Would Maggi rule again?
The ever ending saga of Maggi does not seem to die. Maggi a 2 minute noodle was a packet found in every household of the country, a food cherished by both the young and old. Things took a messy twist for the noodles after FSSAI issued a report citing the excessive presence of lead in the noodle and banning the product from all Indian stores on June 5 2015.
Maggi Instant Noodles were banned on June 5, 2015 due to the FSSAI and FDA reports that it had very high lead content which could be a big health hazard. Incidentally, the product was given a clean chit in many other countries where it was tested.
The brand got a breather on August 13 when Bombay High Court set aside ban on Maggi noodles. The court, however, stated that Maggi would have to get the noodle samples retested in the next six weeks before bringing it back to the shop shelves.
Power of brand Maggi
To restore its value back in the Indian market, Swiss food group Nestle today replaced its Indian head Etienne Benet with Suresh Narayanan. The group challenged the FSSAI report and also went for a number of test to prove the quality of its product. In recent time things have turned positive for Maggi with Bombay High Court giving a relief on the product by allowing it to conduct fresh test on the safety of the product.Assuming that it clears the test this time around, the question remains whether it would get the market share it enjoyed and regain its brand image.
To put things in perspective:
a. Kantar Brand Footprint Global Ranking (FMCG) ranks Maggi at number three with consumer reach point of 2755 and a growth rate of 5% YoY – if one looks at food brands alone, Maggi tops the list.
b. As per the Brand Directory, Maggi’s brand value is $2,415 million and its rating has increased from AA in 2014 t0 AAA- in 2015. It ranks 23rd in the list of most valuable food brands.
c. In Millward Brown’s ranking of India’s top 50 brands for the year 2014, Maggi was proudly positioned at number 18.
d. During Q2, 2015, Sales were badly hit by Maggi noodles ban. During the quarter, total income was down 19.5 percent at INR 1957 crore against Rs 2432 crore (Y-o-Y).
Controversy & other brands:
But the questions that still remain will the product ever regain its past gloryA much admired brand this. Though, other brands too have been in middle of controversies, Maggi’s case can be compared to colas controversy way back in 2006, when pesticides were found in their aerated drinks. Just like Maggi stated that excess lead was an outcome of excess lead in water in India, colas too had stated high presence of pesticides was there because of their excess in water in the country.
Would Maggi Magic resume?
Though not much information on Cola issue can be found in public domain now, it suffices to say that their sales were not really impacted by it, neither was their brand equity diluted. Would in case of Maggi too, there be a similar outcome? One of the top Industry experts Harish Bijoor, Brand expert and CEO, Harish Bijoor Consultant Inc opines, “Absolutely no doubt on that count. The past for Maggi has been glorious. The present is totally bleak. The future looks absolutely brilliant. Maggi is a mania that got affected by all this brouhaha. Once Maggi is able to make a come--back (whenever that is), I do believe it can regain the crown it was made to forsake.”
Believing in the same concept Pranesh Mishra, Chairman and Managing Director, Brandscapes Worldwide says agrees “Yes, I am confident that Maggi will regain its past glory in a couple of years. That, of course, is dependent on getting a clean chit from the fresh round of tests that the HC has ordered.”
Instant noodle market in India
In terms of preference for a long run Maggi has been far ahead of its competitors, it has been the most sought after product in the Indian Market. The recent controversy has not only made a huge loss for the Nestle group but has a given a chance for the competitors to rise in the business.
The instant noodles market in India is estimated at INR 2200 crore (USD 402.7 million) and is projected to grow at a healthy annual growth rate of 15% over the next few years. As per a Technopak report, despite the entry of players like Top Ramen (Indo Nissin Foods) in 1991, Ching’s Secret (Capital Foods) in 1996, and Wai Wai (CG Foods) in 2005, Maggi continued to retain its dominant position. However, in the past few years, we have seen consumer goods giants ITC (Sunfeast Yippee!), Glaxo-Smithkline (Horlicks Foodles), and Hindustan Unilever Limited (Knorr Soupy Noodles) foray into this lucrative market with differentiated product offerings. This market now also has private labels like Feasters (AV Birla Retail), Tasty Treat (Future Group), and Smart Choice (Spencers). Even though Maggi continues to dominate the market with a share in excess of 75%, competition has been heating up.
Maggi’s loss other brands gain?
In such a scenario, has Maggi’s loss been other brands’ gain? Our experts have a difference of opinion here. Elaborating on this further Pranesh Mishra says is emphatic, “I really don't think so. There might have been temporary blips, but not long term, sustainable gains. In the markets, the noodle space is practically empty. It is not easy for smaller players to suddenly increase production to fill the vacuum created by Maggi. Also, when the market leader is under question, consumers would tend to get out of the category, rather than trust relatively smaller brands within the category.”
Bijoor, meanwhile, thinks otherwise. He says, “Yes they have. Retail shelves have seen the creation of empty space due to Maggi’s absence. This space on the shelves has been occupied by brands of every kind. Retailers are keen not to have losses on the count of a quick-movement brand such as Maggi being pulled out. Retailers have therefore gone out on a limb to make other brands happen at their counters.”
Should Maggi go for facelift?
Worry is not only that whether or not competition has accelerated its market push, but also how would Maggi recapture its place on shelves and consumers’ palates? V Balusubramanium, Chief Knowledge Officer& Director, RainMan Consulting Pvt.Ltd further quotesbelieves that it won’t be cake walk for the brand. He states, “It remains truly doubtful for any other product to have the same presence in the market. But for Maggi to become the favourite noodle again, it needs to come up with a convincing proposition first for it to do the magic.”
Harish Bijoor do contradict others by stating “Yes they have. Retail shelves have seen the creation of empty space due to the Maggi absence. This space on the shelves has been occupied by brands of every kind. Retailers are keen not to have losses on the count of a quick-movement brand such as Maggi being pulled out. Retailers have therefore gone out on a limb to make other brands happen at their counters.”
Jagdeep Kapoor, MD, Samsika Marketing Consultant Pvt Ltd, is bang on when he states that consumer engagement is the key for the brand to make a quick come back once it is given a go ahead to return. This engagement, of course, should be to get the consumer confidence back.Ending on this note Jagdip Kapoor, MD, Samsika Marketing Consultant Pvt Ltd, quotes “Maggi should engage with consumers and not remain silent. It should be attached not detached to its’ consumers, since consumers are attached to it. Faith is the most important factor, which is built on quality and consistently. If the consumer is in doubt, the brand is out.”!
Harish Bijoor goes a step forward and suggests a complete makeover. He says, “My recommendation would be a complete revamp of packaging. This is the time for Maggi to get Eco-friendly in its packaging as well. A paper-packaged Maggi? Time to change pack colours as well. Yellow is the new Red. Time to move to a green Maggi pack from the yellow maybe. Maggi must use this opportunity to whet its packaging nomenclature deeply as well.
”Experts do believe that Maggi has too strong an equity in the market, for it to get off the preferred list. More so, if the court rules that there never indeed was an issue with Maggi Instant noodles.
The public opinion
To add to the experts’ perspective on the issue, a recent consumer survey conducted by Airloyal on its ladoo mobile app (which claimedly has over seven million users) 65% of the respondents miss Maggi, and a similar percentage believes that it can never be replaced. What is more, 62% as per the survey, believe that it is safe.
In spite of thumbs up both from experts and consumers, it would not be an easy battle for Maggi Noodles to get the market share and share of mind it earlier commanded. For one, India is a far more health conscious market now than it was when the cola controversy erupted. Secondly, thanks to digital media, the news has spread fast and far. Third, ‘Taste bhi, health bhi’ might not gel too well with the audiences anymore. It just might, also need to explain, why did it burn 30,000 tonnes of stock.
Besides proving that Maggi was always squeaky clean, it would have to take major and very visible steps to win the consumer confidence. An exercise of the magnitude that Cadbury undertook when it was struck with ‘worms in Dairy Milk’ controversy.