Why Nestle India Stock Just Marked Its Steepest Drop In Three Years

Shares of Nestle India plunged nearly 4% on Thursday, marking the company’s steepest decline in three years.

What Happened: The drop followed a report by Public Eye, which criticized the FMCG giant for adding sugar and honey to its top-selling infant milk and cereal products in developing countries like India, unlike in European markets. The report highlighted potential breaches of international health guidelines, which aim to combat obesity and chronic diseases.

The joint investigation by Public Eye and the International Baby Food Action Network (IBFAN) involved sending popular baby food samples from Nestle in Asia, Latin America, and Africa to a Belgian laboratory for testing. The investigation covered 150 products sold in low and middle-income countries, including popular brands like Cerelac and Nido.

The testing revealed that almost all wheat-based Cerelac cereals, intended for infants from six months, contained an average of 4 grams of added sugar per serving. The highest sugar content was found in the Philippines at 7.3 grams per serving, followed by Nigeria and Senegal. In India, 15 Cerelac products had nearly 3 grams of sugar per serving.

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Meanwhile, similar products in Germany and the UK had no added sugar, and those in Switzerland, Germany, the UK, and France avoided added sugars altogether. Public Eye and IBFAN criticized this as a “double standard that is unjustifiable and problematic” from both ethnic and public health perspectives.

Nestle India defended its practices, stating that over the past five years, it had reduced added sugars by up to 30% in its infant cereals portfolio, depending on the variant, and emphasized its commitment to high-quality ingredients and the nutritional quality of its products for early childhood.

Price Action: Nestle India Ltd. shares were trading 3.38% lower at ₹2,459.95 at midday on Thursday. The stock has fallen 10% so far this year, compared to a 2% rise in the benchmark Nifty 50.

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