The Gifts of Maggi
When a brand shows close to zero growth in sales over five years, and it gets reported as positive news, you know that something went very wrong somewhere. And this is the story of Nestle in India, and its popular Maggi brand of instant noodles, whose market share went down from 80% in mid 2015 to zero at the end of the year. So what happened?
That June, the national food safety regulator had banned the sale of Maggi noodles and directed Nestle to withdraw the product. As the flagship product went up in flames—38,000 tonnes, literally—Maggi-branded jams, ketchups and beverages too took the heat. From commanding 80% share of India’s noodles market, (as estimated by Nomura Securities in May 2015) Maggi went down to zero in just a month.
The product was found to contain more lead and Monosodium Glutamate (MSG) than it claimed on the packaging, and it got banned for six months. This Indian Express report explains what happened.
Following the six-month ban, which was lifted in November 2015, it was a long uphill climb for Nestle. The brand had to be rebuilt. A new CEO was brought in. The global leadership took an interest in a market that contributes 2% of global sales. New categories were launched.
Finally, after five years, Maggi’s sales volumes have gotten back to the levels of 2014, before the controversy erupted.
Data sourced from its annual report for the year 2019 show it sold around 264,000 tonnes of Maggi products during the year, compared to 254,500 tonnes in 2014. In value terms, the firm had already surpassed the pre-ban level in 2018 at Rs 3,105 crore, compared to Rs 2,961 crore in 2014. In 2019, it sold Maggi products worth Rs 3,500 crore. The company follows a calendar year format for financial reporting.
The Maggi fiasco in 2015, when it was banned by the food regulator, had taken a toll on all its four broad business categories. While, it managed to recover sales (by volume and value) in the other three categories, Maggi sales had lagged.
At least the ongoing lockdown has been kind to the brand.