The Recent Controversy on Maggi: Myth or Reality- Case Study

Introduction

          Nestle is a Swiss company founded in 1866  By Henri Nestle. And Nestle markets in products in approximately 130 countries in the World. Nestle manufactures around 10000 different products. Maggi is first introduced in 1872 in Switzerland by Julius Maggi in Singen Germany. Later, its owned by Nestle Company in 1947. Nestle launched Maggi for the first time in India in the year 1982 with its instant noodles formula (2-minute noodles).  The brand is very popular in Australia, India, Malaysia, New Zealand, Singapore, South Africa.  Maggi has faced lots of hurdles in its journey in India. So they come up with Maggi-2minutes noodles with the price of Rs.2.10 with a closed 100% margin. NIL shifted its focus from working women and targeted children and their mothers through its marketing.

Maggi Product Mix;

1.    Maggi 2-minute Noodles.

2.    Maggi Vegetable Atta Noodles.

3.    Maggi Cuppa Mania.

4.    Maggi Vegetable multigrain Noodles

Various tagline of Maggi

• Value Proposed:- self-fulfillment for moms in cooking evening snake for their hungry children. Tagline:- “Mammy I’m hungry”. -1980
•  Value Proposed:- A quick and tasty food for children. Tagline:- “Fast to cook, Good to eat”. -1980
• Value Proposed:- A tasty and healthy food. Tagline:- “Taste Bhi, Health Bhi”. -2000
• Value Proposed:- Eat Maggi noodles on the go. Tagline:- “Just add gram pain and carry on jaani”. -2000
• Value Proposed:- Rewarding loyal customers by associating with the product. Tagline:- “Meri Maggi”. -2010
• Value Proposed:- creating curiosity among the customers about the new variety. Tagline:- “Guess the taste”. -2011

Controversy

          We know that many people are concerned about Maggi noodles, after the recent events in India. Maggi controversy all began when Vk Pandey, a 40-year old Barabanki based officer of the Food Safety and Drug Administration (FDA) in Uttar Pradesh had collected more than two dozen packs of instant noodles from stores across the state. According to a Returns report, they found a led concentration of 17.2 parts per million, which is way beyond the permissible limit. They also found very high levels of MSG.

   

Nestle India's official statement said 'we do not add Monosodium Glutamate (MSG) to Maggi noodles. we used a raw material that may contain naturally occurring Glutamate(MSG), last year for a test so as to find out whether Nestle India. contained any monosodium glutamate( commonly known as Ajinomoto). A test enhance which not only present in Maggi but in mostly all package food items. 

 

            Soon after the recall of Maggi Noodles from across Uttar Pradesh, other states like Maharashtra and Gujarat also got Maggi noodles tested, results of which are awaited. Recently, Bollywood stars Amitabh Bachchan, Madhuri Dixit and Preity Zinta also got an FDA Notice for endorsing Maggi noodles, with the FDA seeking a report from the stars within 15 days on a claim made in the advertisement regarding the nutrition value of the ‘2-minute noodles’.

Ban across India

1)   Jammu Kashmir      - for 1 month

2)   Delhi                        - for 15 days

3)   Gujarat                     - for 1 month

4)   Uttarakhand             - for 90 days

5)   Kerla & tamilnadu   - 90 days

Strategy adopted to overcome the controversy

In India, Maggi products were returned to the shells in November 2015. Accompanied by a Nestle advertising Campaign to win back the trust of members of the Indian Community. At this time, the Maggi anthem by Vir Das and Alien Chutney took the nation by storm. Nestle resumed production of Maggi at all five India based plants on 30 November 2015.

In India, Maggi noodles carry a green dot, meaning they are specifically formulated to serve Vegetarians, the special formulation is not available in other Countries, unless imported from India.

Current situation of the Company

 Even today, Maggi enjoys a market share of over 70%, despite the presence of a number of other brands. This decade old dominance, however, is set to be shaken  up. Which is valued at around 250 crore. According to Data monitor estimates, the instant noodle market in India is worth over Rs.1300-crore and is  growing is phenomenal of over 17-20% per year. Current rank of this company in India 18 in the brands of top 50 most valuable Indian brands.

In India the current market share approximately 53% in India.

Financial Analysis of the Company before the controversy

Before the controversy Nestle company’s financial reports was good before two years ago. And Maggi was ranked number 18 in the Brands top 50 most Valuable India brands study conducted by Mitt ward Brown and Commissioned by WPP last year with a valuation of $1127 million.  Maggi instant noodles are popular in India and Malaysia.

Market share

Nestle has 39% Market share in India and Malaysia, and had 90% market share in India.

Goodwill in India

 Before controversy Maggi’s Goodwill was good in India last 33 years. Because every Indian people had trust on this product accept few people.

Financial Analysis of the Company after the Controversy

After the controversy Nestle company has face lots of hurdles to  return increase their goodwill and financial position in India. Following the ban, Nestle took a hit of Rs.450 crore  as it destroyed more than 30000 tons of Maggi the firms had reported its first loss in there decades at Rs.64 crore in the April-June 2015 quarter.

The size of the intent noodles category too shrunk by nearly half, to Rs.2000 crore for the full year ended January 2016 from 3400 crore in the preceding 12 months, two officials said quoting data by researcher Nielsen, we remain positive an Nestle from a two-three year perspective.

Impact on Market share in India

Prior to a nationwide ban by the food safety and standards Authority of India (FSSAI). After ban the market share was reduce to 53% in India.

Impact on Selling & Distribution

Nestle India, which following a January-December financial year, reported a decline 17.2% in its not sale for the year ended December 2015.

Impact on Net Profit

After the controversy or between that duration directly impact on the net profit on amount of the Maggi setback net profit for the year fell to Rs.563 crore, from Rs.1185 crore in the previous year. 

Conclusion

After the study or Analysis of this company we founded,  whatever company had faced the problems related to product only for some time and it impact on the company. Between the controversies, Yog guru Ramdev baba also introduced Patanjali Atta Noodles. The taste is nice but still in the end, people will continue to eat Maggi because nothing can beat the taste of Maggi and nothing can satisfy the hunger of Maggi. In our opinion, this controversy was just for few days, nothing else. Yes few people got affected by this incident but besides this people are still in love with Maggi Noodles.