Front-of-pack labelling: Food CEOs rush taste tweaks as new rules loom

Packaged food companies in India are responding to regulatory pressures by introducing no-added-sugar and low-salt alternatives. Executives recognize the challenge of maintaining taste while making these healthier options. The Food Safety and Standards Authority of India plans a major change in food packaging regulations. These changes could significantly impact the sale of everyday packaged products. Companies will likely expand their product variants to meet health demands.

New Delhi: Facing increased regulatory pressure and an expected Supreme Court ruling on front-of-pack labelling for high fat, sugar and salt, chief executives of packaged food firms are fast-tracking the rollout of no-added-sugar and low-salt alternatives, though they admit that maintaining the same taste remains a challenge.

"The key is, from a taste level, when you give no added sugar, how do you make the taste much more acceptable and palatable?" said Rakshit Hargave, managing director of Britannia Industries, which makes NutriChoice biscuits and Laughing Cow cheese.

He said during the company's second-quarter earnings call that "in the near future, there will be more variants to be able to address the health platform".

In what will be the country's most transformational food packaging reform, which has been mired in controversies, legal disputes and pushback by Big Food for more than a decade, the Food Safety and Standards Authority of India (FSSAI) has proposed a single-phase rollout of front-of-pack labelling (FOPL), using red hexagonal labels.

PepsiCo India and South Asia's chief executive, Jagrut Kotecha, wrote in a LinkedIn post last Friday that as the trend shifts to healthier foods, "the industry has an important role to play; not just in responding to these changing needs... and without compromising on taste".

Almost 60% of everyday products, including packaged noodles, biscuits, chips, chocolates and confectionery, are sold in packs of Rs 10. Such packs, which are seen as core volume drivers, are where the majority of the impact of warning labels is expected.

"Either we risk putting the red labels on the front of packs, or we balance salt-and-sugar reduction while trying to maintain the same taste that most Indians have been used to for decades - both are challenges," the chief executive of a large packaged foods maker said on condition of anonymity. Sunil Kataria, managing director of Godrej Agrovet, told investors during the company's September quarter earnings call last week that "the street food category in India is going to see conversion from unbranded to branded".

The frozen and chilled packaged foods maker sells frozen meat and vegetarian snacks under its Yummiez and Real Good Chicken brands. "Indians are moving towards more hygiene-centric, less contaminated products... we'll drive that," Kataria said.

In recent months, the FSSAI has issued notices to more than 150 packaged foods and beverage brands, including from Hindustan Unilever Limited (HUL), Nestle, PepsiCo, ITC, Mondelez, Red Bull and Ferrero, following allegations of incorrect and misleading labelling claims regarding ingredients, as well as other labelling non-compliances.

Hindustan Unilever's managing director Priya Nair -- whose company makes Kissan jams and Horlicks health drinks -- told investors that HUL "supported clearer nutritional information and was prepared to comply with regulations". She said the company is "very well placed" to meet the labelling regulations proposed by the FSSAI.

Nestle India's managing director Manish Tiwary said in the company's September quarter earnings statement that "food safety and quality are the foundation of consumer trust". The Supreme Court has reserved its order on the timeline for the implementation of the labelling guidelines, stating that whatever order it passes will be binding.

"For packaged food companies, this (front-of-pack labelling) could involve substantial efforts in managing existing vendor arrangements, updating contracting terms and revising capital deployment," said Saurya Bhattacharya, partner, JSA Advocates & Solicitors.

The Maharashtra Food and Drug Administration seized packaged foods worth $80,000 from a third-party warehouse in Navi Mumbai on September 1, which included PepsiCo's Lay's, Maggi noodles and Unilever's Knorr mushroom soup. The packs had forged expiry dates and ingredient labels.

"Growing awareness around food safety and hygiene continues to strengthen consumer preference for packaged food products," said Jayatheertha Chary, managing director at ice-cream and cheese maker Mother Dairy.

FSSAI CEO Rajit Punhani told ET last month, in response to a question about lobbying from global and packaged foods makers on front-pack labelling, that the pushback and pressures from Big Food didn't keep him awake at night. "It is unethical for food companies to mislead consumers on labelling. We are doing nothing wrong, and we expect especially big companies to lead the way in following the regulations," he said.