Nestle begins Maggi pullback, but faces logistical nightmare | business | Hindustan Times
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Nestle begins Maggi pullback, but faces logistical nightmare

business Updated: Jun 09, 2015 09:13 IST
HT Correspondent
Maggi row


Responding to an order from the national food regulator to recall its ubiquitous Maggi noodle on suspected health safety concerns, Nestle India has choked its supply lines to shops nationwide, but faces logistical nightmare to pull millions of packets back into its godowns.

“It is a massive challenge,” a source familiar with the operation told HT on Monday. “It is easier in the West where everything is in the organised sector.”

“We will first block all sales under our control,” said a source who asked not to be identified. “We will go deeper after that.”

To start with, Nestle late last week instructed its distributors and stockists to stop Maggi sales immediately. The packets will be brought back to be destroyed, the source said.

However, under Indian laws, the stoppage would only amount to a “withdrawal” as recall procedures are not yet in place under the law.

Details of the number of packets involved will first be shared with government authorities and cannot be disclosed immediately, Nestle officials said. But industry estimates peg the number of packets out there at around 300 million.

Maggi is a common product in India, which has an estimated universe of retail outlets totaling anything between 9 and 12 million, industry officials said. Of this, 3 to 4 million are core food outlets most likely to stock up on the popular instant noodle, but smaller shops even in villages stock up on Maggi.

Last week, the Food and Safety Standards Authority of India (FSSAI) ordered that all nine variants of Maggi be withdrawn after reports from across the nation that they possibly contained lead and mono sodium glutamate beyond acceptable levels.

Officially, the company has 15 days to reply to a show-cause notice as to why approval for the product cannot be withdrawn. Mercifully for Nestle, this is not a deadline for withdrawal.

“The order does not say how many days (within which the recall must be made). But they would expect us to do it fast,” a company executive said.

Nestle has five manufacturing facilities in India that make Maggi. A small portion is also made by third party contractors under strict supervision.

Nestle India has serious doubts on the kind of checks the 1,000 packs tested so far were subject to. But right now, its worries are about how to get those packets back into the godowns.

“We are now working on the modalities of the recall,” a company executive said. “A team is fine-tuning the methodology.”

Industry watchers and management analysts tracking Nestle’s distribution system said the firm has extensive layers of responsibility matched with training and incentives.