???????? Nestle adds sugar to baby products in India but not in Europe | ?????? Billion dollar asset manager takes contrarian bet on China over India

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Not all babies are equal: Nestle adds sugar to baby products sold in India but not in Europe & UK

An investigation by Public Eye, a Swiss investigative organisation, and IBFAN (International Baby Food Action Network) found that Nestle adds sugar to baby food products sold in India and other Asian and African countries, while the same products have no added sugar in markets like Germany and the UK.

Why this matters: In Europe, Nestlé adheres to stricter standards, where added sugars are not included in infant formulas and cereals for young children. However, all Cerelac baby cereals sold in India reportedly contain, on average, nearly 3 grams of added sugar per serving.

• There is also a noted lack of transparency on packaging regarding the added sugar content, with Nestle emphasizing the nutritional benefits of Cerelac while not adequately disclosing sugar additions.
• Experts condemn the addition of sugar to baby products due to its addictive nature and the risk of future health disorders such as obesity and diabetes.

What they’re saying: Despite the criticism, Nestle India asserts that they conform to all regulations, have reduced added sugars by up to 30% in the past five years in their infant cereal range, and continue to reformulate products without compromising quality or taste.

• The company claims to have reduced the total amount of added sugars in its infant cereals portfolio by 11% worldwide over the past decade.

Now, FSSAI has said it will initiate action against Nestle if the allegations in the report are found to be true.

• However, Indian regulation that prescribes standards for infant nutrition does not prescribe any upper limit for added sugars. Hence it is unclear what section of the law FSSAI would cite to take action against Nestle, as the company has stated that it complies with local laws.

The intrigue: It isn’t just baby food, some social media users pointed out how Nestle’s formulations for chocolates like KitKat are also vastly different in different markets, a common practice for many food companies, as they cater to specific tastes in different markets.

• In a standard KitKat bar, there are 25% Milk solids in Australia, and just 16.2% in India; and 22% cocoa solids in Australia, against just 4.5% in India.

Of note: In India, doctors strictly recommend not giving sugar to infants less than two years old, while the Indian Council of Medical Research (ICMR) recommends not more than 5–7% of total energy coming from added sugars for kids above 2 years.

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Asset manager Ashmore Group takes big contrarian bet on China over India

Ashmore Group has shifted its investment strategy, reducing exposure to Indian equities and increasing its allocation to Chinese stocks in its emerging-markets fund, influenced by a divergence in valuations between the two markets.

• With $6.5 billion invested in emerging equities, the fund has allocated 26% of its EM equity fund to China, while reducing India to less than 13%.

Why? The asset manager's portfolio manager, Edward Evans, highlights India's high valuations, with equities trading at 23 times next year’s expected earnings, and the risk of authorities curbing speculative investing, as reasons for reducing their position in India.

• China's equity market, with valuations at 9 times earnings and signs of economic recovery, presents a better risk-reward balance according to Ashmore, despite the acknowledged risks from geopolitical tensions, a cooling economy, and a property sector crisis.

Between the lines: Ashmore's contrarian move comes at a time when nearly half of Bloomberg MLIV Pulse survey respondents favoured India over China and Japan for investments.

• The fund managed by Ashmore has seen an average annual return of 5% over the past five years, which is double the average return of peers in emerging markets.

Of note: London-based Ashmore is known for its strong contrarian bets, especially in emerging markets. In 2020, Ashmore Group faced significant challenges due to its contrarian bets in countries like Argentina, Ecuador, and Lebanon. These bets backfired, resulting in substantial losses for the firm and its investors.

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