A CASE STUDY ON REPOSITIONING OF MAGGI IN INDIA

SUBMITTED BY-

ANSHU KUMAR

ROLL NO – HRD1815235

BALAJI INSTITUE OF MANAGEMENT AND HUMAN RESOURCE

DEVELOPMENT

S.NO. 55/2-7, TATHAWADE, OFF MUMBAI- BANGALORE BYPASS,

PUNE- 411033, MAHARASHTRA

1
 Declaration
I Anshu Kumar, student of BIMHRD- Balaji Institute of Management and Human
Resource Development Pune hereby declare that the case study entitled
“REPOSITIONING OF MAGGI IN INDIA” has been entirely prepared by me and does
not involve plagiarism.

I declare that the work submitted here is done by me and to the best of my knowledge; no
such work has been submitted by any other person for the award of this degree.

Date: 28/02/2020

Anshu kumar

Place: Pune

2
 TABLE OF CONTENT
S.no Title Page no.
1 Executive Summary 4

2 Introduction 5

3 Objective 8

4 Company Overview 9

5 Analysis 16

6 Case solution 18

7 Learning Objective 19

8 Reference 20

3
 Executive Summary
At present, India’s Food and Beverage Industry might be a vibrant and thriving scene, but
it is highly competitive. With improved standards of living, more and more individuals
coming forward to experience various cuisines from India and across the world. Today’s
generation is extremely conscious about their health. Healthy snacking, in particular, has
been fueled in the lives of consumers who focus on diet, nutrition, and wellbeing.

Maggi ,one of those famous snacks by Nestle, is being consumed by a large target
audience. However, we came across a report of Food Safety Regulator which suggested
that Maggi is unsafe and hazardous for human consumption due to the high presence of
MSG (Monosodium Glutamate) in it. Besides, there was an argument of FSSAI who
claimed the composition of lead in few of the samples of Maggi is exceeding the
permissible limit. This issue impacted the brand image of the product as well as the firm.
This led to the huge loss to its sales as well as decline in the sales.

Though after proper investigation the government removed the ban but the challenge
persisted even after. The challenge of Maggi to regain its customers took a new level of
difficulty with the entry of new players in the market. Target audience started switching
to different options for snacks and breakfast. The issue not only impacted the profits but
also the revenue of the firm.

However, Nestle came up with some new strategies to compete with the existing and new
competitors and also to regain its losses due to ban. The new strategies focused on online
selling, increase in product line, positive publicity, rebranding etc. The repositioning of
Maggi is a great example on how to overcome from the negative branding , huge losses
etc. and maintain its existence as before.

4
 Introduction
The Maggi brand was founded in Switzerland by Julius Maggi in the year 1886. He
created a recipe, using the various flavors that might add taste to the food. He was
requested by the Swiss Government to create a food product that is not only tasty but also
fasts to prepare. He came up with the instant pea and bean soup, after experimenting with
many flavors. In the late 19th century, Julius Maggi was thinking about preparing various
food products which would be available cheaply everywhere and at the same time
nourishing the workers. That's when he came up with food items such as soups, sauces,
and flour, made from pulses that were full of nutrients and most importantly easy to
digest. The products have been an instant hit with everybody and Maggi has started
spreading its wings to different regions of the world. By 1888 the brand had made its
presence felt in various countries such as the United States, France, United Kingdom,
Germany and Italy.

Maggi has become India's most important, dependable and valuable food brand. It has
acknowledged the changing lifestyles of families, delivering goods the family enjoys and
continually innovating value-adding products. Maggi the hot favourite among all the
country's kids, noodles have come a long way since they were introduced in 1983. In
many families it was called snacks, and in many other homes it was a simple diet. When
people became more busy and busier every day, packaged and ready-to-eat foods also
started to gain quite a considerable share in the Indian food industry. Because of Maggi
instant noodles have become a part of Indian homes ' food habit. Maggi... Homes.
Homes. Maggi has moved from being a 5 pm snack to being part of the average Indian
household's breakfast, lunch, and dinner. But the ban on Maggi in the recent past has
created Nestle's negative impact and has created waves in the fast-food industry. The case
study is an attempt to explore the various Maggi problems, possibilities, and
opportunities.

5
He founded the company Maggi GmBH in Singen, Germany in the year 1897, which was
later acquired in 1947 by the Nestlé Group. Nestle group was founded in 1866 and
engaged in the manufacture of dairy products, processed food goods, bakery products,
chocolates, confectioneries, etc. Maggi instant noodles are popular in various countries
such as India, Malaysia, Pakistan and the worldwide pole.

Year 1982: The first noodle product in India was launched by Nestle with the brand
name,' Maggi' with the slogan–two minutes which became an instant.

Year 1997: The demand for the Maggi took a downturn because of stiff competition from
the contemporary brands. The company changed the Maggi's taste and came up with the'
Tastemaker' flavoring agent. Nevertheless, the demand for the product could not increase
and turned out to be a total failure. In fact, it has been hard to change the people's
traditional eating habits in India.

1999: Maggi uses the old recipe to prepare the noodles, with the main goal of increasing
sales. The punch line came up, "Quick to Coo...

Year 2001: Maggi Noodles captured India's market share of large instant noodles.

Year 2009: Maggi celebrated 25 years of Maggi noodles and also brought out a new
product named the Maggi Pazzta at the same time.

Year 2012: Bollywood actor, Mr Amitabh Bachchan became Maggi's brand ambassador.

Year 2015: This is a moment when the mishaps for the Maggi brand started. India's Food
Safety and Standards Authority (FSSAI) imposed a nationwide ban on Maggi due to the
high levels of lead and monosodium glutamate (MSG) in the noodles. Before the ban, the
company enjoyed market share of around 80 percent -90 percent but its share plunged to
zero after the ban.

Year 2016: The countrywide ban on Maggi was lifted by the Bombay High Court on 13
August 2015 and in the following year, i.e. 2016, Nestle India relaunched Maggi on the

6
Indian market after obtaining the clearance certificate from the National Accreditation
Board for Testing and Calibration Laboratories (NABL).

Year 2019: Maggi noodles again find themselves in the hot soup after the company
admitted to India's Supreme Court that their noodles contain the lead content. Currently,
the company has decided to release advertising campaigns mentioning the' Trustworthy
Facts' about its noodles and to win the trust of the Indian people.

"Simply good," in accordance with Nestlé's global commitment, has been initiated by
Brand MAGGI which firmly forms part of our objective and values of improved quality
of life and healthier future.

The Simply Good trip in India has begun with the favorite2-minute iron-fortified MAGGI
Masala Noodles, which now provides consumers with 15% of their daily Iron supplies.

Iron deficiency is one of our country's most severe micronutrient defects. Not many
people are aware of the problem, but in 2015 and 2015, over one-half of Indian women
and children are iron deficient, according to the National Family Health Survey. In
contrast with the popular belief, that iron deficit prevails only in rural parts of the
country, MAGGI Noodles is an equal problem between urban and rural Indian
households, with about 70 percent urban and more than 2.5 organic foods which are
consumed annually (2 times Indian population).

With this goal we have added Iron Goodness in every MAGGI 2-Minute Masala Noodles
pack. We have also set up a helpline number for our consumers where they can receive
all the necessary information about the significance of foods rich in iron and iron that
should be incorporated into their diet.

7
 Objective

• To understand the controversy of Maggi with FSSAI.

• To provide the solution on relaunching, rebranding and increasing the sales of
Maggi.

8
 COMPANY OVERVIEW
Maggi has become India's most important, trusted, and valued food brand in the last 32
years. It has acknowledged the changing lifestyles of families, delivering goods the
family enjoys and continually innovating value-adding products. Maggi the hot favourite
among all the country's kids, noodles have come a long way since they were introduced
in 1983. In many families it was called snacks, and in many other homes it was a simple
diet.

Day after day as people became more busy and busier, packaged and ready-to-eat foods
also began to gain quite a formidable share in the Indian food industry. Because of Maggi
instant noodles have become a part of Indian homes ' food habit. Maggi has moved from
being a 5 pm snack to being part of the regular Indian household's breakfast, lunch, and
dinner.

Issue and Controversy:-

It all started in May 2015, Food Safety Regulators from Barabanki, a district of Uttar
Pradesh, India reported that samples of' Maggi Two Minute Noodles ' had unexpectedly
high levels of monosodium glutamate, and up to seventeen times the permissible lead
limit. A repeat study was also performed at the Kolkata Central Food Laboratory, a
referral laboratory. The Gorakhpur laboratory checked monosodium glutamate (MSG) to
verify Nestle's argument that Maggi had none. All tests contained MSG; however,
according to Uttar Pradesh authorities, the Kolkata lab found very high quantities of
arsenic, 17.2 parts per million.Because of these results,

on 3 June 2015, the Government of New Delhi suspended Maggi's sale in New Delhi
shops for 15 days.

On 4 June 2015, the Gujarat FDA suspended the noodles 30 days after, among other
items, 27 out of 39 samples had been found with unacceptable levels of metallic lead. As
of 4 June 2015, Assam had banned the sale, distribution and storage of Maggi's "extra
delicious chicken noodles" variety for 30 days after testing at the state public health

9
laboratory concluded that the particular variety contained added MSG and excessively
high lead content.

Some of India's biggest retailers such as the Future Group that includes Big Bazaar,
Easyday and Nilgiris have placed a nationwide ban on Maggi. Multiple state authorities
in India subsequently found an inacceptable amount of lead and it was banned in more
than five other states in India.

Tamil Nadu's government also banned Maggi on 4 June 2015 because of excessive
amount of lead and other components. The Government of Andhra Pradesh outlawed
Maggi on 5th June.

On 5 June 2015, India's Food Safety and Standards Authority (FSSAI) ordered a recall
from India of all nine licensed varieties of Maggi instant noodles and oats masala
noodles, indicating them to be unhealthy and hazardous to human consumption. On the
same day United Kingdom's Food Safety Agency launched an investigation to identify
lead levels in Maggi noodles.

On 6 June 2015 India's central government banned unlimited selling of Maggi noodles
nationwide. Nepal also suspended Maggi indefinitely because of concerns about the
amount of lead in the drug. In five African nations-Kenya, Uganda, Tanzania, Rwanda
and South Sudan, Maggi noodles were withdrawn by a super market chain following a
complaint from the Kenyan Consumer Federation.

Following the FDA lawsuit at the Barabanki court in Uttar Pradesh, India's Food
Minister, Mr. Ram Vilas Paswan ordered India's Food Safety and Standards Authority
(FSSAI), to conduct the nationwide Maggi examination.

FSSAI struck Nestle hard claiming that 30 of the 72 samples tested positive for
dangerously high lead levels and even MSG,

Nestle India announced that it would temporarily stop selling Maggi Noodles until the
situation is resolved in the light of growing consumer confusion due to an Indian
government laboratory detecting lead levels above permissible limit. India's Food Safety

10
and Standards Authority (FSSAI) issued an order to halt sale and manufacture of Maggi
noodles from the Indian market.

After the prohibition, Nestle India conducted over 3,500 tests in both national and
international accredited laboratories, representing over 200 million packages for testing
and all the reports are clear. However, MAGGI NOOODLES shipped from India have
been found safe for consumption by various countries including the US, UK, Singapore,
Australia and others. Both samples were tested by three accredited laboratories by the
Bombay High Court and were approval by the National Accreditation Board for Testing
Calibration Laboratories (NABL).

Nestle India then lodged a legal petition with the Bombay High Court, requesting a
judicial review of the order.

After further trials by three independent laboratories with plum content within the
permissible limits, the Court ruled in favor of nestlé and reversed the government's ban
on Maggi noodles. Nestle India is now returning Maggi Noodles to the marker after a 5-
month break following compliance with the Bombay High Court's orders.

The problem of Maggi breaching the Food Safety and Standards Authority of India
(FSSAI) laws has been taken so seriously that it has even called for the testing of four
Maggi variantsUseful Pasta with Tastemakers. Later it ordered testing of different brands
of noodles, pasta and macaroni, including ITC, Indo Nissin Food Ltd, GSK Consumer
Helathcare, CG Foods India, Ruchi International and AA Nutrition Ltd. The regulator has
requested that goods registered with it be reviewed.

Losses and decline in sales Due to the removal of stocks of Maggi noodles, Nestle India
announced on Wednesday a net loss of Rs. 64.40 crore for the second quarter ended June
30, 2015, its first quarterly loss in at least 17 years. It comes on the back of a net profit of
Rs. 287.8 crore in last year's corresponding quarter and a profit of Rs. 320 crore in the
previous quarter ended in March 2015. This loss is mainly due to Maggi being banned as
it accounts for nearly 20 per cent of Nestle India's revenue.

11
The dispute over the Maggi not only impacted the company's profits but also its sales.
During the quarter, Nestle India announced a 20.1 per cent decline in overall net sales.
Net domestic sales were down 20.6%. It comes as a setback to the firm which in the last
few quarters posted record profits. Although net profit for the company crossed Rs. 300
crore mark in September 2014 for the first time, it reached an all-time high of Rs. 326
crore in December.

Net sales worth Rs. 288.4 crore were reversed over the quarter in relation to Maggi
noodle stocks already sold and removed from the market, in addition to the loss of sales
due to the business disruption.

While the gross sales quantity (in metric tonnes) for Nestle in India contracted 0.6
percent over 2013, the PDCA segment experienced a 3.7 percent increase in sales
quantity for the year ended December 2014. Milk products and nutrition segment, which
is Nestle India's largest segment, accounting for nearly 45 per cent of the company's gross
sales revenue, saw it decline by 2.3 per cent in 2014 and fell to 135,591 MT. The
segment also experienced a volume contraction in 2013 over 2012. The volume within
this segment has been declining for several years now and is now down from 1.44.397
MT in 2010, to 1.35.591 MT.

12
Past Nestle Problems This is not the first time that Nestle has been in headlines for being
socially irresponsible. One of its Kit Kat products was targeted in March 2010 for a
boycott by Greenpeace (an NGO) for the use of palm oil which the environmental
organization claimed resulted in the destruction of forest habitats for orangutans in
Indonesia. Nestle later announced a partnership with the Trust of the Forest to create
responsible Guidelines for the production and ensuring that its goods have no impact for
deforestation.

Nestle has faced criticism of its ads in developing countries not adhering to advertisement
laws and making misleading claims in developing countries. Nestle mistakenly aired a
commercial on British television in October 2008 intended for Bangladesh television.
The publicity made false claims that the noodles would help build strong muscles, bone
and hair. The British Advertisement Standards Authority has stated that the advertisement
has not complied with the new EU consumer protection legislation which requires
advertisers to provide evidence of health claims.

Competition:- Maggi has grown drastically in the last three decades because it had no
serious competition. Maggi has grown exponentially to become a generic brand and has
taken the instant noodles category single-handedly from being almost non-existent to a
Rs. 1,200 crore one, of which it currently has approximately 70 per cent share, according
to industry estimates. Originally, Maggi only faced pressure from the' Top Ramen' of the
Japan-based Nissin Group, and the CG Foods ' Wai-Wai ' Noodles based in Nepal.

Wai-Wai, until recently, was limited to West Bengal and Sikkim's eastern sector where it
dominated 70 per cent of the market. His plan was to build up the distribution network
for the first time, which he did successfully, the brand was available on super stores
shelves as much as in local Kirana shops. It was then that they began to build the
company. On the other hand, Top Ramen was aggressive in marketing; he even roped as
the brand ambassador in Shah Rukh Khan, but failed to set up his distribution network.
The company had entered into a distribution tie-up with Saffola and Parachute owners
Marico.

13
Today Wai-Wai works toward a national presence. CG Foods, which had manufacturing
units in Assam and Sikkim, has recently set up a new plant in Rudrapur, Uttaranchal, and
is also looking to acquire a South or West India FMCG business. In addition to hiring a
new agency Dentsu, Top Ramen has also moved to set up its own distribution network to
give it a fresh marketing push. The brand is planning to start itself with a new look and a
new taste.

The year 2010 however saw a sudden spurt in the category of instant noodles. Two major
players of the FMCG, GSK and ITC, decided to venture into the market, nearly 20 years
after the Top Ramen of Nissin Group decided to try their luck. GSK introduced Foodles,
though

One reason we see a spurt in this segment is that it continues to grow at 23 per cent.
While it is true that consumers are aware of instant noodles in both the urban and semi-
urban markets, the hinterland and interiors markets are still to be tapped. This offers
enormous scope for growth. The category must yet penetrate deeper into this country's
deepest regions. The other reason for the growth is because the profit margins are very
high in the category of instant noodles. This was a lucrative opportunity for businesses
like GSK and ITC looking to diversify into other categories

The ban on Maggi became the perfect time for the entry of new players into the category.
They just have to launch a nice, tasty product, and work on its distribution. Taking this
opportunity to fill the noodles market void, on 16 November 2015, Baba Ramdev
launched a Patanjali noodles in 70 gram packs at Rs. 15 per package. It claimed to be the
cheaper rivals with an eye to take on Nestle's Maggi, the marker pioneer, who is back in
shelves after FSSAI's five-month ban. But, it got into major trouble soon after its launch.
The packet of noodles showed a Food Safety and Standards Authority of India (FSSAI)
license number. But when contact was made with Mr. Ashish Bahuguna, Chairman of
India's Food Safety and Standards Authority (FSSAI), he said that Patanjali has not been
granted approval or license for its instant noodles. Baba Ramdev said after the
controversy that representatives of the company will call on FSSAI officials to sort out
the issue in a friendly manner.

14
The biggest new rival for Maggi will be Patanjali Noodles as it is an initiative of Baba
Ramdev, who has been in the FMCG industry in India for quite a long time, who has a lot
of fans behind him, who inspires people to buy Indian goods, who has massive funds, and
last but not least, who has good political support.

Nestle India's Maggi Noodles, which has dominated India's instant noodles market for
almost three decades, will face tough competition with recent new entrants, such as
Sunfeast Yippee!Hindustan Unilever's (HUL) Knorr Soupy Noodles, Top Ramen and
Ching's Secret and the Patanjali Noodles new entrant.

Issue with FSSAI In October 2015, after Maggi's ban, India Today's television team
conducted a sting operation in which they approached officials of FSSAI claiming to
have a high-lead food product. One of them agreed to pass the samples without having to
do any testing. He told the team that on an annual basis, they need a pay of Rs. 20,000.

He disclosed that by intentionally adulterating it, milk samples from one of India's best
known firms had been rejected because the company did not agree to bribe the inspectors.

He further revealed that they sometimes exert pressure to declare some established brands
' food samples unsafe.

He also said Maggi is an international brand, there may be a possibility that somebody
has asked for a donation and the company has denied. He also said the laboratories and
samples are under government, it can do anything.

Minister of Food and Consumer Affairs Ram Vilas Paswan, reacting to the incident, said,
"Quality goods are being branded as sub-standard, and such corrupt officials are moving
faulty products on. This is a major crime and I seek the strongest possible action against
all those found guilty and promised to take serious action, though his ministry does not
administer FSSAI. Commenting on the reports, the Union Health Ministry stated that
FSSAI had made it clear that the officials who have been involved in the sting operation
are not working in FSSAI but are UP State government employees.

15
 ANALYSIS

Porter five force model

Threat of Substitutes

• Pasta , soup, choumein

Threat from new entrant

• HUL (knoor soupy noodles)

• Big Bazar (Tasty Treat)

Bargaining power of Customer

• Maggi noodles face various competitors in market. Thus increase the customers
bargaining power

Industry Rivalry

• ITC (Y ipee)
• Patanjali Atta Noodles
• Top Ramen

Bargaining power of Supplier

• The suppliers of the raw materials of Maggi are the same for its competitors also.
Hence, it increases the bargaining power of suppliers.

16
 Competitor Analysis

Categories Maggi Yippee Patanjali Atta

noodles
Price Rs 5, 12, 45, 89 10,45, 67,78 10,12, 40,

Revenue 12,000 crore 1,000 crore 2,000 crore

Flavors Special Masala Magic Masala Chatpata Masala

Chicken Noodles Madly Classic Masala
Atta Noodles Manchurian Desi Masala
Oats Masala Truly Chicken Veggie Masala
Masala Pasta

Positioning Two minute Noodles Non Sticky and Jhatpat banao

Tasty befikar khao

17
 Case Solution
• Increasing the Product Line

Adding now products would stimulate the customers to try new products which would
also help the company to generate sales.

• Target Children and Women

Advertisements should be created mainly focusing and targeting children. After children,
women would have a significant role to play in deciding what their family members
should eat and what they should not eat.

• New Brand Ambassador with Social Concern

It was used by brand ambassadors such as Amitabh Bachchan, Madhuri Dixit and Preity
Zinta. This is a good opportunity for Maggi to use a new face to give the label a fresh
look that would definitely help in creating brands.

• Entering the Rural Market

A significant portion of India's population lives in rural areas. So, Maggi should focus on
making strategies which would help them to enter the new market

• Offering High Profit Margin to Middlemen

Customers do not contact the manufacturer, distributor or the entire seller; they compete
with the retailer directly. Companies should see how, compared to competitors, they
could give a better profit margin. Giving a higher profit margin would help to increase
profits, as they would promote their product in contrast with others. There is every
possibility that the company can earn more profit through this.

18
 Learning Objective
The real credit goes to Maggi’s campaign team for pushing all the right buttons and
ensuring its presence in every household. Their strategy when it comes to television
advertisements or even stills is so apt that when we see it, we can not only feel the hot
masala-filled noodles detangling in our mouths, but we can smell it too.

Maggi has always made family-based advertisements to attract its customers. Most of the
ads centre around mothers delighting their children with their favourite two-minute
noodles with a storyline of how the child was having a bad day at school or the child
growing up to use the mother’s special Maggi recipe to show her that she still needs her.
Either which way, the narrative revolving around the mother-child duo (in most of the
ads) strikes a chord with the users, who then subconsciously start noting the family value
the product manages to sell. Quite naturally, the first ad after the Maggi re launch was of
a mother speaking nostalgically about her child’s tryst with his favourite noodles, thus
further adding to the emotional value of the customers right there.

After the fiasco of the Maggi ban, its parent company Nestle decided to increase its
spending on television commercials, leading to a growth of its ad volume to about 96
percent by September, 2015 — two months prior to the re launch of the famous
noodles, according to various data estimates. The first print advertisement that
accompanied the announcement of the relaunch read — “Your Maggi is safe, has always
been.”

Today, we are back consuming our favourite pack of two-minute noodles without a
single thought about the fact that it was banned for health reasons a little over a year ago.
Not only did Maggi manage to save its reputation and get back a steady customer base, it
taught us a thing or two about smart marketing!

19
 References
https://economictimes.indiatimes.com/industry/cons-products/fmcg/tata-consumer-
products-hopes-to-grow-faster-than-fmcg-sector/articleshow/74298779.cms

https://www.livemint.com/Companies/bnpYRw229eKTvPoFq7Q4eJ/Maggi-attains-over-
60-market-share-touches-precrisis-leve.html

https://www.google.com/search?q=www.nestle.com&oq=www.nestle.com&aqs=chrome.
.5j69i57j5l6.8518j0j1&sourceid=chrome&ie=UTF-8

http://www6.itc.com/?tdfs=1&s_token=1582742398.0022434162&uuid=1582742398.00
22434162&kw=Live+Video+Broadcast+Platform&term=Instant%20Activation%20Dedi
cated%20Server&term=Live%20Video%20Broadcast%20Platform&term=Help%20Des
k%20Ticket%20System&term=Accident%20Claim%20Lawyers&backfill=0

https://www.google.com/search?q=patanjali+atta+noodles&oq=www.patanjali+aata+&a
qs=chrome.2.69i57j0l7.10750j1j9&sourceid=chrome&ie=UTF-8

20