CASE STUDY- NESTLE

Submitted to:
Amity Institute of Aerospace Engineering

In partial fulfilment of the requirements for the award of the degree of

Bachelor of Technology (Aerospace Engineering)

Submitted to Submitted by
Mrs Soni Gupta Jabez Mony Samuel
Enroll No: A3705518007
Batch: 2018-22
ORGANISATION: NESTLE

Ethical issues of Nestle’s Maggi:

History of the organization:
Nestle, a Switzerland company was founded in 1866 by Henri Nestle in
Vevey, Switzerland Going to the history of the Maggi product, in 1870
the Swiss, Julius Michael Johannes Maggi (1846-1912) inherited family
business, a mill in Kemptthal, near Zurich, wanted to engage the factory’s
women workers to prepare a quick nourishing soup and hence Maggi
product started its journey. The company has product portfolio of most of
the food & beverage category and claiming to give consumers tastier and
healthier products to enjoy at every eating occasion and throughout
life’s stages Maggi, Nestlé’s instant noodles brand, has been a household
name in India for 30 years. According to market estimates, Maggi
contributes more than 20% of the $1.5bn annual sales Nestle has in India.
Maggi accounted for 60% of India’s noodle sales last year, according to a
Euromonitor report.

Maggi ranked among the top five most trusted brands last year in a
survey-based ranking issued by India’s leading business newspaper the
Economic Times

Ethical dilemma faced:

Nestle has found itself in hot water in India after the local food safety
regulators said the company’s instant noodles contained unsafe levels of
lead and traces of monosodium glutamate (MSG), contrary to the food’s
labelling. .

Mistake number one was that Nestlé simply ignored the issue for the first
three weeks, even though its flagship brand was involved. Mistake
number two was to issue an impersonal and unattributed company
statement, instead of fielding the company CEO, when it realized that the
issue was becoming serious. The mind-boggling point is that company
strongly claiming
Maggi noodles are safe, still Nestle-India had to withdraw the
noodle product from the markets before going to the court of
law.
The third mistake was to underestimate the power of social media in
India. Nestle is one of the biggest advertisers in India, spending over
Rs 400 crores on advertising a year. Its ad spends on Maggi
brand alone is near about Rs 150 crores. While expenditure on 'laboratory
or quality testing' moved between Rs 12-20 crores.

The final mistake was to take a confrontational and defiant approach with
a strategy to discredit Indian regulators instead of a constructive
engagement

The company should have immediately recognized the risk when the first
recall was issued. The CEO should have faced the media from day one to
explain the company position and what it was doing to address the
concerns. The company should have promptly formed a credible and
independent multi-stakeholder committee to speedily investigate the
matter with daily updates to media. The company should have engaged
with the regulators instead of publicly making arrogant statements
questioning their test methodologies and insisting their own tests were
the right ones

How they solved:

On re-launching 7, 20,000 units of Maggi noodles (12 packs) were sold
through ‘Snapdeal’ with 60,000 units (welcome kit). These welcome kits
consist of a Maggi calendar-2016, a Maggi fridge magnet, Maggi
postcards and a ‘Welcome Back’ letter. As a whole, 45 million packs of
the popular snack within two weeks of its re-launch and the company are
selling the noodles only in 200, 000 retail outlets across 600 cities and
towns. It has a reach of 3.9 million retail outlets.

It took over 3 decades for the Nestle’s instant noodles brand Maggi, to
capture the heart of millions of Indians. Since then, Maggi has become
Indians go to instant noodles and took a major place in households
becoming everyone’s favorite 5-minute snack irrespective of age or
gender.

According to market estimates, Maggi contributes more than 20% of

the $1.5bn annual sales Nestle has in India.
According to a Euromonitor report, Maggi accounted for 60% of India’s
noodle sales last year.