NESTLE Maggi Crisis

NESTLE is an Anglo-Swiss company which started its first condensed milk factory in Cham, Switzerland in
1886. After this, Nestle operations saw an exponential growth to become world’s third largest contender
in food products. In 2014, with a turnover of USD 94 Bn and profit of USD 14 Bn, Nestle had over 2000
brands in its portfolio worldwide with a presence in 197 countries.

The brand Maggi was launched in 1863 when Julius Maggi was requested by the Swiss government to
create a product rich in nutrients for working women. After a merger with Alimentana S. A. in the year
1947, the range of products for Maggi increased increasing the product portfolio of Nestle.

Nestle India

Nestle began its operation in Punjab, in Moga district with eight manufacturing facilities, four brand
offices and a corporate office in the year 1961. In alignment with its global corporate philosophy of
‘Good food, Good Life’, Nestle India launched ‘Share your Goodness’ campaign in March 2014 that had
an interactive platform on which consumers interacted and were then rewarded with Nestle products
and gifts.

Maggi India

India had a total value of INR 4200 crores making it the fifth largest instant noodle market. In the year
1982, Nestle launched Maggi in India and as time passed, Maggi became synonymous with noodles in
the country. In the year 2013-14, Maggi bagged the number one spot, up from the ninth position and
became the Most Powerful Brand and secured its position amongst the 5 most trusted brand in the
country.

The major appeal of Maggi lay in its two-minute cooking time. With initial targeting towards working
mothers, it later repositioned to include children with its catch lines ‘Bus do minutes’, ‘Mummy bhuk lagi
hai’ and many more. Maggi was distributed in over three million outlets in the country of which grocery
outlets accounted for maximum distribution. Small serve single packs costing INR 5 were distributed to
target rural customers whereas the urban population bought noodles for healthy and wellness benefits
available as wholegrain, real vegetables and oat noodles

The Crisis

The storm started when media reports surfaced about the presence of MSG and high levels of lead in
the product. This leaded to several levels of testing in the year 2014. Almost a year later on April 7,
2015, the Central Food laboratory, Kolkata declared that the product had an excessive lead content of
17.2 ppm (parts per million) as opposed to the normal allowed levels of 2.5 ppm, which was nearly eight
times more. A case was registered following this investigative testing.
The Central government directed the FSSAI to investigate. The Delhi government on June 3 banned
Maggi noodles for 15 days which was followed by several other states. On June 5, FSSAI ordered maggi
to recall its product and asked for strict compliance in three days and ordered daily update on the
progress. Post this, Nestle contested this step in the Bombay high court on several grounds, which then
revoked the ban order and asked for further testing in accredited laboratories. A class action suit was
filed by Department of consumer affairs before the National Consumer Dispute Redressal Commission.
All this led to very bad publicity and had tremendous negative effect on the brand image which was
further aggravated by hyper connectivity of todays internet and social media.