Nes­tle re­calls US lean cui­sine meals, dis­putes Maggi claim

The Pak Banker - - COMPANIES/BOSS -

Nes­tle SA re­called 12 types of prod­ucts in the U.S. be­cause they may con­tain small pieces of glass, while In­dian me­dia re­ports said its Maggi noo­dles may face new reg­u­la­tory is­sues, set­backs for the Swiss food com­pany as it seeks to re­vi­tal­ize some of its best known brands.

No in­juries have been re­ported as a re­sult of the U.S. flaw, ac­cord­ing to the Vevey, Switzer­land-based com­pany, which an­nounced the re­call of a "lim­ited" num­ber of Di­Giorno, Lean Cui­sine and Stouf­fer's prod­ucts Thurs­day. Nes­tle also re­called two types of Delis­sio piz­zas in Canada.

"If I were a Mom, I wouldn't be buy­ing Di­Giorno pizza right now for my kids," said Robert Wald­schmidt, an an­a­lyst at Liberum Cap­i­tal in Lon­don. "There's go­ing to be some lack­lus­ter sales just as Nes­tle was hop­ing to reap the re­wards of that repo­si­tion­ing."

Lean Cui­sine un­der­went the big­gest over­haul in its 35-year his­tory last year as Nes­tle in­vested mil­lions in turn­ing around the ail­ing con­ve­nience-meal brand. The com­pany in­tro­duced health­ier op­tions, such as or­ganic and high-pro­tein meals, as pre­pared-meals were in­creas­ingly per­ceived as un­healthy. Nes­tle, which has also re­vamped Di­Giorno and Stouf­fer's, said last month that se­cond-half vol­ume of U.S. frozen foods rose by a "mid-sin­gle-digit" per­cent­age and the turn­around of frozen foods helped add 1.2 per­cent­age points to North Amer­i­can sales growth for the whole year.

Sep­a­rately, Nes­tle's Maggi noo­dles may be fac­ing new is­sues in In­dia. The Press Trust of In­dia said district au­thor­i­ties of Bara­banki in the state of Ut­tar Pradesh are giv­ing the com­pany one month to ap­peal a claim that Maggi noo­dles are sub­stan­dard be­cause of ash con­tent. The noo­dles are safe and the reg­u­la­tor is in­cor­rectly ap­ply­ing stan­dards for mac­a­roni on the prod­uct, Nes­tle In­dia said in a state­ment, adding it hasn't re­ceived any in­for­ma­tion from the au­thor­i­ties.

The food com­pany has been rein­tro­duc­ing Maggi in that mar­ket re­cently af­ter reg­u­la­tors said last year they found sam­ples that con­tained too much lead. Nes­tle, which has main­tained its noo­dles were safe, filed a case in June, chal­leng­ing the re­call over al­le­ga­tions of un­safe lead lev­els. The Bom­bay High Court later over­turned the ban on Maggi noo­dles, and or­dered tests that showed the noo­dles were safe.

Shares of Nes­tle traded 0.7 per­cent higher at 71.50 francs as of 10:33 a.m. in Zurich, while the Stoxx 50 In­dex ral­lied 2.2 per­cent. Nes­tle In­dia dropped 0.6 per­cent.

The U.S. re­call may cut about 40 mil­lion francs ($44 mil­lion) of sales over the com­ing weeks, es­ti­mates Jon Cox, an an­a­lyst at Ke­pler Cheuvreux. He said the U.S. re­call won't be as big an is­sue as last year's Maggi is­sues in In­dia. "How­ever, it is go­ing to have an im­pact be­cause the com­pany has been re­boot­ing its frozen busi­ness in the U.S."

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.