Patanjali ads cast a long shadow over FMCG sector

  • IMA had urged action against Patanjali for advertisements promoting the Ayush treatment system while allegedly undermining modern, evidence-based medicine

Suneera Tandon, Varuni Khosla
First Published23 Apr 2024
Patanjali Products
Patanjali Products

The Supreme Court on Tuesday turned the glare on fast-moving consumer goods (FMCG) companies that may be issuing misleading advertisements, asking the Centre to explain the steps taken against such companies since 2018.

A bench of Justices Hima Kohli and A. Amanullah also ordered the ministries of consumer affairs, information and broadcasting, and IT to examine potential violations of the Drugs and Magic Remedies Act, Drugs and Cosmetics Act, and the Consumer Protection Act, and directed them to become parties in the ongoing case against Patanjali founder Baba Ramdev, initiated by the Indian Medical Association (IMA).

IMA had urged action against Patanjali for advertisements promoting the Ayush treatment system while allegedly undermining modern, evidence-based medicine. While hearing the plea, the bench noted that FMCG firms were publishing misleading ads, affecting the public, especially children and the elderly. This, it said, was a case of public interest and hence the scope should be expanded to all FMCG companies beyond Patanjali.

Also Read | IMA Uttarakhand sends ₹1000 crore defamation notice to Yoga Guru Ramdev

“Now, we are looking at everything… we are looking at children, babies, women, and no one can be taken for a ride and the Union government must wake up to this," the bench said.

Those in the advertising and consumer goods industry said the move may set a precedent for large consumer goods makers that account for the largest chunk of advertising in India. The move will help curb false advertisements and ensure consumers make well-informed decisions, industry executives said.

“I think the Supreme Court needs to be applauded for not only taking Patanjali to task but also extending the scope of coverage of its order to other defaulting advertisers. The Drug & Magic Remedies Act and other related provisions have been misused and abused for long, most times with the government looking the other way,” said Sandeep Goyal, chairman & managing director of advertising agency Rediffusion.

The Advertising Standards Council of India (ASCI), an industry watchdog, routinely pulls up companies for misleading advertisements, ensuring that advertisements conform to its self-regulatory code, staying legal, decent, honest and truthful. ASCI declined to comment on the issue.

“This will definitely further the awareness among brands to advertise responsibly. The claims have to be proven. A self-regulatory body like ASCI has been doing a good job to bring responsibility in advertising. The court's statement will impact even other category advertising,” said Krishnarao Buddha, senior category head at Parle Products.

In 2023, fast-moving consumer goods companies spent roughly 31,428 crore in advertising, making it the largest category to advertise, according to a 2024 report by Dentsu and Exchange4Media. FMCG firms account for a third of all advertising spends in India.

Also Read | FMCG ad dollars seen rising in Q4

"It is directionally very good because the Supreme Court is looking at a larger ambit now. There are so many companies that have made big claims and oftentimes, they tend to go unregulated. The bigger companies generally respect ASCI guidelines much more, but a lot of the homegrown companies have gotten by with fairly exaggerated claims, like skin whitening creams or health supplements, or things that can cure you of incurable diseases. All this will have to change now,” said Lloyd Mathias, a business and marketing strategist.

Meanwhile, Ambi Parameswaran, former CEO of advertising firm DraftFCB Ulka said most FMCG companies adhere to the laws of the land and are signatories of ASCI code of conduct. "As long as FMCG and healthcare companies adhere to good practices and the advertising laws, they should not be worried about the SC. But if they violate the laws, ignore warnings repeatedly then they should be hauled up,” said Parameswaran.

On 21 November, the court had warned Patanjali that a fine of 1 crore could be imposed if it did not stop circulating misleading claims and advertisements against modern medicine. Patanjali issued a media statement the following day, denying any misleading claims about its products.

With inputs from Krishna Yadav and Shivangini

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