New Delhi: The central government is investigating allegations against Nestle regarding the addition of sugar to infant milk products sold in the country.

A top government official, talking to a national newspaper, confirmed that they will conduct a thorough investigation under the Consumer Protection Act, following reports from a Swiss investigative organization ‘Public Eye’, and IBFAN (International Baby Food Action Network). Nestle samples Asia, Africa, and Latin America to a Belgian laboratory for testing.

Against the backdrop of the allegations, Nestle India's shares plummeted by up to 5.4% on Thursday, reaching a day’s low of Rs 2,409.55 on the BSE – the worst single-day drop in 3 years.

Reports suggest that Cerelac baby cereals sold in India contain added sugar, averaging nearly 3 grams per serving. Similar patterns were observed in South Africa and Brazil. Nestle's sugar content adjustments in Cerelac appear to differ between Asian countries and developed markets like the US and Europe.

Euro monitor International data indicates that Cerelac is the leading global baby cereal brand, with sales exceeding $1 billion in 2022. A substantial portion of these sales, around 40%, comes from low- and middle-income countries, with Brazil and India being significant contributors.

In response to the allegations, Nestle India stated that they have reduced added sugars by up to 30% in their infant cereals portfolio over the past five years. The company vowed to commit to product quality, safety, and taste while continuously reviewing and reformulating its products to further reduce added sugars.

Despite the setbacks, the Swiss company says it expects organic sales growth of 4% this year and a moderate increase in the underlying trading operating profit margin. Earlier this year, Nestle CEO Mark Schneider asserted that Nestle’s free cash flow generation has returned to historical levels despite unprecedented inflation driving down demand for food and beverage products.

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