Nestlé crisis - Will dent company’s equity scores, but not hit consumption: Experts

A few years back, there was a huge controversy when India’s food regulator had banned the very popular brand Maggi in 2015 after tests showed it contained excessive lead and for alleged mislabelling of flavour enhancer MSG. The product returned to the stores after a court lifted the restriction. Nestlé has since then removed the claim “No added MSG” and the brand was back on store shelves after the product totally disappeared from the market following the government ban. The brand lost some of its shine and its equity got diluted during that period and it took some time for them to rebuild and come back after revisiting the product formulation.

Now, another controversy has surfaced, which was reported by the Financial Times, which recently published a report about an internal presentation of Nestlé circulated among top executives in early 2021, which said that only 37% of Nestlé’s products, excluding pet food and specialised medical nutrition, achieved a rating of 3.5 or higher under Australia’s health star rating system. The company considered 3.5-star rating as the “recognised definition of health”. The system rates foods on a scale of 5 stars and is used by international groups as the benchmark.

In the meantime, Nestlé is stepping up their consumer engagement in India and reassuring their customers through their print communication. According to a company spokesperson from Nestlé, their approach as a company is always been to bring in credibility, trustworthy and be responsible and always communicate with the consumers on the facts, in humble and transparent tone and manner. Some of the leading newspapers are carrying a print campaign, which talks about how Nestlé has been a part of everyone’s life for over 100 years. The communication is clearly trying to build the trust factor, which Nestlé has built over the years. The brand has set up a special helpline 24x7 to address customer concerns.

Remarking on the latest imbroglio, Vani Gupta Dandia, Founder, CherryPeachPlum Growth Partners and former Marketing Director, PepsiCo Indian Foods, opined that the recent news will hardly dent Nestlé’s consumption for two reasons:

• ‘Bharat’ is more taste obsessed. And anything that comes in a shiny packet is considered healthy!
• How many know which brand comes from which corporate house? Who knows Tide kiss company ka hai ya Maggi kiss company ka hai?”

“Nestlé’s core portfolio (barring baby food) gets its lion’s share of revenue from the Tier 2 and Tier 3 cities, and certainly from the large masses – those other than the top 5% population,” she added.

At the same time, Gupta Dandia added that the recent news would certainly dent Nestlé’s equity scores because most equity surveys are limited to metros and top towns amongst the English news coming lot. “But in the main, for the most part neither this latest series of full page ads nor the damaging news on their unhealthy portfolio will have any significant impact on their sales,” she further said.

Speaking on the campaign initiative undertaken by Nestlé post this incident, Gauri Awasthi, Co-Founder & Managing Partner, Digital Edify, remarked, “Brands like Nestlé, ParleG, Dabur, Amul, Britannia and the likes have been serving their consumers for over 100 years now and in case of restoring the equity of the brand, to buy-back the trust and confidence, the love of their consumers, such campaigns act like a catalyst. Reassurance and winning back the confidence is the need of the hour right now and Nestlé is doing that with the recent Print campaign.”

At the same time, she felt that what Nestlé should have also added to spread the word of mouth was a much stronger Digital Marketing campaign to support the Print campaign, since the virality of the campaign would have reached manifold. “When the equity of the brand like Nestlé is questionable and the brand needs to reassure their trust factor from 100 years, then they should not shy away in using other mediums of advertising as well. Getting a nice digital film made heavily playing on the EQ of their consumers is not a bad idea either,” she added.

Awasthy cited the example of Facebook, which has come up with series of such digital films, which strike an emotional chord with consumers, are clear on their messaging and expectation setting to their users. “Nestlé definitely needs to work on a come-back campaign like what was done couple of years back for the ‘Come-back Maggi campaign’. Same strategy needs to be adopted like before – such as make consumers your ‘True Influencers’, let them talk about their experiences and journey with Nestlé’s brands. A huge amount of listening and ORM is what they need to focus on. Fortunately, I had the privilege of handling Nestlé during my stint with the WPP group, where I had spear-headed the “Come-back Maggi” campaign, which was a quite a success,” she further said.