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Maggi Wins Back the Market Share Before Crises

Back in June 2015 India’s most beloved brand’s most beloved product Nestle Maggi was banned. The government imposed the ban on selling or manufacturing of Maggi saying it is too harmful and hazardous for the human body.

Maggi was banned by Food Safety and Standards Authority of India (FSSAI) in June 2015 for allegedly containing lead beyond permissible limits

The main reason for the ban was an excess amount of lead contents in the product. The lead was way more than the safe amount and was proven to physically harm the human body if consumed too much.
The ban on this most popular product blew Nestle’s stock prices and the report of its other products was just not enough to recover the damage. Nestle knew they needed to do something real quick before the damage to their company goes beyond control.
After 5 months of deep researches and compulsive testing sessions, Maggi was relaunched in the market with a clean slate in November 2015. The ban was sure off but the market share was gone.
Considering the ban on one of the countries most successful products the competitors saw it as a huge opportunity. Companies like Yippee, Nepal-based Chaudhary group’s Wai Wai, and Patanjali Noodles came up attending the Maggi hungry market.
These companies together successfully able to replace the Maggi madness in the country but Nestles returned in not more than 5 months. People sure did miss Maggi and the product was already selling in huge amounts from the very day it relaunched.
People loved Maggi, by the end of a year in Sept 2016, Maggi was already overtaking the potential competitors that emerged when they were not around. Nestle reached over 55% of the pre-crisis figures till then and was strongly holding it’s grounded with 3 other brands under it. Chocolate products were also performing very well meanwhile.
Nestle kept of pushing it’s products, even more, it already had the leverage of its reputation for it had hooked 90% of India’s young population to it. Soon Patanjali and Yippee were the only better competitors for the product.
Nestle had launched over 25 products in this period in different categories, all successful. It seemed like the ban didn’t pose unrecoverable damage to the product. It was bound to succeed and kept on increasing the market share.
The company official reported total sales of CHF (Swiss franc) 65.5 bn in September 2016. They also revealed the growth by 3.5% by the end of 2016. The organic growth was earlier calculated at 4.2%, still, the figures were far greater than anyone’s expectations with bright hopes for Nestle for overall growth.

“In an environment marked by deflation and low raw material prices, we continued to privilege volume growth, resulting in real internal growth at the higher end of the industry in both emerging and developed markets. Our growth was broad-based across categories, allowing us to gain or maintain market share in most of our businesses,”
– Nestle CEO Paul Bulcke.

It was clear that the company had high hopes and was truly standing tall on all the expectations. To which he added…

“For the full year 2016, considering the current softer environment, we expect organic growth of around 3.5 per cent, improvements in margins and underlying earnings per share in constant currencies, and increased capital efficiency,”

Maggi sure lost its market share for 5 months, but it didn’t lose its value in the market and hence they were so successful in driving these results again. They wanted to cover as much market loss as was possible and in the least time. Which they are successfully attaining.
The year 2017 was marked as a full recovery year for Nestle’s loss from Maggi ban. The figures were satisfactory and the company had already struct 60% ground of what it was before the crises.
Maggi got dragged to level zero and had to start it all from the beginning, still, the figures were all awe-inspiring. Reaching almost the same level as they were when stuck with the ban in just 2 years is an amazing achievement for any company.
The instant noodles brand Maggi by Nestle attained over 60 percent market share and almost touched the pre-crisis level in value terms, said a top company official. However, volume-wise Maggi is far from pre-crisis period. Nestle used to dominate the market with 75 percent market share back then.
Still, it’s not far-fetched. With continuous growth in these figures, Nestles is sure to reach the exact market share soon enough.

“We are little over 60 per cent (market share). In business terms, we are almost back to where we were (in terms of pre-crisis). In value terms, we are almost back there,”
– Nestle India Chairman and Managing Director Suresh Narayanan.

He also exclaimed that they have enough time to get back to where they were originally and everything is going according to the plan.
Currently, Maggi contributes to over 1/3rd of Nestle’s total sales. It is almost around 30% as per the info from Narayanan. In 2017 Nestle India crossed the 10,000 Crore sales mark. It is a huge achievement, more than what most of us could imagine after getting stricken out completely from the market.
Right from getting banned from recovering the loss in 3 years, Maggi is a product that is standing taller than ever with Nestles yearly growth skyrocketing.

 

Team

RG Consultants

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