Nestle spent Rs 445 cr on ads, but Rs 19 cr on quality tests

In the dock over alleged lapses of food safety standards in its Maggi noodles, Nestle India has disclosed having spent Rs 445 core on “advertising and sales promotion” last year, while the expenses towards “quality testing” was less than 5 per cent of the amount.

The trend has been similar over the last five years, when the “advertising and sales promotion” expenses were Rs 300-450 crore annually, while expenditure on “laboratory or quality testing” moved was Rs 12-20 crore.

An analysis of the annual financial accounts of the Indian arm of the Swiss multinational shows the expenses towards employees have risen the most in the last five years—by about 75 per cent from Rs 433 crore in 2010 to Rs 755 crore in 2014.

In comparison, advertising and sales promotion expenses have risen 47 per cent, from Rs 302 crore in 2010 to Rs 445 crore in 2014. In the same period, the “laboratory or quality testing” expenses rose 45 per cent, from Rs 13 crore to Rs 19 crore. The company follows a financial year ending December 31.

Experts, however, say a similar trend could be seen at other such companies, as they all spend huge sums on brand promotion.

While Nestle insists that Maggi is safe, it has had to withdraw the product from markets after many states banned the famous “2-minute” instant noodles after tests showed them containing taste enhancer MSG (monosodium glutamate) and lead in excess of permissible limits.

Meanwhile, traders’ body Confederation of All India Traders (CAIT) has urged Health Minister J P Nadda and Consumer Affairs Minister Ram Vilas Paswan to take action against brand ambassadors of Maggi under the Food Safety & Standards Authority of India (FSSAI) Act.

In a letter to the ministers, CAIT said Maggi brand ambassadors have violated Section 24 of the Act, and therefore proceedings must be initiated against them, as also taking action taken against Nestle.


Section 24 provides for restrictions on advertisement of any food which misleads, deceives or contravenes the provisions of the FSSAI Act.

“When proceedings against Maggi has been launched by FSSAI, why is no action being taken against its brand ambassadors and the chain of officials who approved the product despite it having either deficiencies or exaggerated good claims?” said CAIT on Sunday.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal wrote to Paswan and Nadda in this regard, said the organisation.

CAIT, however, did not mention the brand ambassadors. Actors Amitabh Bachchan, Madhuri Dixit and Preity Zinta have been separately dragged to the court for promoting the noodles brand.

“On packs, it is claimed that Maggi has 'Grain Shakti' without elaborating which grain and how much 'Shakti'. They have mentioned 'fibre of three rotis' without specifying grain used to make roti, and its size and thickness,” said CAIT.

The brand ambassador have given health guarantee to the public, which is not based on any adequate or scientific judgment, and therefore makes them liable to face prosecution for violation of the FSSAI Act.

CAIT also drew attention to Nestle Global CEO Paul Bulcke's statement to the media in the national capital. He had said at a press conference: “We apply the same quality standards and methods in the world here in India too.” “If this is so, why does the Maggi pack contain the line 'For sale in India, Nepal and Bhutan only'? It speaks of double standards of Nestle and must be taken note of,” said CAIT.