The Overview of Supply and Demand: Economic Analysis of Maggi Noodles in India

e of Trend in ScientificT esearch and De
Int rnational Journal

R ISSN No: 2456 - 6470 | | Vo
m
The Overview of Supply and Demand:
Economic Analysis of Maggi Noodles in
India
Taniya Mirza
B.A., L.L.B. (Hons), Indore Institute of Law,
Indore, Madhya Pradesh, India
INTRODUCTION
The world economy is increasing day by day, as
consumers we play a vital role in the working of the launch the brand has become synonymous with the
economy of country. All the marketing of goods start category of instant noodles.
with the decisions made by us- the consumers. These
Nestle :
decisions made by the consumers concerning our
Nestle is a swiss company originated in 1905 and
consumption affect the demand and supply of a
was founded in 1866 by Henri Nestle. Today the
commodity. ‘MAGGI – 2 MINUTE NOOODLES’ company has 447 factories, operates in 194 countries
is a leading brand and also an important part of the
and employs around 339.000 people. Overall nestle
Nestle family. Over the years Maggi has positioned
itself as ‘Fast to cook, good to eat’. owns 2000 main brands over 50 countries.
SALES REPORT OFE N STLE BRAND IN
The adjustments to the changing requirements of the 90000 INDIA
wider area and different consumer eating habits have
made the growing population to accept the 2 minutes 85000
snacks. In India around 80% population eats Maggi
every day irrespective to the age group. It acquires
about 90% of the instant noodles market from the last 80000 120000
25 years. According to a Mumbai based advertising
expert it is said that Maggi is now the ‘Third staple 75000
food’ after wheat and rice. 2013 2014 2015 2016 2017
1
Heath concern has always been the z factor for every *impacted by Maggi noodles issue.
food commodity as consumers today are more active.
The Maggi noodles being the most popular brand in Figures of 2016 and 2017 are stated as per Ind AS
India , was ban by the FSSAI and was termed as
hazardous for consumption and ordered Nestle to shut *Sales for the year not comparable due toh the
down the noodles market. After it was approved safe implementation of GST.
to consume, it was relaunched again in the market in
November 2016. But the demand and supply of Sales per category in CHF:-
Maggi noodles was severely affected after the ban.
 20.3 billion powdered and liquid beverages
Evolution and development of product and  16.7 billion milk products and ice cream
brand:-  13.5 billion prepared dishes and cooking aids
 6.9 billion water
Maggi was introduced in India by the Nestle family in
the early 1980’s. Maggi was invented in the mid 19th
century by Julius Maggi as per the corporate history 1
of the brand. The Swiss brand maggi merged with https://www.nestle.in/investors/stockandfinancials/documents/an

the Nestle group of companies in 1947. After the nual_report/01_nestle-india-annual-report-15.pdf
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug 2018 Page: 1

International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
MAGGI NOODLES: with price of Rs.60, 50, 30, 15,10 and also in a mini
saver pack of Rs. 5. It can be understood with the help
The history of the noodles starts from the industrial of figure 1.
revolution in Switzerland due to which the factory jobs grossly and RFigure 1- VE WITH
emerged for the they THE RELATION
women were DEMAD
CU
left with no time. So WITH
to overcome this PRICE
problem,a person
Julius Maggi was
given a task to create
a food product quick
and easy to prepare.
“In the year 1863, he
came with a
different idea to add
taste to meals and
after in collaboration
with the
Swiss welfare society ,in the year 1882-1883 he
l
a
u
n
c
h
e
d
f
i
r
s
t
M
a
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p
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o n
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s
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a
o ,
n
i
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M t
a h
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w
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p .
w T
i h
t i
h s
t i
a d
g e
l a
i
n s
e e
s r
v
e
d A MAGG R
Figure 2-THE
r
I K GLOBAL
DEAMD
i NE OF
g
h M
OT INSTANT
NOODLE
t O S –INDIA
NO.5
f D
o
r L
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h S
e
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p
a H
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6
-
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e 1
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a 7
m
e 40%
A
a 60%
G
b G
r
I
a
n
d N
n O
a O
m
D
e
. L
ES OTHER S 0
3
-
2
W
The demand and supply chain of Maggi noodles in h
a
India:-
t
A
c X
c e
o r
r o
d x
i
n i
g s
t t
o o
t p
h h
e o
t
r o
e c
p o
o p
r i
t e
r
o
f a
n
t d
h
e c
o
E l
c g
o a
n t
o e
m
i t
c o
t t
i o
m o
e t
s h
p
2 a
0 s
t with a healthier taste decades with a market
e without compromising on share of 70%. The
, the great taste of love. demand is picking up
The demand of the after the ban in 015 and
M noodles is always high as coming to the same title
a it comes 2with covering a lot of
g scope in the Indian
g market.
2 Supra note 1
i
Determinants of demand
i of maggi noodles:
s
t
o
n
o
o
d
l
e
s
i
n
I
n
d
i
a
.
A
f
t
e
r
t
h
e
long journey of ups and downs, Maggi noodles has
always acquired Indian
a mainstay in marke The global market report
the across the t
nestle brands in shows that the Maggi has
the world.
The law of demand maintained its position in
according to Alfred
Marshall says the market from the last
that ‘Others things Maggi noodles is the
being equal, the demand most loved meal defined
for a commodity varies by all age groups and
inversely with its price.’ bringing people together
0 . It shows
3 TEJBIR KAUR i oods
8 that the
,volume 4,no.10, OCT
15,The case study of
n decrease
0 in little will
Maggi noodles story: t demand
0 as have a
IJMSSR h it6 impact of
e substitutes.
0 has large
1. Price of the p number
commodity:- The In the market demand 0
and consumer r 1 of
most important 4
behaviour the i 2 0
thing is the price of c0
the commodity. substitues play major 0 Series 3
role because with a e0 top ramen maggi noodlee
2
change in the factors o1
0
of demand the f 0 0
consumers switch to g0
0
the
60 10
700 other products. Lets
600 compar the scenario 20
500 of maggi noodles
with top ramen with 40
400 e
P change in price and
300
R income of the E
2
0
consumer. L
I
0
Price Rs 10 Rs 20 A
C S
1
Quantity 100 g 200 g
0 E T
0 Qunatity 70 g 170 g
I
0 C
1 W Maggi has susatined
its position in the I
E market because the T
I Maggi products Y
2. Income of contains more
G O
Income Lower Middle quantity Upper
as compare Elite
the H F
group with substitute
consumer:-
Pack/month 3 T 5 5
product of top ramen 7
in the same price. D
Maggi noodles have E
elastic demand and M
one of the major A
factor is the N
availability of D
substitute :
er middle go -
od
upper middle s 1.
as a brand
Price
de name
elasticity
cri product.
Maggi
Sales be ifthe
the price
d customers
increased ready
3 l toare still
purchase
in
7 fig Thus the
maggi.
o ur elasticity
positive.
5 is
e
5 w ris 2.C
e
b
y
2
0
%
t
o
2
5
%
t
h
e
n
t
h
e
demand for maggi will
increa e by 10%.
Figure 3-
Maggi outlets in 3.I ncome elasticity-
If the income of the
year 2015-17 people rises by 20%
then demand of Maggi
SUBSTITUTE will also rise by 10%.
GOODS:- Thus this is the effect
of income elasticity on
1. Yipee people.
2. Top ramen
3. Knorr instant Short run and Long
noodles run impact in the
elasticity of demand:
4. Wai wai
5. Chings chinese In the Short run period
noodles of time, the demand
for the Maggi is less
elastic because if the
price of Maggi
suddenly increases the
demand of the product
will also decrease as
per the long run
of scenario.
To s
p Some other situations No change in the taste and
ra can also arise:- quality
me Our product should be in Assumptions:-
n the monopolistic
or competitive market  There are
Kn product. possibilities of
orr change in
technology and Maggi has created an
chances of impact by targeting the supporting it. It was a Accreditation Board of
product age groups, household betrayal of the trust of India).
innovation in the class , working class etc. the consumer which is
Test results:- After
long run. The brand name of the worst of the maggi few months Nestle India
 There are Maggi has catered the controversy. FSSAI
conducted more than
possibiities of buyers concern about has noted three major 3500 products samples
increasing good their health issues due to violations of Maggi noodles in
quality instant the resence of wheat both national and
1. Presence of lead
noodles flour used in noodles.
detected in the international accredited
manufacturing The brand popularized
poducts in excess laboratories. These tests
units the image of mother as
of the maximim representing more than
Maggi mom , working
 Growing no. of permissible levels. 200 millions packets of
women that loves and
substitutes in the cares for her children as 2. The label of the noodles in total have
market. much of traditonal Maggi was false as found Maggi noodles
mother but they didn’t it conveyed safe for consumption.
Maggi noodles on and ‘MSG’.
have time for making Nestle India is
off the shelves of time consuming curries . committed to colaborate
india:- In may 2015 Maggi
Kids loves maggi, moms and work acively with
was ban nationwide by
The tagline of maggi loves making maggi. FSSAI the apex food
noodles taste bhi health The demand of maggi the central government regulator by maintaning
bhi, good food for good before the year 2015 was due to the presence of the standards of food
life suggests the picture hifg and it contributed to lead and MSG. The quality and safety in the
of instant tasty noodles. the profit of Nestle ban started from Uttar manufacture of all its
company. Pradesh Barabanki
The year 2015 june 5 district where FSSAI, products and consumers
was the biggest disaster reported the trust of paramount
for house Nestle as the Maggi controversy: importance. 4
unexpectedly high
Food safety and The maggi controversy levels of monosodium
standard of India Its net sales declined 17
has shatterd many hearts gulmate,as well as up
(FSSAI) demolished it % to rs. 8123 crores and
in India. It was not a to 17 times permissible
and Maggi was termed its profit declined
brand or a product nut the limits of lead .
hazardous and 52.45% to rs. 563.27
consumer trust in the
unhealthy for crore as per the table
product from years and AFTER BAN :-
consumption. The below listed. Nestle said
supply of Maggi was years
The brand title of sales in Asia , Oceania
shattered because of the Maggi has always and sub sahara africa
ban on noodles for the shown that the brand is (AOA) markets were
presence of MSG and safe . Maggi had to overshadowed by the
lead . pull tock worth Rs.320 issue in India. Market
crore from the market research agency
M aggi story in Neilsen’ dat for January
and had to pay 20
India:- 2016 put Maggi’s
crore to a cement
Maggi instant noodles factory to burn the market share at 42% ,
are having a brand name product. In addition the 35% points lower than
in India and has almost MCA imposed a Rs. the share of the brand a
replaced the word 640 cr fine on Nestle year ago. The company
instant noodles in the India. The high court however has gained
global world. It had a of bombay struck significant market share
market shares of 90% of down the ban and since its relaunch on
shares in India until question the test results november 9.
FSSAI imposeda wide as the samples were
national ban on it and 4
today contributes 53% not tested as https://www.nestle.in/
of the markets noodles authorized laboratories aboutus/ask-
supply. nestle/answers/maggi-
accredited to the noodles-india-latest-
NABL( National
test-results
Nestle net profit Net profit
17% 52.45 %
Rs. 8123 cr. Rs 563.27 cr.

Jan 2016 Jan 2015
Maggi share market 42% 77%
Size of instant Rs 2000 cr Rs 3400 cr.

Noodles market
Figure 4- Test results of Maggi noodls

Data analysis and interpretation:-
The research sample was taken on the sample collected from different age groups in the area of hoshangabad,
bhopal and jabalpur. The sample is based on questionnaire type related to the maggi ban its after effect and its
consumption.
STPD ANALYSIS:-
Segmentation is the process of grouping people or organizations within a market according to similar needs,
characteristics or behavior.
Segmentation Targeting Positioning Differentiation

Age Kids Fast to cook good to Eat Taste
Eating habits Youth 2- minute noodles Flavours
Lifestyle of urban Office goers Taste bhi health bhi Packaging
families
Working women
5 Ibid
QUESTIONNAIRE:-
Q uestion 1:- Brand names of instant noodles consumed by the respondents recently.
Brand names No. of respondents Percentage
Maggi 35 38
Yipee 44 47
Sunfeast 7 8
Knorr 3 3
Wai wai express 2 2
Others 2 2
Total 93 100
Q uestion 2:- How often do you consume Maggi?
16%
maggi others
84%
Q uestion 3:- With what products would you associate the brand MAGGI?
60
50
40
30
20
10
0
KETCHUPS NOODLES SOUPS MASALA
Figure 5 MAGGI NOOLDES HIGHEST ASSOCIATION

Q uestion 4:- Health perception of respondents regarding maggi instant noodles?
HEALTH PERCEPTION
24%
HEALTHY
76% NOT HEALTHY
Question 5 :- Consumption of Maggi after its relaunch?

Opinion No.of respondents Percentage
Yes 23 25
No 70 75
Total 93 100
n
Question 6:- The opinion of the respondents regarding relaunch of Maggi instant oodles in the market?
70
60
50
40
30
20
10
0
yes no no response
Opinion Percentage
Yes 66
No 30
No response 4
Total 100
6 https://www.worldwidejournals.com/paripex
R ESULTS AND FINDINGS:-
 Taste is the most important factor considered by the respondents while choosing instant noodles.
 Maggi as a good brand recall compared to its customers.
 Majority of the respondents did not like the taste of maggi and the demand of the noodles went down
when it was banned and other continued consuming the noodles.
 So the company should maintain its previous and should follow strict safety measures by taking
consumers health into consideration.
 After the ban majority of the respondents do fear about the safety of other branded products available in
the market even though they wish to buy the same.
CONCLUSION:-
The research shows that the consumers buying behavior is the biggest factor in the demand and supply of any
product. The brand name of Maggi noodles has gained a very high position in the market in the last 25 years.
Though the consumers are willing to buy the product which have taste but also includes ingredients which are
good for health of the consumer. The demand of Maggi went down due to its ban as compared to the market
share of last years. Maggi instant noodles after its roll back in the market are making every effort to win the
trust of the consumers and soon will regain its position with regards to the health of the consumers.

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e of Trend in ScientificT esearch and De

Int rnational Journal

of the brand. The Swiss brand maggi merged with https://www.nestle.in/investors/stockandfinancials/documents/an

@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 5 | Jul-Aug 2018 Page: 1

Rs. 8123 cr. Rs 563.27 cr.

Maggi share market 42% 77%

Size of instant Rs 2000 cr Rs 3400 cr.

Figure 4- Test results of Maggi noodls

Segmentation Targeting Positioning Differentiation

Q uestion 2:- How often do you consume Maggi?

Figure 5 MAGGI NOOLDES HIGHEST ASSOCIATION

76% NOT HEALTHY

Question 5 :- Consumption of Maggi after its relaunch?

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