Don’t serve noodles al Dente

Like for most of my generation & the later ones, Maggi has been an integral part of my growing up and I felt it’s my nostalgic duty to put up a defense in favor of its beleaguered maker. However as more details started emerging, it became clear to me that an outright defense will be an aberration. So here I go serving up a steaming bowl of instant wisdom to Nestle.

React don’t respond

When trust issues like these crop-up, a quick reaction from the effected brand, however half-baked, will still help assuage the consumer fears than a measured but delayed response would – a typical consumer will only view this time-lag as hesitation (stemming from guilt..) and hence lose faith.

Now again, even this measured response shouldn’t come across as an ill-articulated stand that raises more questions than it answers. CEO Paul Buckle says “Nestlé’s safety measures and standards are same all over the world” - Safety measures, perhaps yes but this statement can’t be factual when it comes to standards as these can differ depending on the market – If Paul meant to say Nestlé’s compliance adherence is the same all over the world, he should say that. This clarity becomes that much more significant given the lack of clear-set of applicable standards in the Indian context & hence one sees FSSAI oft-quoting FDA while interpreting various facets of the results.

Screw brevity, be verbose

Any attorney worth his salt will vouch for the fact that there are no short cuts to drafting safe harbor clauses & the more verbose; the lower is the chance of it being interpreted unsuitably.

It’s perhaps not a lie when Nestle says ‘No MSG added” & it is absolutely possible that the proteins within the noodles & taste-maker put together can throw up a peak for glutamic acid on the chromatogram. But considering FDA clearly considers this label as misbranding and as misleading the consumer, Nestle should’ve used some discretion and printed a more elaborate disclaimer to the effect

‘No MSG has been added to this product during manufacture. It is however possible that the product does contain trace quantities of Glutamic acid that occurs naturally in many proteins’

Challenge the rulebook, but before breaking the rule

I believe there is some merit in Nestle contesting the test method(s) used by FSSAI et al to ascertain lead-content in Maggi and its good they want to ‘engage with the authorities’ on the same. Why wasn’t this done early on Paul? I’m sure the inadequacy of the method prescribed by FSSAI &/or BSI was crystal clear to Nestle for over two decades as compared to their probably superior internal STP – what’s the consequence of talking about method integrity after failing?

It is also a valid contention that applying lead-limit set for noodles to the separately-packed taste-maker isn't logical and that it should be sufficient if the combined ingredients meet the limit. But again it's not clear why Nestle chose to ignore this potential risk of regulator considering both as separate products while enforcing limits.   

Finally, isn’t it a regulatory thumb rule that in order to comply with a specific standard, product should be tested using the prescribed method of the regulator & not by the manufacturer’s internal method?

Don’t serve noodles al Dente

That’s for pasta. So rather than quoting technicalities, tell the consumer clearly what they can expect and expect consistently. The consumer deserves to know that your latest variant is approved or if it is still a test marketed item.

Trusted brands need to work on keeping the consumer trust – it’s a double edged sword. No company let alone a top brand like Nestle can afford to get complacent in any market about quality, compliance and transparency however lackadaisical the enforcement is &/or however half-aware the consumers there are of their rights - This is tantamount to a brand-harakiri & for no noble purpose either.

A final dash of taste-maker

Since my intention was a defense to start with I would still close it thus – I believe Nestle has the requisite stature, maturity and still sufficient consumer trust to pull itself up from this mess and shine again.

This war-on-Maggi by the Indian regulators will hopefully stir other slumbering giants in food & pharma industry who have gotten used to using the Indian regulatory lacunae & its ineffective enforcement to their advantage and instead start prioritizing consumer interest above all.

As for the warring lords in the Indian regulatory arena, my appeal is three fold

• Keep up the heat and not just on Nestle
• Demand compliance but only after setting & implementing standards
• Let science prevail not sentiment

Wake-up and smell the soup!

Post thought - 08 June '15

It's imminent that the Maggi saga will rake-up a huge public debate with respect to the general quality of the mostly uncontrolled unprocessed food out there in India. While this sounds great, I’m worried this unplanned extrapolation may bloat-up the debate & dilute its impact.

Before throwing in unprocessed food into the simmering pot of processed-food debate, it should be noted that the challenges with unprocessed foods are a very different devil and it's more an public distribution issue while Maggi noodle fuss is all about enforcement & adherence to quality standards for processed food.

Also, this is a more immediately addressable consumer rights issue as problem with quality of processed food amounts to a breach of contract between seller/ maker & buyer/ consumer. A much complex scenario however will be in play for unprocessed food where such clear definition of roles isn’t easy and the debate cannot solely happen on the merit of what an end-consumer expects.

For the sake of efficiency I think it'd be ideal for regulators & activists alike to channel the current enthusiasm towards addressing the gaps in processed food segment first - else it could be a classic case of biting off more than one can chew.

The Negative yield ecosystem

   In the Fynbos shrub lands of South Africa, an occasional forest fire is essential for survival of majority plant species there since their seed is released from its woody encasement only after being burnt (obligate seeders). By analogy, the on-going negative yield inferno that’s rapidly destroying investor wealth too may crack open a few seeds of hope and redemption - The core assumption of a fiscal conflagration ecosystem.

Unlike in a natural phenomenon though, any positive outcome from this dismal fiscal scenario has to be necessarily a derivative of human behavior in face of risk. The Prospect theory explains this when it says ‘the decision makers will be risk averse when choosing between gains and risk seeking when choosing between losses’ – This could mean the investing universe over next few months (& once the ECB buy-back bubble in 2016 too is suitably burst…) would stop sinking more money in government, sovereign bonds and look at riskier options like equity that don’t at least start with a chilling promise of sub-zero return – many articles like here, here & herecovered this possibility quite convincingly.

But again, just as forest fire burns down dry tinder first & then progressively dehydrates and engulfs vegetation that was relatively less-drier & safer before, the investors’ new found appetite for risk gradually could expose the relatively self-correcting equity and other asset classes to the risk of long-term under performance. While this eventuality may not be completely unanticipated by the investing junta, the reason why they’d still ignore it in the shorter term once again is explained by the prospect theory’s ‘reference level dependence’ characteristic, whereby a poor performance of a much riskier equity investment would still look eminently better than a known negative yield of a bond.

So if it isn't even equity, what seeds of hope would crack open?

In their quest for the feel-good investments, it is likely the investor interest in PE will spike in the short to longer-term. This expansion of the PE pie will of course be helped by its historically steadier IRR as compared to other asset classes (@ annual return of 15% calculated across 10 years)

While any such incremental flows into the PE may still be a blip compared to what’s at stake in traditional asset classes, considering the critical nature of capital availability in building/ growing companies that’d eventually feed the future equity market, I’d think Private Equity in its glow of new found investor love will turn out to be the quintessential seed that’ll regenerate the fiscal ecosystem.

Well it just might be that the hot winds of negative yields could prove a windfall for the VCs & FoFs currently raising funds.

#TheDress gave me #EcomStress

White n gold?

.....I tentatively responded when my sister shared the now viral picture of #TheDress. I soon realized I was the odd ducky (in my sister's words..) in a family/ gene-pool that firmly stood behind the blue n black verdict.

It wasn't the dearth of any other more-pressing topics to deal with (like my brand new car's freshly smashed front bumper) but I too rapidly contracted this abundant online virus and embarked upon a quest to prove to myself (and to my sis’ n others...) the correctness of MY color perception, only to realize that I'm barking up the wrong tree this time around - National Geographic, Dailymail, Wired, ScienceDirect all said the same… damn! No amount of coaxing could make my retina change its perspective nor my brain it's opinion.

Even as I started bothering myself less and less about what made my brain/ retina perceive the blue as white & black as gold & made me a color-duh, I decided I will never ever trust myself again with online purchase of clothes.

Amazon, the loss is yours and yeah do blame Facebook & Google for it!