jute, second in fruits and vegetables, and third in cereals globally.

Despite strong agricultural production, India faces a significant gap in food processing, leading to spoilage and value loss.

With a vast population, India boasts the sixth-largest food & grocery market globally. This presents a significant opportunity for domestic and international food companies.

Scandals involving adulteration and misleading labelling have shaken consumer trust and highlighted the need for stricter regulations and enforcement.

The Indian government recognises the food industry's potential and actively supports its growth through initiatives like promoting food processing and attracting foreign investment.

India's food supply chain faces challenges like inadequate cold storage facilities and poor transportation infrastructure, leading to spoilage and inefficiencies.

The Bottom Line

Blaming either the government or the companies would be a waste of time, as both sides are at fault here. India has been the target of such practices for a while now, and it's time for things to change. The government authorities need to tighten up their security measures to protect consumers’ health.

Companies should be honest in their marketing taglines and provide customers with clear information about the contents of their products. However, it is highly unlikely that every company will follow this practice since it may not be the best strategy to attract customers.

Therefore, it is crucial for consumers to be aware of what is healthy and what is harmful to their well-being. They should make informed decisions when purchasing products for their homes.
While India's food industry faces challenges, it also has significant growth potential. Addressing food safety concerns, adapting to climate change, and keeping pace with consumer trends will be crucial for its long-term success.

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Preeti Gupta

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A book-lover who adores everything fictional, Preeti has undertaken the life mission of tasting every flavour available in the pantry. A science student with a Master's in Mass Communication, she now wishes to conquer the Finance world as a writer. With the power invested by the randomly chosen music, she is here to make Finance fun for you.

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