Nestlé’s Maggi Recall in India: A Reverse Supply Chain Ordeal |
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| The manufactured Maggi was packed into cartons at the manufacturing plants. Then, it was stored in 38 distribution centers under Nestlé’s control. These distribution centers supplied cartons of Maggi to 1,357 distributors and Canteen Sales Departments located pan India. Nestlé had a Warehouse Management System (WMS) and Radio Frequency (RF) system at the warehouse and distribution center levels. It minimized the cost of distribution of Maggi by using an optimal truck mix, vehicle utilization , rail transportation, and route planning... |
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| Nestlé initially assessed the quantity of Maggi to be recalled at 27,420 tons. The estimate was later revised to over 30,000 tons. Nestlé divided the recall process into the following three stages.. |
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| The recalled Maggi had to be burned in such a way that it caused the minimum environmental impact. Nestlé outsourced the incineration process to three cement manufacturers. By June 13, 2015, Nestlé had destroyed 169 tons of Maggi through three cement manufacturers who had the facility for burning food products, one that had previously been used by other food product manufacturers. An additional two facilities were employed to complete the process on time and with five plants, the combined burning capacity went up to 700 tons per day... |
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| In the wake of the FSSAI ban on Maggi, the company’s net profit came down from Rs. 11.85 billion in the year 2014 to a mere Rs. 5.63 billion in the financial year ended on December 31, 2015. The ban also had a negative impact on the share prices of Nestlé India, sending them down to below Rs. 5,000 by February 2016... |
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| In November 2015, the ban on the sales of Nestlé Maggi was lifted. Nestlé then began working to regain market presence. In 2017, the Ministry of Health and Family Welfare, Government of India, enforced Food Safety and Standards (Food Recall Procedure) Regulations, 2017. The same year, the FSSAI issued extensive guidelines for Food Recall (Refer to Exhibit VII for the food item recall process by a manufacturer)... |
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Exhibit I: FMCG Companies’ Reach in India’s Total Retail Outlets (in %)
Exhibit II: Nestlé Presence in India
Exhibit III: Share Price Movement of the Nestlé India Stock
Exhibit IV: Stock Position at Beginning of Maggi Recall Process*
Exhibit V: Event Timeline
Exhibit VI: The Financial Implication of Maggi Recall for Nestlé
Exhibit VII: Stages of Food recall as per the Guidelines for Food Recall issued by FSSAI
Exhibit VIII: Market Share of Maggi in Instant Noodles Market
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