2 Minutes!

Maggi Noodles

Abstract

Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé SA, introduced
the Maggi brand in India in 1982, with its launch of Maggi 2 Minute Noodles, an instant noodles
product.

With the launch of Maggi noodles, NIL created an entirely new food category - instant noodles -
in the Indian packaged food market. Because of its first-mover advantage, NIL successfully
managed to retain its leadership in the instant noodles category even until the early 2000s.

Over the years, NIL extended the Maggi brand to a variety of culinary products like soups,
sauces and ketchups, and cooking aids among others. However, these product extensions were
not as successful as the instant noodles. In 2005, NIL started offering a range of new 'healthy'
products under the Maggi brand, in a bid to attract health-conscious consumers.

This case looks at the various phases in the product life cycle of Maggi noodles in India. It talks
about the various measures taken by NIL to keep the Maggi brand fresh in the minds of Indian
consumers. The case also talks about the various extensions of the Maggi brand and tries to
analyze why only the sauces and ketchups category, among all the other product extensions,
managed to succeed.

It further discusses the measures taken by NIL to reposition Maggi as a 'health product'. The case
ends with a discussion whether NIL would be successful in sustaining this new image for Maggi
in the market.

Verbatim

"What Xerox is to photocopier and Colgate to toothpaste, Maggi is to noodles in India."1

- The Economic Times, a prominent newspaper in India, in 2003.

"Maggi is the leader in the Instant Noodles category because it is constantly improving its
understanding of the consumer to give them excellent and tasty products that provide nutrition,
health, and wellness."2

- Martial Rolland, chairman and managing director, Nestlé India Ltd., in 2006.
"Maggi has managed to enter Indian homes to change the traditional food habits of Indian
children on their promise of convenience. This brand has understood the psychology of Indian
mothers and positioned itself for mother-child indulgence."3

- Business Week, a prominent business magazine, in 2006.

Background Note

NIL introduced the Maggi brand to Indian consumers when it launched Maggi 2 Minute
Noodles, an instant food product, in 1982 (Refer to Exhibit III for the history of the Maggi
brand). At that time, Indian consumers were rather conservative in their food habits, preferring to
eat traditional Indian dishes rather than canned or packaged food. In fact, NIL was trying to
create an entirely new food category, instant noodles, in India. Initially, the company targeted
working women on the premise that Maggi noodles were fast to cook and hence offered
convenience.

However, this approach failed as was evident from the fact that the sales of Maggi noodles were
not picking up despite heavy media advertising. To get to the root of the problem, NIL conducted
a research, which revealed that it was children who liked the taste of Maggi noodles and who
were the largest consumers of the product. After this, NIL shifted its focus from working women
and targeted children and their mothers through its marketing. NIL's promotions positioned the
noodles as a 'convenience product', for mothers and as a 'fun' product for children. The noodles'
tagline, 'Fast to Cook Good to Eat' was also in keeping with this positioning.
NIL aggressively promoted Maggi noodles through several schemes like distributing free
samples, giving gifts on the return of empty packs, etc. NIL's advertising too played a great role
in communicating the benefits of the product to target consumers.

Through its ads, NIL positioned Maggi as a 'fun' food for kids which mothers could prepare
easily. Taglines like 'Mummy, bhookh lagi hai' (Mom, I'm hungry), 'Bas 2-Minute,' (Only 2
minutes) and 'Fast to Cook Good to Eat' effectively communicated the product's benefits to target
consumers.

These ads had become so popular that the tagline 'Bas 2-Minute' immediately reminded Indian
consumers of Maggi noodles even several years after the ads were taken off the TV. Maggi's first
product extension was Maggi instant soups launched in 1988. With the launch of Maggi soups,
NIL had become a pioneer in the organized packaged soup market in India...

Maggi after The Re-launch

In July 2001, Maggi replaced Nescafé (NIL's coffee products brand) as the company's core
brand. Nescafé had been NIL's core brand since 1998.
Commenting on the shift, Carlo Donati (Donati), chairman and managing director, NIL, said,
"The focused approach on Nescafé, which was the company's flagship brand over the last few
years, has yielded rich dividends and we plan to replicate the same in case of Maggi as well."

According to Donati, the new focus for the Maggi brand was to provide 'the much needed
impetus' for the culinary segment as it had been lagging behind some of NIL's other product
segments like milk and milk products and coffee products...

The Health Angle

In the early 2000s, the Nestlé Group had been taking measures to transform itself into a 'health
and wellness' company. The company had also set up new research and development facilities
with a view to improving the attributes of the existing Nestlé products to make them healthier,
and to develop new health and wellness products. Since the early 2000s, the Nestlé Group had
been introducing 'health and wellness' products all over the world. In India, NIL introduced new
'healthier' weaning and milk products in 2004.

In March 2005, the Maggi brand too took to the health route with the launch of Vegetable Atta
Noodles. NIL made use of the group's extensive research and development facilities in
developing this new 'healthy' product. According to NIL, Vegetable Atta Noodles were healthier
as they were made of whole wheat flour instead of maida (refined wheat) and also because they
contained real vegetables...

Maggi takes the Health Route

In May 2006, Nestlé India Ltd. (NIL), a major FMCG company in the country and a subsidiary
of the Switzerland-based Nestlé Group, launched a new instant noodles product called Maggi
Dal Atta Noodles (Dal Atta Noodles) under the popular Maggi brand (Refer to Exhibit I for a
brief profile of NIL). The Dal Atta Noodles were made of whole wheat and contained pulses, and
positioned as a 'healthy'instant noodles product that provided 20 percent of the daily RDA of
dietary fiber and protein for a child aged between 7 and 9. This was the latest addition to the
range of 'healthy' products NIL had been launching over the early 2000s.

NIL offered a variety of culinary products such as instant noodles, soups, sauces and ketchups,
cooking aids (seasonings), etc., under the Maggi brand (Refer to Exhibit II for Maggi's product
portfolio as of mid-2006). Of these, instant noodles had been NIL's main product category in the
culinary segment since the launch of Maggi 2 Minute Noodles (Maggi noodles) in 1982. Over
the years, Maggi noodles became a popular snack food product in India.

During the 1990s, the sales of Maggi noodles declined, and this was attributed partly to the
growing popularity of Top Ramen , another instant noodles product. In order to improve sales
and attract more consumers, NIL changed the formulation of Maggi noodles in 1997. However,
this proved to be a mistake, as consumers did not like the taste of the new noodles. In March
1999, NIL reintroduced the old formulation of the noodles, after which the sales revived. Over
the years, NIL also introduced several other products like soups and cooking aids under the
Maggi brand. 

However, these products were not as successful as the instant noodles.In the early 2000s, Maggi
was the leader in the branded instant noodles segment, and the company faced little serious
competition in this segment. In the early 2000s, NIL started introducing new 'healthy' products in
accordance with the Nestlé Group's global strategy to transform itself into a health and wellness
company.

NIL also adopted the same strategy for the Maggi brand with the launch of the Maggi Vegetable
Atta Noodles (Vegetable Atta Noodles), a 'healthy' instant noodles product made of whole wheat
flour and vegetables (instead of refined flour), in 2005. The Dal Atta Noodles were another
variant of Maggi's healthy instant noodles. proved to be a mistake, as consumers did not like the
taste of the new noodles. In March 1999, NIL reintroduced the old formulation of the noodles,
after which the sales revived.

Over the years, NIL also introduced several other products like soups and cooking aids under the
Maggi brand. However, these products were not as successful as the instant noodles. In the early
2000s, Maggi was the leader in the branded instant noodles segment, and the company faced
little serious competition in this segment.

In the early 2000s, NIL started introducing new 'healthy' products in accordance with the Nestlé
Group's global strategy to transform itself into a health and wellness company. NIL also adopted
the same strategy for the Maggi brand with the launch of the Maggi Vegetable Atta Noodles
(Vegetable Atta Noodles), a 'healthy' instant noodles product made of whole wheat flour and
vegetables (instead of refined flour), in 2005. The Dal Atta Noodles were another variant of
Maggi's healthy instant noodles.

Outlook

According to the FICCI 'Food and Beverage Survey' published in February 2006, health foods,
health food supplements, convenience foods and branded foods were the 'rapidly rising' segments
of the food and beverage industry. The survey also revealed that the market for branded food
products was growing at a healthy rate of around 15 percent in the early 2000s. The changing
lifestyles and eating habits of Indian consumers and the increasing purchasing power of the
growing middle income group were thought to be the reasons behind this growth.

Even though the demand for convenience food was increasing in India in the early 2000s, analysts said
that most of the Indian consumers were still conservative in their food habits, and gave importance to
the perceived health benefits of traditional food. Therefore, it remained to be seen whether products
like Maggi Atta Noodles, despite their 'health' focus, would prevail in the long run.

Competition was also increasing for Maggi in various other product segments (Refer to Exhibit VI for
NIL's competitors in the prepared dishes and cooking aid segment in mid-2006).

For instance, Heinz was taking various initiatives to increase its presence in the sauces and
ketchup market. In March 2006, Heinz India launched two new Indianized flavors - Chatakdar
Mint Chutney and Chatpata Tomato Chutney. The company already had a vitamin-enriched
sauce, Heinz Champ, for health conscious consumers...

The Maggi Brand in India

Brand Extension and Repositioning

Case Background

Nestle India Limited is the market leader in Indian Noodle Market with it’s Maggi Brand
of Noodles which was pioneer brand launched in 1983 in the packaged food market of
India. It took the challenge and established Maggi in Indian market considered to be
conservative and typical about food consumption. It appropriate realization of target
segment, effective positioning and effective promotion and sales made Maggi to
Noodles in India as Xerox it to photocopier. NIL had introduced sauces, ketchups and
soups under Maggi brand to reap benefit of brand popularity and image and contribute
to financial gains by 1990.Maggi also became successful in sauces, ketchups and soups
Market in India. Though NIL tried to extend to other ready to eat products like pickles,
cooking aids and paste, It was unsuccessful so dumped those products. Maggi Brand of
products sustained recession in 2000 and 2001 in India by introducing economy packets.

To fulfill novelty needs of customers and revitalize Maggi Noodles Brand NIL made
different attempts by introducing new formulation to new taste but customers resisted
change and Maggi had to reintroduce Maggi Noodles in same taste. Maggi Noodle had
till 2005 five product line on noodles with four variant in Maggi 2 Minutes Noodle. In
2006 in compliance with NIL target to be “health and Wellness Company” Maggi
repositioned it as health and taste food products. NIL has also introduced with taste and
product line in Sauces and Soup Market under Maggi to catch new segment, revitalize
brand, compete with other producers and fulfill expectation of customers.

In 2005 Maggi brand worth was 3.7 billion from 1.7 billion market worth in 1.7 billion in
2003. Maggi Noodle is Market leader with around 80% market share in Noodles/Pasta
and Maggi Sauce is market leader with almost 37% of market share in 2005 in 1.8 billion
market of India. Knorr has taken over Maggi in Soup market recently.

In 2005 Maggi was the highest spender in the Promotion and Sales in the Indian Market
in the Noodles Category.

Maggi is competing with Heinz Sauces and Ketchup, Knoor Soups, Kissin Sauces and
Ketchup, Top Ramen, Sunfeast Pasta Wai Wai and 2 PM in corresponding categories of
products and variants

Key Issues
 How Nestle India Limited is ahead in Noodles Market with brand Maggi since
1982
 How NIL extended it’s brand and line of products to leverage the brand and
established Maggi as family brand.
 NIL’s positioning and repositioning strategy to catch market and consumer
expectation.
 How to continue NIL capability to Maintian Point of Difference ( POD) and Point
of Party (POP) while bradn extension and repositioning.
 Maggi’s challenge to protect it’s market leader position in situations where there
is emergence of competitors like Hindustan Lever Limited, Indo Nissan, ITC,
Dabur India, Heinz are competing with their corresponding brand on the product
category.
 BCG Martix ( Maggi Brand Products in 2006 )

20 % STAR QUESTION ?

Maggi
Noodles Maggi
Maggi Soups
Market Sauces
growth rate 10 %
CASH COW DOG

0 %
10 x 1x 0.1x

Relative Market Share

STARS : Maggi Noodles is the market leader with 80 % market share in Noodles Market
and Maggi Sauces and Ketchup is leader with 37 % market share. The products are
producing cash for the company consistently. The Market is growing by 15 % in the
Product Category of Noodles.

QUESTIONS ? : Maggi Soups is the category which is in Question mark as the market is
growing and the brand as less market share then market leader Knorr brand of Hidustan
Lever Limited. There are more chances for Maggi Soups to go to dog it does not stay
competitive and increase market share in the category.
 SWOT Analysis of Maggi as Brand

Strengths

 Established Family Brand

 Strong Global Corporate Brand ( NIL )
 Specialization in food processing category marketing and distribution in Urban
market
 Presence of other product segments of food category : Dairy Products, Chocolate,
Infant foods
 Pioneer and Leader so 1st mover advantage in Noodles, Sauce, Ketchups and Soup
market.
 Nestle symbolization of warm, family & shelter.
 Research and Development Division in India
 New Noodles Plant in Uttarnchal

Weakness

 Generic Brand to Noodles in India

 Low rural market presence constraints
 Uniform Brand for all food category
 Brand Proliferation

Opportunities

 Growing package and canned food market in India by 15% annually.

 High brand awareness of Indian consumer
 Other product category like Biscuits, Chips and Ready to Eat Market still
 unexplored.
 Opportunity to be substitute to other snacks category of food products.

Threats

 Competitors with long history in product category Internationally like, Heinz

Sauce and ketchups of Heinz Indian, Top Ramen in Noodle and
 Knorr Soups.
 Single product focused competitors like Heinz sauce and Wai Wai Noodles.
 Less Entry Barriers in the Market segment for product category
 ITC’s strong base in Indian Market.
 Substitute Product to Product Segment.

Possible Alternatives

Strengthen and use the Distribution : NIL should focus on distribution channels and use
of the distribution channel to expand it’s market to Rural India with products targeted
to the market. It is the way it could increase it’s volume of sales.

Increase the Usage of Maggi Brand Products: Since Maggi Noodles and Maggi Sauce is
market leader it has to adopt strategy to increase the usage of the product to protect
it’s market share. As it cannot further grow sales drastically in the same segment, only
way is to increase product usage like Noodles for breakfast Ketchups in biscuits.

Lunch Health Awareness Promotion Campaign : NIL should launch Health Awareness
campaign to educate consumers about the benefits of health food. It could sponsors
health camps, publish health information.
Enter into other product category like Biscuits, Chips and Snacks with New Brand : To
enlarge it’s domain, NIL should enlarge it’s product segment. It would spread economies
of scale to customers in the form of price.

BEST COURSE OF ACTION

Introduce different new brand or acquire emerging brand in biscuits, chips and snacks
category.

Maggi though has been able to differentiate itself from other Noodles, Maggi
being taken as generic to Noodles is hampering other extended product category.
Competitors have high grounds to capture the market differentiating then from being
Maggi. It makes others possible product category vulnerable if lunched under Maggi. So
to avoid proliferation of brand and introduce new products to capture opportunities in
other snacks and ready to eat product category NIL has to introduce new branding
strategy.

As pasta of ITC has been seen as products capturing the market of noodles and Maggi
failing to lunch pasta under Maggi brand also support the argument for new brand
introduction by NIL.

As Indian Market is Brand conscious, other competitors are coming up with more
Indianized brand of products, and as Indian being more aware of their culture and large
segment being typical and conservative about their culture, there care more chances
that NIL would be successful if it create a brand close to Indian culture in wording to
positioning. As India is growing, Old Indian Brands are also regaining momentum
worldwide, NIL could catch the trend of market.

By doing so, NIL could avoid the draw backs associated with the Maggi brand. It could
position new brand in competition with other competitor’s brand where there is no fit
of product with the Maggi brand.

NIL other option is acquiring products manufacturers of different products like biscuits,
chips and snacks as it is very essential for it’s market leader position. Other companies
have advantage of such products. ITC has biscuits to it, Hindustan Lever has tea to it.
India is huge market where distribution advantage plays major role and economies of
scale pays back. So it’s is important for NIL to concentrate on other ready to eat
category to benefit consumers from economies of scale reflect in price.

Good Link..but we need to buy this

http://www.docstoc.com/docs/30195704/Distribution-and-marketing-communication-strategy-for-Nestle-
Maggi