Nestle India, Zydus Wellness Shares Fall After FSSAI Notices; What Did The Regulator Say?
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Nestle India and Zydus Wellness shares fell on Thursday after FSSAI sought scientific evidence for claims made on products including Lactogen Pro 1, NAN Excella Pro Stage 1 and Complan. Both companies have responded to the regulator.
Nestle India and Zydus Wellness shares fell on Thursday, October 22, after the Food Safety and Standards Authority of India (FSSAI) issued notices questioning promotional and labelling claims made for some of their nutrition products.
Nestle India shares dropped around 3% during Thursday's session, while Zydus Wellness fell around 2% as investors reacted to the regulatory action. Abbott India also declined after FSSAI's scrutiny extended to promotional content involving infant milk substitutes.
The notices, issued on Wednesday, October 21, cover Nestle India's Lactogen Pro 1 Powder and NAN Excella Pro Stage 1 and Zydus Wellness' Complan. FSSAI has sought scientific evidence and supporting documents for claims relating to digestion, immunity, children's growth and cognitive benefits.
The regulator has also sought explanations over the promotion of infant milk substitutes on social media, with notices issued to companies including Nestle India and Abbott Healthcare, among others.
The notices seek explanations and scientific substantiation from the companies and do not amount to a final finding of wrongdoing.
FSSAI Questions Claims On Nestle's Lactogen And NAN Excella Pro
FSSAI's notice to Nestle India questioned claims made for Lactogen Pro 1 Powder and NAN Excella Pro Stage 1.
For Lactogen Pro 1, the regulator sought evidence supporting a claim that the product contains whey protein, a part of milk protein, which is easy to digest. Nestle India has been asked to furnish scientific substantiation and supporting documents for the claim.
FSSAI separately questioned claims made for NAN Excella Pro Stage 1, including one relating to five human milk oligosaccharides, or HMOs, helping support the normal immune system.
The regulator said the immunity-related claim could fall under provisions restricting claims relating to diseases, disorders or particular physiological conditions unless specifically permitted under applicable regulations.
FSSAI also sought scientific evidence for a whey protein-related claim appearing on NAN Excella Pro Stage 1 packaging or promotional material.
Nestle India has been asked to explain why action should not be initiated under the Food Safety and Standards Act, 2006, and applicable regulations.
Zydus Wellness Faces FSSAI Scrutiny Over Complan Claims
FSSAI separately issued a notice to Zydus Wellness Products over claims appearing on Complan packaging and promotional material.
Among the claims questioned by the regulator were those relating to “2X Faster Growth”, support for concentration and memory and “Pro Immunity+ 34 Vital Nutrients”.
The regulator also sought scientific justification for promotional messaging around growth benefits and flagged certain statements under provisions of the Food Safety and Standards (Advertising and Claims) Regulations, 2018.
Zydus Wellness has been asked to submit supporting scientific evidence and explain why action should not be initiated under the Food Safety and Standards Act and applicable regulations.
The regulatory action also extends to the promotion of infant formula products on social media. FSSAI issued notices in connection with an Instagram Reel that allegedly promoted products including NAN-Pro 1, Aptamil Premium 1, Similac Advance 1, Enfamil A+ Stage 1 and Dexolac 1.
The social media content attributed benefits relating to nutrition, immunity, brain development and digestion to the products. Notices were issued to an influencer as well as companies including Nestle India, Abbott Healthcare, Nutricia International and Mead Johnson Nutrition India.
The regulator is examining whether such promotion complies with rules governing the marketing of infant milk substitutes.
Nestle India, Zydus Wellness Respond To FSSAI Notices
Nestle India said the latest FSSAI communication reiterates issues that had been raised earlier regarding the labels of NAN Excella Pro and Lactogen Pro.
The company said it has already submitted a detailed response to the regulator. Nestle has maintained that the products and their labels were approved by FSSAI's expert committee and that the statements appearing on the labels are factual and supported by scientific literature.
Zydus Wellness has also defended its claims, saying Complan complies with applicable regulations and that it has submitted a detailed clarification to the authorities.
The company maintained that statements made on the product labels are factual and supported by scientific evidence. It said it remains confident about the scientific basis of its claims and will continue to cooperate with the authorities.
The notices come amid increased regulatory scrutiny of advertising and labelling claims in India's packaged food industry, particularly those involving infant nutrition, children's growth, immunity and other health-related benefits.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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