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The Maggi Noodles Crisis

Nestlé S.A A Brief Introduction

Nestlé S.A (Estd. 1905) is the world’s largest food and beverage

company in terms of revenue.

Headquartered in Vevey, Switzerland.

Nestlé S.A India, a subsidiary of Nestlé

S.A. set

up

factory in 1961 at Moga, Punjab.

its first

It caters to varied product segments Refrigerated Products, Chocolates, Baked Goods, Cereals, Coffee, Water, Infant Foods,

Seasonings, etc.

It could capture the chunk of the food market due to its ability to venture into diversified product segments.

Maggi A Brief Introduction

Maggi was originally a wholly owned Swiss subsidiary that was reputed in the field of seasonings, instant soups & noodles.

Established 1872 by Julius Maggi.

Maggi was the pioneer in bringing protein rich legume meal in the market and followed it up

with a ready-made soup.

In 1947, it merged with Nestle due to changes

in the Organization and corporate structure.

Maggi A Brief Introduction

(Indian Context)

The

the

noodles segment as it almost had 70% share in the Indian Market.

Maggi

Instant

Noodles

monopoly

was

a

in

It is a niche product in its segment as an easy to cook

instant noodles. Its

consumer

base

consisted

of

children

in

which

majority were students.

 

Brand

Ambassadors:

Amitabh

Bachan,

Preity

Zinta,

Madhuri Dikshit.

Market Share and competitors

Maggi had a 70% market share in the noodles segment and hence held a monopoly .

Competition:

Sunfeast Yippee Noodles

Horlicks Foodles

Top Ramen

Knorr Soupy Noodles

Chi g’s Noodles

Its Variants and their popularity

Its Variants and their popularity

Maggi Noodles - Crisis

In May, 2015, the UP Food Safety regulators carried out systematic raids on retail outlets of Nestle selling Maggi Noodles.

Testing in Government Laboratories in UP and Kolkata revealed that I dia’s favorite snacks had:-

amount of MSG or monosodium

7

times

the

permissible

glutamate.

Elemental Lead detected up to 17 times more than the permissible level.

This paved way for the imposing of ban on the popular instant

noodles and the existing supplies were all lifted out of the retail stores.

Thereafter, one after other, 11 states have banned the sale of Maggi Instant Noodles until further notice.

Nestle Damage Control Mode

Issued a press statement on 21st May, which

reassures consumers the brands commitment to

quality.

The Brand has a page Meri Maggi on Facebook

and issued a similar statement through a post.

The post received mixed reactions from followers, some defended the brand while others continued

asking questions on the controversy.

Maggi has increased the ad spots post the crisis .These ads are visible across prime slots i.e. between

The Crisis In Numbers

The Crisis – In Numbers

Implications of the fiasco

Demand & Supply

 

Retailers took maggi off the shelves was one of the first

reason that fall in sales of maggi noodles.

 

Maggie sales fell 60% across India since the controversy broke.

As harmful chemicals like lead and MSG found in samples consumers may feel their health is at stake. This has shaken co su ers’ confidence.

Nestle’s

public

relations

strategy

also

failed

to

take

consumers into confidence. The Maggi controversy has affected all the other packaged food brands since it was a widely used brand.

Implications of the fiasco

Revenue

The fall in sales directly affects the revenue since Maggi is a single largest brand under Nestle India, which usually contributes about 22-25% to its total revenue of the company.

The fiasco has forced Nestle to cut production by one-third,

recalling Maggi from markets across India. Nestle lose about Rs 160 crore in revenue in the quarter to June 2015.

There is a 9 percent decline in the purchase of ready to cook food and 4 percent decline in the beverages purchase. The overall packeged food segment growth has been declined to 4 percent as compared with the 9 percent in the previous year.

Implications of the fiasco

Competition

Maggi dominated its segment with huge market share. The current crisis can prove to be an immense window of opportunity for rival brands such as Yippee .

It gives the chance to woo audiences without competing

with the market leader.

 

They can use the situation as a chance to increase their visibility at retail markets & occupy racks that were

previously dominated by Maggi.

 

They

can

possibly

look

at increasing

their marketing

budgets & media spends.

 

An opportunity to build relationships with audiences and get the consumer confidence back.

Current Scenario

The Indian unit of Nestle had challenged a June 5 order of the

Food Safety and Standards Authority of India (FSSAI) of the

ban on the product.

the

countrywide ban on nine variants of Nestle’s Maggi instant

The Bombay High Court on Thursday

set

aside

noodles.

The court has ordered Nestle India to conduct fresh safety tests on the product before relaunching it.

Nestle has started to pave the way for the brand's comeback with a series of social media ads. Using the hashtag #WeMissYouToo, the company has posted four adverts on

Youtube.

What can Nestle India do

Nestle India could look at roping in a brand ambassador to

advocate their products

The ambassador or the celebrity should have high trust value amongst the audiences.

Maggi has been in the market for years. They can reveal statistics of deaths due to Maggi over the past decade which would be none. Hence using numbers as a positive reinforcement.

Make necessary changes to the product & that adhere to the

norms.

Cooperate with the FDA & redress the issue.

Build a campaign around Maggi being a health conscious brand through its latest wheat, oat & raggi noodles.

Conclusion

Maggi has lost the trust of many customers &

rebuilding that trust will be a challenge for Nestle.

There is an immense window of opportunity

for Maggi’s rival brands. With the lift on ban Nestle will now attempt to win back its customers with an aggressive marketing campaign.