Maggi - Nestle's Problem Child?
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Case Details:
Case Code : MKTG021
Case Length : 10 Pages
Period : 1997 - 2001
Pub Date : 2002
Teaching Note : Available
Organization : Nestle India
Industry : Food, Beverages and Tobacco
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"The Maggi brand revolutionized 'fast food' made-at-home."
- A Financial Express News report, in March 1999.
Maggi Under Pressure
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In late 1997, global FMCG major Nestlé SA's Indian subsidiary Nestlé India (Nestlé) launched a 'new, improved,' formulation of its noodles brand, Maggi (a snack food cooked in water along with a flavoring agent called the 'tastemaker.') This change was the first since the brand's launch in India in the 1980s.
The new formulation had thinner noodles and a different flavor. The company reportedly wanted to infuse fresh life into the brand to deal with stagnating sales. Nestlé was in for a major shock. Maggi lovers all over the country rejected the new formulation. Sales started declining alarmingly and even maintaining the previous year's sales level of 13,000 tonnes seemed very difficult.
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Around the same time, Maggi Macaroni, launched in mid-1997 with a Rs 10 million1 ad spend, was also faring badly. Against a target of 1000 tonnes, it managed to sell only 300 tonnes for the year 1997. Reportedly, many shops had stopped carrying the product.
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To add to the company's woes, Maggi lost its leadership status in the soup segment to a new entrant, Knorr, in the same year. Knorr cornered a 55% market share of the 425 tonne soup market -around 75% of which came by eating into the customer base of Maggi soups. Competition had intensified in the ketchup segment as well.
Unilever subsidiary Hindustan Lever Ltd's (HLL) Kissan brand had almost reached Maggi's market share figures. Other products under the Maggi umbrella -instant food mixes, seasoning cubes, and pickles -were also faring poorly with limited sales scattered in different regions of the country (Refer Exhibit I for products available under the Maggi brand). |
Maggi - Nestle's Problem Child?
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