Inside Nestl? India’s head office in Gurgaon is a sort of a model kitchen. Coloured bright yellow with hues of red, it reminds you of the company’s highly successful brand, Maggi. But what this kitchen also signifies is Nestl? India’s ambition–to deepen the bond with homemakers and to create more products for them. As it celebrates 25 years of Maggi, the company is not taking it easy. And there are enough reasons for the same.
The territory where Maggi has lorded over all these years, instant noodles, is being breached by big players. Fast moving consumer goods giants GlaxoSmithKline Consumer Healthcare (GSKCH) and Hindustan Unilever (HUL) have entered the Rs 1,000-crore instant noodles market with their respective brands, Foodles and Knorr. ITC Foods is reported to be waiting in the wings to enter the instant noodles market with its Sunfeast brand. In addition, there are the private label brands of large retailers which are increasing finding a way into the consumer’s shopping trolley. Sauces too are a highly competitive space, with Maggi claiming to be the market leader but not with a huge margin. And the soup category is even tougher.
It is not the first time Maggi has faced competition in the noodles category. In 1997-98, Indo Nissin came with its noodles brand Top Ramen. Nestle changed the formulation of Maggi 2-minute noodles around the same time which was rejected by the consumers. As a result, sales of Maggi noodles declined with the company finally bringing back the old formulation in 1999 to arrest drop in sales. Meanwhile, Indo Nissin had also become complacent, and Maggi was able to quickly consolidate its position as the leader. Though it will not be easy to dislodge Maggi from its perch today, given the huge brand equity it enjoys among consumers, experts say some loss of market share cannot be ruled out, given the deep pockets and vast distribution network of its new rivals.
For starters, the company is building on the brand lineage to take it forward. Maggi noodles and sauces have become household names over the years. The company is strengthening its emotional connect with the consumers. Last year saw Nestle launch its ?Me aur meri Maggi? campaign that revolved around consumers sharing their experiences. The selected ones were published on the product packaging.
For sauces, the company is again evoking nostalgia and spreading the message of humour whcih has worked so well for the brand. The ?It?s different? campaign starring actor Javed Jaffari, which made Maggi sauces an instant hit makes a comeback, but with a twist this time. This time, it’s about ?Make a difference?. The company has planned a complete 360-degree campaign surrounding it that includes a series of TV commercials, a car by the name of ?Ha Ha Car? which will travel across cities for over 70 days, and a toll free number where people can call, listen to jokes and even share their jokes. The toll free number received over 2 lakh calls in the last two months, claims the company.
On the other hand, Nestle India has launched fortified food products such as Maggi Rasile Chow targeted at the rural/semi-urban markets. Initial feedback on these low priced products has been positive. The new products under the mother brand are in sync with the strategy that Nestle has adopted globally? popularly priced products or PPP. PPP are affordable food products of high quality and nutrition. The importance of PPP’s can be gauged from the fact that in 2009, they accounted for around 8% of Nestl?’s global annual sales, which roughly translates into $ 8 billion.
While fortified noodles Maggi Rasile Chow is priced at Rs 4, Maggi Masala-ae-MagicC, a taste enhancer but again fortified with iron and other nutrients, is available only in Rs 2 sachets.
?There is greater understanding and widespread concern today about micronutrient malnutrition in India. Finding convenient and affordable approaches to address this was a challenge, and we worked closely on various concepts with our Nestle R&D team,? says Shivani Hegde, general manager-foods, Nestle India. Besides noodles and sauces, there are soups, pastas, powders, pizza sauces, and variants of noodles and sauces in the Maggi stable.
Maggi?s first move towards the opportunities at the bottom of the pyramid came around 2005. What Nestle did was to expand its customer base and reach out to tier 2-3 towns and rural areas by launching Maggi 2-minute noodles at the Rs 5 price point. ?The first move was the large value packs. Then to gain further penetration and to sustain market share, they launched smaller value packs for the new consumers,? says a research analyst with a brokerage firm.
Emmanuel Upputuru, national creative director of Publicis India, which handles the Maggi account, recently presented a case study on Maggi at the recent Think Digital cnference. “As a product, Maggi is targeted at mothers. But today, these are the same mothers who?ve spent a lifetime with Maggi and their experience with the brand was reason enough for them to write to us with their stories. Thousands of stories were received during the campaign,” he had said.
Over the years, Maggi?s campaigns have been talking to mothers, though the nature of the conversation has evolved continouusly. The Maggi story began in India in 1983, with the launch of Maggi 2-minute noodles. “When Maggi was launched in the ?80s the mother’s need for convenience was important but without undermining her involvement with the children. ?Mummy Bhook Lagee hai – Bus Do Minute? was a pioneering rendition of this approach,? says Hegde.
While the initial years of Maggi 2-minute noodles were challenging, it overcome those with not just a carefully executed campaign but also on-ground activities.
?Nestle initially spent a lot on sampling a product. There were a lot of school programmes where the product was freely sampled, in metros as well as small towns. There was a lot of money spent on advertising, but it is the sampling which helped them set a category and be the leader,” says Anand Ramanathan, sector analyst, KPMG.
The dawn of the new century saw Nestle globally changing its position towards a healthier foods company. And in 2001, Maggi became the core brand in India for Nestle in place of Nescafe. Four years later, it adopted the health angle into its communication with the ?Taste Bhi Health Bhi? campaign. This was devised to counter the growing concerns over the health aspect of fast food products. While on one hand it appealed to the kids, on the other hand it assured the parents of its nutritional values. This was followed by the launch of Vegetable Atta Noodles and re-launch of Maggi soups in 7 variants. The next year saw Vegetable Dal Atta noodles launched which was rejected by the consumers and it was then pulled out.
?Whenever they have launched variants of the original product, they haven’t been that successful and have ultimately rolled it back,? says Ramanathan. There have been other casualties on the way as well. Remember Maggi pickles and jams, macaroni, snack mixes ?
Maggi as a category has performed very well. It had a 21.7% volume growth in calendar year 2009-10 and a 60% incremental growth in volumes, according to a report by Angel Broking. From a revenue contribution point of view, milk and nutrition products are the largest, but the foods category under the Maggi brand is the fastest growing. But it’ll have to work aggressively to make sure it retains its leadership. Apart from the big campaigns, they haven’t been doing enough recently. There have been new products and variants launched, but the awareness generation has not been much. It seems that some of the lessons learnt (like free sampling) have been unlearnt. One must remember that for food category, people would really like to sample and then decide,” says Ramanathan.