Why did Swiggy shares fall 2.6%? FSSAI issues 9 notices to Instamart over alleged food safety lapses

Shares of Swiggy Ltd, one of the leading on-demand convenience platforms that operates a diverse hyperlocal commerce network, slipped as much as 2.6% to ₹266.13 apiece on the NSE in the early trade on Monday, July 13.

The fall in price was witnessed following the food regulator FSSAI’s action on Saturday.

FSSAI said it has issued nine notices to quick-commerce platform Swiggy Instamart following several consumer complaints, including of alleged supply of rotten and expired food products, against the platform.

In a social media post on X, the Food Safety Standards Authority of India (FSSAI) said it has "issued 9 notices to Swiggy Instamart following multiple consumer complaints alleging violations under the FSS Act 2006."

The FSSAI stated that the consumer complaints "alleged the supply of expired, spoiled, rotten, contaminated and otherwise unsafe food products through Swiggy Instamart".

The regulator has directed the platform to submit a detailed explanation along with a compliance report. Failure to address the concerns could lead to appropriate legal action against the company.

Swiggy Instamart is the quick-commerce vertical of Indian food delivery company Swiggy, offering on-demand delivery of groceries, daily essentials, and household products.

The platform operates through a hub-and-spoke model using micro-fulfillment centres, also known as dark stores, enabling rapid deliveries across more than 120 Indian cities, often within 15 to 30 minutes.

What has Swiggy said?

According to PTI, an Instamart spokesperson said: “We are reviewing the flagged listings by FSSAI and are in touch with the authorities to resolve the same.”

Elaborating on the consumer complaints, the FSSAI mentioned that 'Healthify 100% Whey Protein 1 kg' and 'Noice Homestyle Madras Mixture with Peanuts' were allegedly supplied after their expiry dates.

'Akshayakalpa Organic Egg' was reportedly found expired, rotten, emitting a foul odour, with signs of contamination. Similarly, 'Kakke da Paratha' was reportedly found spoiled, emitting a foul odour.

The FSSAI said that some of the complaints alleged delivery of contaminated eggs and milk, along with damaged packaged food items through Instamart.

"An infant food formulation was reportedly found in a highly deteriorated and unsafe condition, showing signs of contamination and improper storage and handling," it added.

Even after return of this same product, it was allegedly re-supplied.

FSSAI also observed incorrect, invalid or non-existent FSSAI licence numbers. Food business entities were allegedly being listed under names different from those reflected against their FSSAI Registration.

"Some complaints alleged that no satisfactory response, grievance redressal or corrective action was taken despite the complaints being forwarded or escalated, while one complaint stated that only a refund was offered without addressing the reported food safety concerns," the FSSAI said.

The regulator said these notices raised concerns regarding seller onboarding, compliance verification, traceability, food quality monitoring, consumer grievance redressal, supervision of food business activities and the adequacy of food safety compliance systems.

Recent updates

The FSSAI has recently stepped up scrutiny of food business operators (FBOs) and e-commerce platforms over misleading claims, advertisements and labelling violations. The regulator has been issuing notices based on suo moto action as well as consumer complaints.

In the last 2-3 months, FSSAI has issued notices to several energy drink makers, alcoholic beverage companies, food companies and quick-commerce platforms. The regulator has also flagged companies such as Lotte India, Ferns N Petals and Kubera Foods for alleged misleading claims and labelling violations, while six energy drink brands, including Red Bull, Adrenaline Rush, Campa Energy Drink, Sting, Hell Energy and Monster Energy, received notices over alleged misbranding and misleading claims.

The FSSAI has also taken action against quick-commerce platform Blinkit over consumer complaints related to the sale of poor-quality eggs and a case involving a customer who allegedly fell sick after consuming curd ordered through the platform.

The regulator took suo moto cognisance of complaints raised on social media and sought explanations from the company.

Earlier this month, FSSAI issued a notice to Heritage Foods Ltd over alleged misleading claims related to its ‘Fresh Paneer’ product, as part of its efforts to protect consumer interests.

About Swiggy

Swiggy Limited is a consumer technology company operating across multiple segments, including Food Delivery, Out-of-Home Consumption, Supply Chain and Distribution, Platform Innovations, and Quick Commerce.

The Food Delivery segment provides on-demand food delivery services through a network of restaurant and delivery partners, accessible via its mobile application and website. The Out-of-Home Consumption segment offers restaurant discovery and dining solutions through Dineout, along with curated outdoor experiences through SteppinOut.

The Quick Commerce segment provides on-demand delivery of groceries and household essentials through Instamart. The Supply Chain and Distribution segment offers supply chain solutions to wholesalers, retailers, and fast-moving consumer goods (FMCG) brands by leveraging Swiggy’s warehousing capabilities.

The Platform Innovations segment focuses on incubating new service offerings and includes business verticals such as Private Brands, Swiggy-Games, Swiggy Minis, and InsanelyGood.