Nestle India under fire after reports of added sugar in infant milk, shares fall 2%

Shares of Nestle India Ltd dipped approximately 2% in today's trading session following reports alleging that the company adds sugar and honey to infant milk and cereal products sold in many poorer countries, contrary to international norms.

The added sugar, reportedly in the form of sucrose or honey, was found in samples of Cerelac, a cereal for children aged between six months and two years, as well as Nido, a follow-up milk formula brand intended for infants aged one and above.

Previously on the day, the government took suo-moto cognizance of these reports, with a top official stating, "We have taken cognizance of the report regarding Nestle and will investigate the matter after doing due diligence," as reported by Business Today TV.

As a result of this development, Nestle India shares fell by 1.73%, reaching a low of Rs 2503.05 on the BSE. The stock is down by 5.98% in 2024, compared to a 6.52% drop in the BSE FMCG index during the same period last year.

Responding to the allegations, Nestle India informed several publications that it had reduced "added sugars" by up to 30% in its infant cereals portfolio over the past five years. The company emphasised its commitment to regularly reviewing its portfolio and continuing to innovate and reformulate products to further reduce the level of added sugars without compromising on quality, safety, and taste.

According to a report recently published by Public Eye, a Swiss investigative organisation, traces of sugar and honey have been found in infant milk and cereal products Nestlé sells in many poorer countries, including Bangladesh, in violation of international guidelines aimed at preventing obesity and chronic diseases. 

The same was not the case in Europe, where there was no added sugar.

In Bangladesh, added per serving (in grammes) in Cerelac were found to be 3.3g. The added sugar content is declared on the packaging, but the associated risks are glossed over.

The case was similar for Nido, another popular brand. 

In India and Pakistan it was 2.7g, although no declaration was found on the packaging tested from the latter.