MAGGI by NESTLE

CRISIS faced by Maggi in India for adulteration charges

A brief about the case:

A report-explaining crisis faced by Maggi (by Nestle) in India upon adulteration charges. It’s
not the first time when Maggi is facing such charges for adulteration. Maggi being the most
favorite noodle brand amongst Indians regardless of the age-group, was into controversies for
food adulteration, presence of toxic chemicals, harmful for consumption.
This report discuss various aspects of crisis faced, and effect on it’s outlook in Indian markets
and people’s choice, their reactions and reviews, different rescue strategies by NESTLE to
overcome the problem and finally sustaining in the market and planning strategically for future.
The “Noodle Invasion” on India’s middle class goes back to 1983, when Maggi Noodles made
its debut. Michel Johannes Maggi (1846-1912), of Switzerland, is considered the founder of
the Packaged Food Industry that started in 1886.
Till the 2015 Ban by FSSAI, Maggi had a 70% share of the Rs 4000 Crore (+) Noodles market
in India. Maggi Noodles sell in 130 countires across the Globe.
By January in New Delhi, orders by The Supreme Court; gave the National Consumer Disputes
Redressal Commission (NCDRC) the go-ahead to proceed with a class action suit brought
against Maggi noodle makers Nestle three years ago by the Centre for allegedly selling noodles
that fell short of the existing food standards.
The Centre had filed a class action suit against the company in 2015 in an unprecedented move
seeking Rs 640 crore by way of compensation for allegedly selling noodles containing
excessive lead and flavour enhancer MSG to consumers.
Company History:
Nestlé S.A. is a Swiss multinational food and
drink processing conglomerate corporation
headquartered in Vevey, Vaud, Switzerland. It is
the largest food company in the world, measured
by revenues and other metrics, since 2014.
Maggi is an international brand of seasonings, instant soups, and noodles that originated in
Switzerland in late 19th century. The Maggi company was acquired by Nestlé in 1947.
Nestle acquired Maggi in 1947 in India. Nestle has 8 manufacturing facilities- Moga (Punjab),
Choladi (Tamil Nadu) Nanjangud (Karnataka), Samalkha (Haryana), Ponda (Goa), Bicholim
(Goa), Pantnagar (Uttrakhand) and Tahiwal (Himachal Pradesh). Noodles are made in Moga,
Pantnagar, Nanjangud and Tahiwal.
The company originated in Switzerland in 1884, when Julius Maggi took over his father's mill.
He quickly became a pioneer of industrial food production, aiming to improve the nutritional
intake of worker families. Maggi was the first to bring protein-rich legume meals to the market,
and followed up with a ready-made soup based on legume meals in 1886. After that Julius
Maggi introduced bouillon concentrates, first in capsules, then in cubes. In 1897, Julius Maggi
founded the company Maggi GmbH in Singen, Germany.
In 1947, following several changes in ownership and corporate structure, Maggi's holding
company merged with the Nestlé company to form Nestlé-Alimentana S.A., currently known
in its francophone home base as Nestlé S.A.
Nestle India Ltd's popular instant noodles brand Maggi has attained 60% market share and has
almost made its way back to the pre-crisis level in terms of value, as mentioned by a top
company official. However, when it comes to volume, Maggi still has some ground to cover.
The instant noodles known for its cooking time of 2 minutes used to dominate the market with
75% market share before its ban in 2015.

Maggi Swot analysis

From the house of Nestle, Maggi is one of the most known brands and the clear leader in the
packaged food segment. The tagline “2 minutes noodles” is true to date. This is because
people love the taste of Maggi. And at the same point, the distribution of the product is so far
and wide that there have been stories written on “Meri Maggi”.

Moreover, the growing popularity of Maggi has spawned many related products as well,
leading to the rise of a complete umbrella brand in the name of Maggi. Such a company is
bound to have more strengths then weaknesses. So without further ado, let us delve in the
SWOT analysis of Maggi.
Strengths in the SWOT analysis of Maggi

1. With the presence in different product categories under the umbrella brand of Maggi
with large SKU’s (Stock keeping unit).Maggi have edge over its competitors.
2. 1st Mover Advantage: Maggi has established itself a pioneer in changing the eating habits
& acceptance of Noodles as easy meal. Although now the market is full of local &
national players in different product categories but still Maggi Holds market
leader place.
3. High Customer Pull: With its distinguished promotion, strategies & branding hence
creating strong customer connects had helped Maggi to have High TOMA score.
4. Distribution Channel: Robust & well-established distribution channel of the parent
company (NESTLE) is helping in making the product available in the Market.
5. Popularization of Maggi in Restaurants & Road side stall, Canteens is contributing to its
success.
6. With rich history and financially stable parent company is on the growing path.

Weaknesses in the SWOT analysis of Maggi

1. Risk of Over Dependence: Company is playing hard on the risk of over dependability on
Maggi Noodles, as 57% (2014) of the revenue of the brand Maggi comes from Noodles
knowing the fact that their market share has been decreased significantly (in 2012 “84%”
to 63% in 2014).Although with more & more competitors the market size is still on the
expansion mode.
2. Ill effects of Maggi: Awareness about ill effects of Maggi is gaining momentum with
more & more educated class becoming more health conscious.

Opportunities in the SWOT analysis of Maggi

1. Brand Extension: Maggi can expand its product categories by venturing out in corn
flakes, Chips & Pickles Although it failed in 2003 but now with presence of local &
national players in this product category,company can reap the benefits).
2. Although it’s been used majorly by the educated class in order to save their time what if
the long potential rural markets can also be penetrated with the innovative strategies
pertaining to consumers engagement with the brand.
3. Also Company can target the Restaurants chains by offering some customized or special
offerings to make it more short of part of the daily life of the consumers.

Threats in the SWOT analysis of Maggi

1. Competition: Tough competition from the local & national player is the area of concern
for the company.
2. Negative word of mouth: Propagation of ill effects of Maggi noodles through online &
Social Media possess threats to the existence of Maggi. As deterioration in perceived
value of the Maggi brand due to its Noodles product category can affect the brand as a
whole.
3. Commoditized name: For majority of population the name Maggi is being commoditized
for Noodles just like Coalgate, Surf etc.
INITIAL STRATEGIES OF MAGGI

 Maggi has faced lot of hurdles in its journey in India

 The basic problem the brand faced is the Indian Psyche.
 Initially Nestle tried to position the Noodles in the platform of convenience targeting
the working women.
 However, the sales of Maggi was not picking up despite of heavy Media Advertising.
 NIL’s promotions positioned the noodles as a ‘convenience product for mothers
& as a ‘fun’ product for children.
 The noodle’s tagline , ’Fast to Cook, Good to Eat’ was also in keeping with this
positioning.
 They promoted the product further by distributing free samples, giving gifts on return
of empty packets, etc.
 Effective Tagline Communication.

MARKETTING STRATEGY-

Marketing Mix of Maggi analyses the brand/company which covers 4Ps (Product, Price, Place,
Promotion) and explains the Maggi marketing strategy. The article elaborates the pricing,
advertising & distribution strategies used by the company.

1. PRODUCT-

The instant noodles category has a wide variety and very popular globally. The major Maggi
products in this category are 2-minute Noodles, Chicken noodles, Vegetable Multigrain
noodles, Cuppa Mania, Hot Heads noodles, Oats noodles, Atta noodles. This is the backbone
of the product strategy in the marketing mix of Maggi.

2. PRICE-

In recent times Maggi has started coming up with new products like the cup range and Hot
Heads noodles which it targets for the higher income level segments and hence are priced at
higher range.

3. PLACE –

Maggi products are directly taken from the factories which are independently managed to
Carry and Forward Agencies who then store in there large warehouses and pass them onto
the wholesalers according to their demanded quantities. These quantities are then distributed
among the retailers or to the end customer through hypermarkets, other small businesses and
even its own kiosks to corporates.

4. PROMOTION-

The advertisements mainly flashed on kids channels with effective tag lines of “Bas 2-
minute” and the jingle “Maggi Maggi Maggi”. On its 25th anniversary it launched the voice
over campaign to create a nostalgic feeling among the customers about their journey with
Maggi. It has also used the “Miss you Maggi” ad campaign to regain back the lost customers
after the Maggi ban in India.
MAGGI NOODLES, FOOD ADULTERATION, F.S.S.A.I

March 12, 2017

Monosodium Glutamate in Maggi Noodles was tested

at the U.P. Food Safety and Drug Administration lab at
Gorakhpur, U.P. and then at the Central Food Lab,
Kolkata in June 2015. It was found to be containing lead
at 17.2 parts per million (ppp). Under Food Safety and
Standard Regulations, 2011, the permissible levels lead
range from 0.2 ppm in milk substitutes and baby foods,
to 10ppm in categories like baking powder, tea, onion
powder (Dehydrated) and Masalas used to add flavour.

 Lead toxicity is slow poisoning. Lead accumulates in the body to cause irreversible
damage to the brain and nervous system. It causes 600,000 new cases of brain and
learning disorders in children every year, globally (All data is W.H.O.).

 Maggi Noodles first recall was in 1992. Nestle thereafter stated that it has stopped using
MSG. In 1997, Maggi Noodles second recall took place after which light frying of
noodles stopped.

 Nestle re-launched Maggi Noodles in November 2015. Nestle stated it has destroyed
Rs 350 crore worth of stocks. It has now started selling across 100 cities, apart from
Snapdeal orders by June 2016.

 In August 2015, the Government of India filed the first-of-its kind “Class Action Case”.
Against Nestle India seeking Rs 640 crores in damages for alleged unfair trade practices
by selling hazardous noodles. In August 2015, Bombay High Court lifted the ban on
Maggi Noodles but has ordered a round of fresh tests. F.S.S.A.I. in March 2016 has
ordered that all food business operators will stamp products with “NO MSG” or “NO
ADDED MSG”.
 Conclusion

1) Recent update about maggi is on jan 07 2019

2) Nestle, the maker of Maggi noodles recently advertise on Maggie and said "We do not add
lead to Maggi noodles in any form at any stage,"
3) On 2nd of august 2019 the company informed stock exchanges on Friday that “The state-
of-the-art, environmentally sustainable factory for Maggi noodles will involve an initial
investment of nearly ₹700 crore over the next two years,“.
4) The company’s first such investment in dedicating a new manufacturing facility for
production of the instant noodle brand, after a nationwide ban in 2015 hit sales.
5) At present, Maggi instant noodles are manufactured at three plants in India with lines
dedicated to the instant noodle brand. The new plant in Gujarat will further help to boost the
brand's sales.
 REFERENCES

https://images.app.goo.gl/zcMebPDXgF1383Pb6

https://blitzkrieg974.wordpress.com/2017/03/12/maggi-noodles-food-adulteration-f-s-s-a-i/

https://blitzkrieg974.wordpress.com/2017/03/12/maggi-noodles-food-adulteration-f-s-s-a-i/

https://en.wikipedia.org/wiki/Maggi

https://en.wikipedia.org/wiki/Nestl%C3%A9

https://m.economictimes.com/industry/cons-products/food/lead-is-everywhere-but-not-in-our-
noodles-maggi/articleshow/67416079.cms?utm_expid=.aCvTruGxS8-
4GGxfap5E9A.0&utm_referrer=https://m-economictimes-
com.cdn.ampproject.org/v/s/m.economictimes.com/topic/Maggie/amp?amp_js_v=a2&amp_g
sa=1&usqp=mq331AQEKAFwAQ%3D%3D

https://www-livemint-com.cdn.ampproject.org/v/s/www.livemint.com/companies/news/nestle-
india-to-set-up-new-maggi-plant-with-initial-investment-of-rs-700-crore/amp-
1564754794420.html?amp_js_v=a2&amp_gsa=1&usqp=mq331AQEKAFwAQ%3D%3D#ao
h=15673361647564&referrer=https%3A%2F%2Fwww.google.com&amp_tf=From%20%251
%24s&ampshare=https%3A%2F%2Fwww.livemint.com%2Fcompanies%2Fnews%2Fnestle-
india-to-set-up-new-maggi-plant-with-initial-investment-of-rs-700-crore-1564754794420.html