Food for thought: Lessons for brands from the Nestle crisis
Experts say that the time is ripe for the packaged food industry to do some introspection in terms of transparency and contributions to the community
The last week has seen a lot of chatter around the Swiss food and beverages major Nestle after a leaked internal document indicated that nearly 70% of its main food and drinks products do not meet a “recognised definition of health."
These products fail to meet the rating requirement of at least 3.5 under Australia’s health star rating. However, the brand has since clarified that the said foods comprise less than 30% of its global portfolio, mostly representing indulgent products that do not meet stringent external “healthfulness” standards. The Swiss conglomerate has since promised to make its portfolio healthier.
But the whole incident has brought into focus the overall packaged food industry, raising pertinent questions: Do brands need to be more responsible for what they are offering? Does the category need a complete makeover?
Indians love to eat ‘junk’
As per an Ipsos survey released in 2019, 77% of Indians would rather "eat well" over sacrificing food to become "thin." 67% claimed they would much rather exercise just so they don’t have to "watch what they eat."
And most of them, arguably, would be eating more junk than healthy alternatives. A 2019 research for BMC Public Health indicated that an average Indian household consumes more calories from processed foods than fruits.
Madison Media Chief Strategy & Analytics Officer Nagaraj Krishnamurthy rightfully points out: “Indian consumers have always been mindful of the nutritional value of their meals and snacks. That is true across all social strata. Our customs also make our diet very selective. We are a well-informed society. It is possible that some of us may not be disciplined and gorge on all kinds of food. We do that knowingly!”
But does that stop brands from creating healthier products?
Certainly not. While Indians indulge in “unhealthy” snacks excessively, a great section of the population has also become extensively aware of their health and immunity, more so because of the pandemic.
As per a Mintel survey, eating healthy has become a high priority for 79% of Indians since the outbreak. Another Ipsos survey, conducted last year revealed that 91% of Indians would like to explore healthier alternatives while looking to "snack up."
Mehak Jaini, Head of Strategy, 22feet Tribal Worldwide & Vice President - Strategy, DDB Mudra Group, says that while the pandemic has made us acutely aware of our health and wellbeing, India continues to be the land of contradictions, where conversations around immunity are had over deep-fried tea-time snacks.
She says, “There are meals and snacks that fill your stomach, and then there are the ones that fill your heart, and often you will find them at diametric ends of the nutritional spectrum. But that doesn’t absolve companies and brands of their responsibility towards helping consumers make better choices.”
dentsumcgarrybowen India EVP & Head- Planning & Strategy Vishal Nicholas adds, “Caveat Emptor (let the buyer beware) is a relatively well-known concept. But we must remember there is also the concept of Caveat Venditor (let the seller beware). As in any transaction, both sides have to step up. The due diligence that either side does is the best check and balance. Trust is, after all, a two-way street.”
It’s not just about the nutritional value
The Indian market has evolved a lot over the past few years. A number of big brands, in the past few years, have started rolling out “healthier” alternatives for the consumers, at almost similar pricing points as their existing portfolio. Nestle has its very own Oats Maggi and Lays has its range of baked chips. There's also a whole range of healthy snacks by RSGG under the brand name Too Yumm!
Despite the brands' best intentions, controversies aren't too far behind. Flavour enhancers and other preservatives caught the cautious eyes of many, questioning the authenticity of such products.
Krishnamurthy says, “Some brands do not disclose all the ingredients by taking advantage of laxity in our laws and enforcement. That is not in the long-term interests of the brands especially in the days of the supremacy of social media. In their own interest, brands must be proactive and disclose ingredients, preservatives. If they do, then consumers can make a considered decision. If brands try to hide any fact and if it is exposed, they stand to lose it all.”
Another alternative has been the growing emergence of D2C brands that offer healthier, organic, and nutritional snacking options to consumers. But they remain much more highly-priced than the traditional branded packaged food items, which makes their adoption a slow affair.
Nicholas elaborates, “Fundamentally, the pricing of healthier snacks is an issue. Consumers want healthier products and companies know that and are happy to do so too. The problem is that there is no such thing as a free lunch. These foods are more expensive, and companies also know that the average consumer in India isn’t willing to cough up for health beyond certain price points.
“Usually, the inflexion point for this is an increase in per capita incomes. Once per capita incomes in India cross a certain threshold, then willingness to pay more also increases in line with other developed economies. Then it becomes viable for businesses to offer healthier products. Till then, the focus will always be on ingredients that are not necessarily the healthiest since they aren’t costly. Economic prosperity needs to happen first for the rest to follow.”
Till then, the brands will have to be more transparent about their products. And if they can’t really make the food healthy, they will have to figure out how they can serve a bigger purpose.
Jaini suggests, “Indulgent snacks will always be great at indulgence, but can they be better for us, our farmers, our environment, our communities? That is the real question big brands like Nestle should be asking themselves.
"Indians aren’t expecting 'do good' benefits from their indulgent snacks, but they do expect 'no harm' (when consumed in moderation). If a product can’t be made explicitly healthier, brands need to use their might for the better in other domains – how it sources ingredients, how it cares for the land that the ingredients are grown on, or how it adopts environmental and community-friendly practices to balance the scales. Brands need to echo a sense of responsibility towards mankind’s future, considering not just the product but the ecosystem at large.”
Krishnamurthy adds, “Purpose-driven brands grow faster and are more profitable. Data proves that and there is no doubt on that score. The best approach for a brand is to be more transparent and disclose all details on nutrition, ingredients etc. It is better that they do it voluntarily instead of some Government diktat that adds more complexity.”
Not just about brands
While brands certainly have to shoulder more responsibility to create healthy food options and be more transparent about the actual nutritional value of their products, regulators also ought to come up with improved quality standards.
Nicholas explains, “Businesses can always argue that as long as it is legal, there is nothing wrong with it. I think more than businesses, it is the responsibility of the regulators to push the envelope. Brands and businesses will follow suit. I think there is much to study further and learn from this Australian 5-star health rating system -- which initially triggered the Nestle controversy.”
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