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Maggi In Crisis

Dr. Neena Prasad,

Associate Professor, R V Institute of Management, Bangalore- 560011.

Abstract

The packaged food segment in India is dominated by Nestle, ITC and Unilever. Nestle‘s Maggi

became the most popular brand because of its unique tastemaker and its understanding of the

psychology of Indian mothers and positioned itself for mother-child indulgence.

The case is structured to achieve the following teaching objectives;

Identify the new post crisis response parameters to marketing activities.

Assess the impact of this crisis in a quantitative way.

Critically analyse the crisis communication strategies and understand the need to have a crisis

communication plan at the organisation to handle crisis situations effectively.

Understand how competitor strategies impact business decisions.

The case can be analysed from the perspectives of Product and Brand Management, Product life cycle

concept, Strategic Management, Strategic Brand Management.

Keywords: Maggi, Crisis Management, Product and Brand Management, Crisis Management

Background

“Is Maggi noodles gone forever'' a 10-year-old, craving for the instant meal, asked her father on a

Sunday morning."Of course not," the father replied, to which the daughter clapped joyfully. It's a

brand loved by one and all, but now Maggi is a banned word in many households. Nestle's real

strength in this case is the power of Maggi, one of the few brands which provide real meaning to the

lives of people and has occupied a dominant place consistently over many years. Maggi wasn't seen as

the healthiest food around but mothers logically agreed that they made it healthier by adding their own

special ingredients. In many ways, Maggi was an open source idea, well before the healthy breakfast

or after school snack concept took off, as everyone developed their own special Maggi recipes. This is

the strongest reason why Nestle will, in all probability, bounce back. Paul Bulcke, the global CEO of

Nestle is of the opinion that the brand is owned by consumers and they have a stake in its success.

As a company, Nestle enjoys a reputation of quality and is not a company that consumers love to hate

or even have a view about (at least not in India). It's a brand that brought in loads of revenue for

Nestle, but now it‘s very existence is under threat in India and everybody wants to know whether

Nestle will win back people's trust and that Maggi will ever regain its place on the shelves. At this

juncture, this brand image is no doubt useful, but by itself not a convincing reason to believe that a

crisis like this can be overcome. In the past, Intel, PepsiCo, Cadbury and Nokia, were each caught in

the eye of a storm but came out with valuable lessons learnt. In short, this is a crisis of potentially

catastrophic proportions for Nestle. But in the current context, there are reasons to believe that Nestle

may be able to retrieve ground but how is the big question.

About Nestle

Nestle India is a subsidiary of Nestle S.A. of Switzerland. Nestle India manufactures a variety of food

products such as infant food, milk products, beverages, prepared dishes & cooking aids, and chocolates

& confectionary. Some of the famous brands of Nestle are NESCAFE, MAGGI, MILKYBAR, MILO,

KIT KAT, BAR-ONE, MILKMAID, NESTEA, NESTLE Milk, NESTLE SLIM Milk, NESTLE Fresh

'n' Natural Dahi and NESTLE Jeera Raita. Nestle was founded in 1867 in Geneva, Switzerland by

Henri Nestle. Nestle's first product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle

acquired the Anglo-Swiss Condensed Milk Company. Nestle's relationship with India started 1912,

when it began trading as The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited,

importing and selling finished products in the Indian market. After independence, in response to the

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then economic policies, which emphasized local production, Nestle formed a company in India,

namely Nestle India Ltd and set up its first factory in 1961 at Moga, Punjab, where the Government

wanted Nestle to develop the milk economy. In Moga, Nestle educated and advised farmers regarding

basic farming and animal husbandry practices such as increasing the milk yield of the cows through

improved dairy farming methods, irrigation, scientific crop management practices etc. Nestle set up

milk collection centers that ensured prompt collection and paid fair prices. Thus, Nestle transformed

Moga into a prosperous and vibrant milk district. In 1967, Nestle set up its next factory at Choladi

(Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. Nestle opened its

third factory in Nanjangud (Karnataka) in 1989. Thereafter, Nestle India opened factories in Samalkha

(Haryana), in 1993 and two in Goa at Ponda, and Bicholim in 1995 and 1997 respectively. Nestle India

is now putting up the 7th factory at Pant Nagar in Uttarakhand. Today, Nestle is the world's largest and

most diversified food company. It has around 2,50,000 employees worldwide, operated 500 factories

in approximately 100 countries and offers over 8,000 products to millions of consumers universally.

Current Scenario

“Think globally - act locally”

Nestle India Limited (NIL), the Indian subsidiary of the $100-billion Swiss food major, after a slow

response to the crisis initially, is now moving quickly to contain the damage in order to speed up its

comeback in the Indian market. Its crisis management began on June 5, with the company releasing a

press statement to announce a voluntary recall of Maggi noodle, which at an estimated Rs 2,500 crore

(Rs 25 billion) makes up over 30 per cent of its India revenue and commands 80 per cent of the market

share.

The Food Safety and Standards Authority of India ordered the company to shut down its production

and called the product "hazardous''. Paul Bulcke, global CEO took centre stage at a press conference

to explain the countrywide recall. "People's trust has been shaken," he said, but maintained the product

was completely safe as the company's own analysis had shown. Nestle moved the Bombay High Court

for relief.

NIL‘s shares dipped after a ban was imposed on its Maggi noodles earlier this month, but in the

current scenario it seems the impact is wearing off. Shares of Nestle have rebounded by about 10

percent from the lows it hit when the controversy over its flagship brand Maggi was at its peak. Nestle

India's share prices traded at Rs. 6,059.95 on the Bombay Stock Exchange (BSE) on Wednesday,

recovering from a low Rs. 5,539.80 recorded on 8 June.

Maggi is a product of Nestle India, a subsidiary of the Nestle Group of Switzerland. It goes without

saying that Nestle India's Maggi is still undoubtedly the top noodle brand in India. Maggi has been

dominating the Indian noodle industry for almost 32 years. Maggi was the pioneer of noodles in India.

Synonymous with noodles in India today, Maggi is known to be the fastest cooked tasty meal in an

Indian household.

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Launched in 1983 in the Indian market with the challenge of entering a market that was conservative

and had typical notions about food consumptions, this product still managed to gain some space in

almost every Indian kitchen.

Packaged food market in India

Owing to the fast paced lives today, packaged and ready-to-eat foods are gaining quite a formidable

share in the Indian food market. Due to fast cooking properties, instant noodles today have occupied an

important position in almost every Indian kitchen. Since the percentage of working women in urban

India is increasing, instant noodles and ready-to-eat foods are slowly and steadily replacing the

traditional rice and pulses. Noodles have come a long way since their introduction in 1983. It is a hot

favourite among all the children in the country and is consumed in almost every Indian household prior

to the lead and MSG controversy. Maggi, which was initially considered a snack, had taken the place

of a staple diet in many Indian homes. According to the World Instant Noodles Association, India

consumed 5,340 million cups or bags of instant noodles through 2014. Maggi is estimated to have a 70

per cent share of the market and it counts among the fastest growing markets in the world for the snack

and contributes nearly 30 per cent to Nestle's Rs 9000 crore annual turnover. Although, there are a

number of noodle brands available in India, only a few have been able to dominate the taste buds of

the Indians.

However, according to market experts, Nestle India's Maggi noodles, which has been dominating the

instant noodles market in India for nearly three decades, is currently witnessing tough competition

with a number of new entrants such as Sunfeast Yippee!, Hindustan Unilever's (HUL) Knorr Soupy

Noodles, Top Ramen and Ching's Secret. Maggi like biscuits is one of the few Indian packaged foods

that is affordable to the poorest of the poor and hence is one of the few affordable packaged foods that

has gained immense popularity over the years. However, in 2015, Maggi got entangled in a major

controversy when a few samples of Maggi were tested and found 'unsafe and hazardous' for human

consumption. The tests concluded that Maggi contained much higher levels of monosodium glutamate

(MSG) and lead than what was permissible. The findings of the tests were followed by bans on Maggi

in many states across and outside India. Though Nestle denied the allegations that Maggi was 'unsafe

and hazardous' to human health, it pulled back all the stocks from across the country. Consequently

Hindustan Unilever Ltd followed Nestle India Ltd in pulling its instant noodles off the shelves. Tata

Starbucks Ltd, too, has withdrawn some of its products and this crisis has raised several questions;

Are we consuming food that is not safe?

How can companies launch food products without requisite approvals?

At a larger level, who is responsible for food quality in India?

Food Safety and Standards Authority of India (FSSAI)

To answer the above questions, a countless number of laws and regulatory bodies were responsible for

determining and enforcing quality and health standards. Those were replaced by the Food Safety and

Standards Authority of India (FSSAI) which, since becoming operational in 2011, became the central

regulatory authority responsible for food safety in India, under the Food Safety and Standards Act,

2006, that consolidated all the existing laws. FSSAI‘s job is to lay down ―science-based standards‖ for

the manufacturing, processing, distribution, sale and import of food in India. It is responsible for

approving all new food products coming into the Indian market, but since it has only been operating

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for a few years now, the procedure also applies to those products which were already in the market

before that time and to imported products.

FSSAI has laid down an online process for applications by companies seeking approval for their

products. The application requires the manufacturer to give detailed information, such as the

ingredients used, the manufacturing process, place of manufacture and source of raw materials,

including water. FSSAI has also released detailed regulations laying down permissible levels of toxins

or additives such as lead and MSG (monosodium glutamate) in different kinds of food products. On 5

June, the food regulator mandated Nestle India to recall all the available stock of the product from the

market, after it was confirmed that the 'two-minute noodles' contained harmful levels of lead and

MSG.

However, the practical process of obtaining approval is a subject of great confusion, and FSSAI itself

gives the impression that it is a work in progress, with frequent announcements of changes and

alterations in procedure on its website. Despite all the detailed guidelines, the law does not make

testing of food products before approval mandatory. Food regulation is not completely novel—milk

adulteration probes by FSSAI have been common for years now—but the rise in regulatory activity in

the food sector is novel. The real story is of a market that has mostly escaped heavy regulation from a

regulator that has traditionally lacked the resources and know-how to effectively safeguard public

health and standards.

Another major issue is that FSSAI virtually has no enforcement mechanism to speak of. Not only does

it have no way of ensuring that projects rejected by it are properly recalled, it also doesn‘t have any

way of ensuring that products never approved by it do not get to the market in the first place. For

instance, on 8 June, FSSAI sent a notice to the commissioners of food safety of all states, with a list of

33 food products under the category of ―noodles, pastas and macaroni with tastemaker‖ which had

been approved by it.

It asked the commissioners to take samples of all these products for lab testing in view of the

contaminants allegedly found in Maggi noodles. As for any products which were not on the list, the

notice said such products were ―unauthorized and illegal and cannot be intended for human

consumption…‖ and the state regulators were ―advised to ensure that such products are recalled,

removed from the market and destroyed‖. However, a product recall in a market as large as India is

almost impossible in practice. But such instances of brands being pulled up are still (despite the

increased activism on the regulator‘s part) few and far between. Once a brand is found to have violated

food safety procedures by FSSAI, there‘s not much recourse available. The FSSAI appeal procedure is

entirely internal and departmental and not very effective and even a legal challenge via a writ petition,

such as that attempted by Nestle in the Bombay high court, is usually too slow to be effective except in

rare cases, because courts are often extra-cautious in questions affecting public health and safety.

Report on Maggi noodles

Maggi as a brand has been marketed as a comfort food in India and has been a dominant brand in the

instant noodles space for over 32 years, enjoying a market share of over 70 per cent. However the

goodwill of the brand Maggi has suffered tremendous damage in the past two weeks. The test reports

from Uttar Pradesh food regulator showed toxic levels in Maggi noodles above the permissible levels

which started the controversy and snowballed into a nightmare for Nestlé India. Several test reports

from states like Chhattisgarh, Karnataka, Assam, Arunachal Pradesh, Sikkim, Meghalaya and

Mizoram have found toxic levels far below permissible levels of lead.

Infact, countries like Canada and Hongkong have also termed tests on the product satisfactory.

Following media reports of the incident in India, a CFS spokesman told Business Standard, that the

Centre for Food Safety conducted a check at the retail level and samples of Maggi Masala Noodles and

a curry flavoured variant were analysed for lead content and the results were satisfactory. He also

added that between 2012 and 2014, CFS had tested some 120 samples for metallic and microbiological

contaminations and the results were all satisfactory and also reiterated that Nestlé Hongkong does not

sell Maggi noodles produced in India there.

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Product-Harm Crisis Effects

Nestle India Ltd has plunged nearly 15 per cent in the past five trading sessions, after the FMCG

company's leading noodle brand Maggi was taken off retailers' shelves following tests that revealed

dangerous levels of MSG (Monosodium glutamate) and lead in the samples. Product-harm crisis are

among the worst disasters that can happen to any organisation and in NIL‘s case it is in the context of

endangering the health and well-being of the company‘s loyal customers. The implications of a brand-

specific product-harm crisis often go beyond the ―obvious‖ short-run sales or market-share loss for a

variety of reasons. The firm might experience a reduced effectiveness for its marketing instruments in

terms of the brand‘s own marketing mix effectiveness being reduced as customers‘ trust might have

been breached, a loss in baseline sales, an increased cross sensitivity to rival firms‘ marketing-mix

activities, a decreased cross impact of its marketing-mix instruments on the sales of competing,

unaffected brands or advertising might now give less ―bang for the buck‖ than before the crisis. More

so over, the brand might now have less potential to attract potential switchers or would have become

more sensitive to competitive activities.

For a company with multiple brands and product categories, the ramification of a product-harm crisis

implies that consumers might very well consider the impact of the crisis on other brands of the same

company as all the brands might now be perceived as belonging to a lower quality tier in the post crisis

period, making them more vulnerable to competing brands. The issue that is predominant for NIL is

that across all its brands and the competitor brands, it has to be seen that the net change in the impact

of one brand on the other is zero, positive or negative. However, from the perspective of both the

consumers as well as the markets, it would very premature to conclude that their relative positions to

each other will be affected.

The Road Ahead

‘Good Food, Good Life’

Clearly, with the ongoing controversy, the brand is in distress and that, according to experts on Dalal

Street, makes it a classic example of Warren Buffett's investment ideology of buying businesses in

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distress. Here's what Warren Buffett had said: "Great investment opportunities come around when

excellent companies are surrounded by unusual circumstances that cause the stock to be

misappraised." As a result, most brokerages as well as analysts have turned cautious on Nestle India,

at least in the near-term.

Therefore the best strategy that NIL can put forth across the markets is by implementing very careful

business processes with sufficient checks and balances and to react in an appropriate fashion by using

appropriate marketing instruments and providing various qualitative guidelines in order to regain

customer confidence

ANNEXURES

Exhibit 1

Nestlé‘s origins date back to 1866, when two separate Swiss enterprises were founded that would later

form the core of Nestlé. In the succeeding decades, the two competing enterprises aggressively

expanded their businesses throughout Europe and the United States.

In August 1867, Charles (US consul in Switzerland) and George Page, two brothers from Lee County,

Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. Their

first British operation was opened at Chippenham, Wiltshire, in 1873. A 1915 advertisement for

"Nestlés Food", an early infant formula.

In September 1866, in Vevey, Henri Nestlé developed a milk-based baby food, and soon began

marketing it. The following year saw Daniel Peter begin seven years of work perfecting his invention,

the milk chocolate manufacturing process. Nestlé‘s was the crucial cooperation that Peter needed to

solve the problem of removing all the water from the milk added to his chocolate and thus preventing

the product from developing mildew. Henri Nestlé retired in 1875 but the company, under new

ownership, retained his name as Société Farine Lactée Henri Nestlé.

In 1877, Anglo-Swiss added milk-based baby foods to their products; in the following year, the Nestlé

Company added condensed milk, such that the firms became direct and fierce rivals.

In 1905, the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company,

retaining that name until 1947, when the name ‗Nestlé Alimentana SA‘ was taken as a result of the

acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana

SA, of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs.

The company‘s current name was adopted in 1977. By the early 1900s, the company was operating

factories in the United States, the United Kingdom, Germany, and Spain. The First World War created

demand for dairy products in the form of government contracts, and, by the end of the war, Nestlé‘s

production had more than doubled.

Nestlé felt the effects of the Second World War immediately. Profits dropped from US$20 million in

1938, to US$6 million in 1939. Factories were established in developing countries, particularly in

Latin America. Ironically, the war helped with the introduction of the company‘s newest

product, Nescafé ("Nestlé‘s Coffee"), which became a staple drink of the US military. Nestlé‘s

production and sales rose in the wartime economy.

After the war, government contracts dried up, and consumers switched back to fresh milk. However,

Nestlé‘s management responded quickly, streamlining operations and reducing debt. The 1920s saw

Nestlé‘s first expansion into new products, with chocolate-manufacture becoming the company‘s

second most important activity. Louis Dapples was CEO till 1937, when succeeded by Édouard

Muller till his death in 1948.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and

numerous companies were acquired. In 1947 Nestlé merged with Maggi, a manufacturer of seasonings

and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby‘s (1971)

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andStouffer‘s (1973). Diversification came with a shareholding in L‘Oreal in 1974. In 1977, Nestlé

made its second venture outside the food industry, by acquiring Alcon Laboratories Inc.

In the 1980s, Nestlé‘s improved bottom line allowed the company to launch a new round of

acquisitions. Carnation was acquired for $3 billion in 1984 and brought theevaporated milk brand, as

well as Coffee-Mate and Friskies to Nestlé. The confectionery company Rowntree Mackintosh was

acquired in 1988 for $4.5 billion, which brought brands such as Kit Kat, Smarties and Aero.

The first half of the 1990s proved to be favourable for Nestlé. Trade barriers crumbled, and world

markets developed into more or less integrated trading areas. Since 1996, there have been various

acquisitions, including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002).

There were two major acquisitions in North America, both in 2002 – in June, Nestlé merged its U.S.

ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef

America, the creator of Hot Pockets. In the same time-frame, Nestlé came close to purchasing the

iconic American company Hershey's, one of its fiercest confectionery competitors, although the deal

eventually fell through.[11][better source needed]

Another recent purchase included the Jenny Craig weight-

loss program, for US$600 million.

In December 2005, Nestlé bought the Greek company Delta Ice Cream for €240 million. In January

2006, it took full ownership of Dreyer‘s, thus becoming the world‘s largest ice cream maker, with a

17.5% market share.[12]

In November 2006, Nestlé purchased the Medical Nutrition division of Novartis Pharmaceutical for

US$2.5 billion, also acquiring, in 2007, the milk-flavouring product known as Ovaltine.

In the year 2007 Nestle set up its factory in Brazil, bought US baby-food manufacturer Gerber for

$5.5 billion[13][14][15]

and it entered into a strategic partnership with a Belgian chocolate maker, Pierre

Marcolini.[16]

Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The sale was to form

part of a broader US$39.3 billion offer, by Novartis, for full acquisition of the world‘s largest eye-care

company.[17]

On 1 March 2010, Nestlé concluded the purchase of Kraft Foods's North American frozen pizza

business for $3.7 billion.

In July 2011, Nestlé SA agreed to buy 60 percent of Hsu Fu Chi International Ltd. for about $1.7

billion.[18]

On 23 April 2012, Nestlé agreed to acquire Pfizer Inc.'s infant-nutrition unit for $11.9

billion.[19]

Before the acquisition, there was a 'bidding war' between the three shareholders

Nestlé, Mead Johnson Nutrition and Danone. Each of the companies held a share, with Nestlé holding

the biggest share (17%) (Johnson held 15%, Danone 13%).[20]

As of 28 May 2013, Nestlé has announced that it will expand R&D in its research center in Singapore.

With a primary focus on health and nutrition, Nestlé is investing $4.3 million in its Singapore center,

creating 20 jobs for experts in related R&D fields.[21]

In 2013 Nestlé Nigeria successfully pioneered

and implemented the use of compressed natural gas as a fuel source to power their Flowergate

factory.[22]

Products

Nestlé has 8,000 brands,[23]

with a wide range of products across a number of markets,

including coffee, bottled water, milkshakes and other beverages, breakfast cereals,infant

foods, performance and healthcare nutrition, seasonings, soups and sauces, frozen and refrigerated

foods, and pet food.[24]

As of year end 2010, Nestlé held 29.7% of the shares of L'Oréal, the world's largest company

in cosmetics and beauty. Its brands including Garnier, Maybelline, and Lancômeas well as The Body

Shop stores. L‘Oréal holds 10.41% of the shares of Sanofi-Aventis, the world's number 3 and Europe's

number 1 pharmaceutical company.[25]

Corporate Affairs

Nestlé is the biggest food company in the world, with a market capitalization of roughly 231 billion

Swiss francs, which is more than 247 billion U.S. dollars as of May 2015.[26]

In 2014, consolidated

sales were CHF 91.61 billion and net profit was CHF 14.46 billion.[27]

Research and

development investment was CHF 1.50 billion.

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Sales by activity breakdown 29% from all beverages (except dairy)

22% from drinks (coffee, tea, etc.; except water and dairy)

7% from bottled water

19% from dairy products

15% from ready-prepared dishes and ready-cooked dishes

13% from Nestlé Nutrition (including baby food) and HealthCare

12% from pet products

11% from chocolate, candies, other sweets

Sales by geographic area breakdown 44% from Americas (25% from US)

28% from Europe

28% from Asia, Oceania and Africa

According to a 2006 global survey of online consumers by the Reputation Institute, Nestlé has a

reputation score of 70.4 on a scale of 1–100.[28]

Joint Ventures

The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestlé and L'Oréal,

while Galderma is a joint venture in dermatology with L'Oréal. Other joint ventures include:

Cereal Partners Worldwide with General Mills

Beverage Partners Worldwide with The Coca-Cola Company

Lactalis Nestlé Produits Frais with Lactalis (40%/60%)[29]

Nestlé Colgate-Palmolive with Colgate-Palmolive (50%/50%)[30]

Nestlé Indofood Citarasa Indonesia with Indofood (50%/50%)[31]

Nestlé Snow with Snow Brand Milk Products (50%/50%)[32]

Nestlé Modelo with Grupo Modelo.

Exhibit 2

Brief Product Profile of Maggi

The original company came into existence in 1875 in Switzerland, when Julius Maggi took over his

father's mill. He quickly became a pioneer of industrial food production, aiming to improve the

nutritional intake of worker families. Maggi was the first to bring protein-rich legume meal to the

market, and followed up with a ready-made soup based on legume meal in 1886. In 1897, Julius

Maggi founded the company Maggi GmbH in the German town of Singen, where it is still based

today. In 1947, following several changes in ownership and corporate structure, Maggi's holding

company merged with the Nestlé company to form Nestlé-Alimentana S.A., currently known in

its francophone homebase as Nestlé S.A.

Noodles

In India and Malaysia, Maggi instant noodles were very popular; Nestle has 39% of the market in

Malaysia, where "Maggi" is synonymous with instant noodles;[33]

and had a 90% share in India.[34]

In

Malaysia, fried noodles made from Maggi noodles are called Maggi goreng. In June 2015, it was

reported in India that tests had found high amounts of lead and MSG in Maggi noodles, and FSSAI

ordered country-wide withdraw and recall for all 9 variants of Maggi Instant Noodles and Oats Masala

Noodles.[35][36]

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Dehydrated Soup

Like other dehydrated soup mixes, Maggi Onion Soup mix is often combined with reduced cream to

create an French onion dip.[37]

Seasoning Sauce

In China, Taiwan, Thailand, Mexico, Pakistan, Singapore, the Philippines, Malaysia, Brunei, German-

speaking countries, the Netherlands, the Czech Republic, Slovenia, Poland and France, "Maggi" is still

synonymous with the brand's Maggi-Würze (Maggi seasoning sauce), a dark, soy sauce-

type hydrolysed vegetable protein-based condiment sauce. In Spain and Mexico, it is sold under the

name Jugo Maggi. [38]

Cube

The bouillon cube or "Maggi cube", which was another meat substitute product, was introduced in

1908. Because chicken and beef broths are so common in the cuisines of many different countries, the

company's products have a large worldwide market.

In West Africa and parts of the Middle East, Maggi cubes are used as part of the local cuisine.

In Haiti,[39]

and throughout Latin America, Maggi products, especially bouillon cubes, are widely sold

with some repackaging to reflect local terminology. In the German, Dutch and Danish

languages,lovage has come to be known as "Maggi herb" (Ger. Maggikraut,

Du. maggikruid or maggiplant, Da. maggiurt), because it tastes similar to Maggi sauce, although

lovage is not present in the sauce.

Exhibit 3

Top Noodle Brands in India

Due to fast cooking properties, instant noodles today have occupied an important position in almost

every Indian kitchen. Since most of the women in urban India are working, instant noodles and ready-

to-eat foods are slowly and steadily replacing the traditional rice and pulses.

Hot favorite among all the children in the country, noodles have come a long way since their

introduction in 1983. Consumed in almost every Indian household (prior to the lead and MSG

controversy), Maggi, which was initially considered a snack, had taken the place of a staple diet in

many Indian homes. Owing to the fast paced lives today, packaged and ready-to-eat foods are gaining

quite a formidable share in the Indian food market.

However, according to market experts, Nestle India's Maggi noodles, which has been dominating the

instant noodles market in India for nearly three decades, is currently witnessing tough competition

with a number of new entrants such as Sunfeast Yippee!, Hindustan Unilever's (HUL) Knorr Soupy

Noodles, Top Ramen and Ching's Secret. Although, there are a number of noodle brands available in

India, only a few have been able to dominate the taste buds of the Indians.

Maggi

Maggi is a product of Nestle India, a subsidiary of the Nestle Group of Switzerland. It goes without

saying that Nestle India's Maggi is still undoubtedly the top noodle brand in India. Maggi has been

dominating the Indian noodle industry for almost 32 years. Maggi was the pioneer of noodles in India.

Launched in 1983 in the Indian market with the challenge of entering a market that was conservative

and had typical notions about food consumptions, this product still managed to gain some space in

almost every Indian kitchen.

Synonymous with noodles in India today, Maggi is known to be the fastest cooked tasty meal in an

Indian household. In 2015, Maggi got entangled in a major controversy when a few samples of Maggi

were tested and found 'unsafe and hazardous' for human consumption. The tests concluded that Maggi

contained much higher levels of monosodium glutamate (MSG) and lead than what was permissible.

The findings of the tests were followed by bans on Maggi in many states across and outside India.

Though Nestle denied the allegations that Maggi was 'unsafe and hazardous' to human health, it pulled

back all the stocks from across the country.

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Yippee!

Another popular noodle brand in India is Sunfeast Yippee!, which belongs to the Indian conglomerate

ITC. Yippee made its way into the Indian market in the first decade of the 2000s and gradually made a

considerable presence. By the early 2010s, Yippee! had started giving market leader Maggi some sort

of competition. Yippee! noodles are available in five different variants; namely, Classic Masala, Magic

Masala, Chinese Masala, Tricolor Pasta (Creamy Corn) and Tricolor Pasta (Masala).

Top Ramen

Top Ramen, by Nissin, is another leading noodle brand in India. Nissin is a Japanese company that

introduced its first noodle product in 1958 but entered the Indian market 30 years later in 1988. It took

a while for Top Ramen to become one of the leading noodle brands in India. Different variants of Top

Ramen noodles in India include Atta Noodles, Cup Noodles, Curry Veg Noodles, Oats Noodles,

Scoopies Short Noodles and Super Noodles.

Ching's Secret

Ching's Secret is another popular noodle brand in India. It is a product of Capital Food Indian Limited.

Another popular brand of noodles in India produced by Capital Food India Limited is Smith & Jones.

But Ching's Secret is the more popular one and is giving stiff competition to the top noodle brands in

India. Ching's Secret offers a vast range of products to its customers that include Schezwan Instant

Noodles, Singapore Curry Instant Noodles, Hot Garlic Instant Noodles, Egg Hakka Noodles and Veg

Hakka Noodles.

Knorr Soupy Noodles

Knorr Soupy Noodles is a product of Hindustan Unilever and has turned out to be a popular brand in

India of late. Knorr is famous for its unique range of soups in India and is the leading brand for the

same but has earned accolades for its unique combination of noodles and soup, that is, Knorr Soupy

Noodles. Knorr noodles range consists of Mast Masala Soupy Noodles, Knorr Chinese Noodle Hot

Spicy, Knorr Chinese Noodle Schezwan, Chinese Noodles and Fried Rice.

Exhibit 4

Maggi in Soup

Maggi is widely consumed by students and young professionals, and is available even in the most

inaccessible parts of the country; the Maggi Points on the Leh-Kargil highway for instance. By some

reckonings, Maggi has declined 70 per cent in sales since the crisis. Amid allegations of higher than

permissible levels of lead and the presence of MSG (monosodium glutamate) in its flagship noodles,

Maggi was down, out and sinking lower at the time of going to print. It had been temporarily banned

in Delhi, Tamil Nadu, Uttarakhand and Jammu & Kashmir. Kerala took it off shelves in all

government run shops, the army issued an advisory to its canteens against the product and it'd also

been dropped by retailers including Big Bazaar, Walmart, Hyper City and online store Bigbasket. An

increasing number of state governments were keen on testing not just Maggi but a wide range of

processed food. VK Pandey, an officer with UP's Food Safety and Drug Administration ended up

www.theinternationaljournal.org > RJSSM: Volume: 05, Number: 4, August 2015 Page 216

doing what several deep pocketed global multinationals couldn't do; deal Maggi (a Top 5 Trusted

brand according to last year's Brand Equity survey) a blow it may never entirely recover from. The

food brand's troubles began when Pandey — who has a previous history of activism against targets as

diverse as Britannia and a Lucknow based biryani house — sampled Maggi packs from Barabanki for

MSG. After his report was challenged by Nestle, the labs came up with an even more damaging

verdict: not only was MSG present but the lead levels were nearly 7 times the permissible limit. On

30th of April, authorities in Lucknow ordered Nestle to recall a batch of noodles. In an emailed

statement, the company claimed, "We are confident that these packs are no longer in the market. The

company does not agree with the order and is filing the requisite representations with the authorities."

The Silent Treatment

And then, in the weeks it took for the controversy to spread to social media and grow into a full blown

crisis, Nestle appears to have done... not very much at all. It seems unaccountable, considering Nestle

is an MNC and has been through enough rough patches to assume there would be a response

mechanism. According to an industry veteran, "They've had complaints about one thing or the other

every three years now. And they probably thought this would die down if they didn't do anything."

However, even when it became blindingly obvious that this was more than a minor blip, Nestle

continued to look the other way. If it reacted, it was via impersonal and template based responses to

consumers who keyed in the words Maggi and MSG. A common interpretation was that of an

admission of guilt. Says a marketing expert who personally weathered a crisis in which traces of

pesticide were found in popular soft drinks, "For so ubiquitous a brand, the first thing they could've

done is conversed with the consumer. Whether guilty or not, it didn't matter; communication was non-

negotiable. The more the delay, the more the suspicion." Adds a retail veteran, "Whenever a

controversy happens, consumers pause and wait for clarity. The brand needs to come out, engage and

keep the dialogue going." Part of the blame for Nestle's stilted response is laid at the door of its social

media strategy. Srinivasan argues that most brands spare no expense while crafting a message over

film or print. And yet this much loved product was "given an assembly line treatment on Facebook and

Twitter. There have been enough meltdowns on social media for most brand experts to recommend a

well-defined strategy — communicate openly, give the company a face, say sorry if necessary, find

your loyalists, have an honest discussion of the issue with them, give them an insight into the brand's

perspective and hope they become your first line of defence at a time when the brand's credibility is

badly damaged. However, as of now, Maggi is going down and taking the category and its company

with it.Nestle's stock rose by 25.7 per cent over the last year. It fell a staggering 11.7 per cent last

week. Marketing experts believe it's a watershed moment for Indian consumers and processed food.

Once the lead and MSG stories die down, Then according to the comments of a veteran from cola

industry, he points out that it's a very unhealthy snack because of the presence of maida and this

incident will take a different direction: ―how healthy is it?‖

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