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Nestls Half-Billion-Dollar

Noodle Debacle in India

Presented by :
NAMIT SHARMA
MANAS RANJHAN
ABHINAV MAHAJAN
NISHANT RAGHUWANSHI
Top food processing companies
in the world(2017)
Nestle Around The Globe
It was Founded in 1866 by Henri Nestle and it is a Swiss
transnational food and drink company headquartered in Vaud,
Switzerland
It has been the largest food company in the world measured by
revenues and other metrics, for 2014, 2015, and 2016
Nestl has 447 factories, operates in 194 countries, and employs
around 339,000 people
Nestle market its products in 130 countries across the world
Ranked No. 66 on the Fortune Global 500 in 2016
Nestle is the main shareholders of L'Oreal, the world's largest
cosmetics company
Products of Nestle
1. Noodles
2. Cereals
3. Coffee and Tea
4. Confectionary
5. Dairy products
6. Frozen food
7. Snacks
8. Chocolates
9. Bottled water etc.
NESTLE MAGGI
i. Nestle, the worlds largest food and beverage company, has
sold Maggi in India for more than 34 years.
ii. Nestle unleashed brand Maggi in India in 1983 with launch
of its traditional 2 minutes noodles in its masala, tomato
and chicken flavours.
iii. Indians consumed more than 400,000 tons of the instant
noodles.
iv. Maggi was commanded a market share of around 75 % prior
to five month ban in 2015 and now still has commanded 60
% market share in market.
v. It generates huge revenue for the company. In 2014 it
generates almost $ 1.6 billion in India.
About the Case
* Maggi at that time was one of Indias five most trusted brand
and Mr.Sanjay khajuria was head of corporate affairs for
Nestle India.
* Maggi ban started with the first phase of inspection in
Barabanki, Uttar Pradesh, from where the food inspector
allocated a batch of 12 Maggi packets to the research lab in
Gorakhpur
* Where the presence of excess lead and MSG (monosodium
glutamate) was confirmed.
* In June 2015 the Food Safety and Standards Authority of India
(FSSAI) ordered Nestle India to withdraw all nine variants of
Maggi instant noodles from the market terming them unsafe
and hazardous for human consumption.
About the case
*It was confirmed that in the February 2014 manufactured
batch of Maggi packets which was 8 times higher than the
permissible limit.
*MSG increases the body MSG level by 20% which is harmful for
humans especially children.
*Nestle India has its own argument regarding the MSG content
in Maggi. They claim that the MSG found in Maggi is not
added by them which they clearly mention in the Maggi
packets as NO ADDED MSG.
*It is also challenged by Nestle India that out of the 1000
samples inspected of the 12.5 crore Maggi packets, the found
lead content on an average does not exceed the prescribed
level of lead content.
Cost or Loss to the Company
*The Maggi meltdown would prove costly Nestl lost at least
$277 million in missed sales
*1250 crore loss of brand value.
*Nestle India faced Losses Because of Maggi Ban at Rs.320 Cr
From which stocks of Maggi noodles worth Rs. 210 crore were
being withdrawn from the market and destroyed even as
another Rs. 110 crore worth of finished and related material
stocks remained at its factories and distribution centres.
START OF THE SAGA
* Mr.Sanjay Singh who was the food-safety commissioner
of U.P. sent four packages of Maggi to laboratory for
testing.
* There was trace of MSG while its packaging said it
didnt so it was punishable offence but Nestle ignored
it.
* If Nestle had paid the penalty this story might have
ended there.
* Samples were again tested and results were shocking
MSG was present and there was presence of huge
amount of lead.
NESTLE WAY OF HANDLING
* Protonotarios was the man in charge of quality and
safety at Nestl India.
* Nestle was confident in its companys quality assurance
system that the monitoring process would have picked
up something if it wasnt okay.
* So Nestl India prepared a stack of its internal
monitoring documents and mailed a response to the
Uttar Pradesh food-safety officials
*Soon the Indian press got wind of the story
* Within a week speculation about a Maggi ban was
everywhere and yet Nestl didnt issue a statement on
the matter
* Nestle wasnt more proactive because of general rule
Nestle was dealing directly with authorities rather than
through the press.
* Nestle stayed quiet as they were still gathering facts
and testing which make them appeared paralyzed or
worse guilty.
* As rumours were spreading, Mr.Malik asked every state
food-safety commissioners to test maggi and submit
their findings to FSSAI
* Nestle CEO Paul Bulcke arrived in India with his team to
attend conference mneeting.
* The only way to regain control of the narrativeand
win back consumers trust was to pull Maggi and
relaunch
UPHILL JOURNEY BEGINS
* The head of the FSSAI was not satisfied with the
developments so he countered Nestls move by
implementing a temporary national ban of Maggi
* Mr.Bulcke attended the press conference remarking
that maggi is safe.
* Six days after the government issued its temporary
ban, Nestl India filed suit against the FSSAI in Bombay
High Court
* Both nestle and government argued on different
points.
* But was there lead in Nestles Noodles?
* InJuly 2015, the Bombay High Court overturned the
governments ban, asking that three NABL (National
Accreditation Board for Testing and Calibration
Laboratories) accredited labs test Maggi noodles for
lead. These labs found all 90 samples - covering six
variants, with lead levels well within the food safety
limits specified by the Indian authorities.
* Entered the competitors and conspiracy theory
began. Nestl has a wily new competitor in the
noodle market
MISTAKES BY NESTLE
* It was blinded by pride
* It failed to think two steps ahead
* It overlooked context
* It communicated but didnt engage
STRATEGIES IMPOSED:
* The company took steps to up its communications game
* The company created a Maggi information hub on its
website, where visitors could view its lab reports and read
up on MSG.
* It publicized its recall efforts and it invited journalists to
tour its Quality Assurance Center in Moga.
* Nestl India also got a boost in late July from the arrival
of Suresh Narayanan as its new top executive
* Nestl had gotten official clearance from the Bombay
High Court in October and spent weeks preparing.
* Nestl launched a #WeMissYouToo campaign on YouTube
a series of minute-long spots starring handsome bachelors
who are forlorn without their instant noodles
Thank you