MAGGI FROM VICE Is NICE TO WHERE?* BACKGROUND ‘Maggi is the leader in the instant noodles category because it is constantly improving its under- standing of the consumer to give them excellent and tasty products that provide nutrition, health and wellness. —Martial Rolland, Chairman and M.D., Nestlé India Limited, 2006 It made the phrase “Bas 2 minuze’ iconic. It wooed mothers. with the promise of snacks that were ‘fast to cook and good to eat’. It added that bit of “different” to the popular ketchup, and offered “Health bhi taste bhi” through its no-Monosodium glutamate (MSG) soups. Yes, we are talking about Nestlé’s iconic brand, Maggi, in its various avatars of instant noodles, sauces and soups Most people are unaware that Maggi is Nestlé’s Hagship culinary item not only in India, but glob- ally as well, On the international front, it is primarily seen as a brand of dehydrated cooking aids that have gradually migrated to being a general savoury brand with several ready-to-eat meal variants and frozen foods. However, in India, Maggi, is best known for its flagship product of instant noodles with its vari- ‘ous desi sub-segments such as the traditional dal ati, vegetable aifa and rice noodles, along with their variar ts—the traditional Curry, Masala, Tomato, and Chicken; and Shahi Pulao, Lemon Masala and Chilly Chow in the rice noodle segments. In fact, the culinary brand comprising nine instant noodle products, ¢ight variants of sauces and twelve variants of soups has grown at 33.2 per cent, almost © per cent faster than the company’s other rapidly growing category —chocolates—during the third quarter ending 30 September 2007. While extolling the virtues of the brand, Martial Rolland, Nes Director, said: 1Ié India's Chairman and Managing Since the packaged food business is still very small in India there is naturally a greater growth potential in this category than the others. According to numbers announced by the publicly listed companies, the growth is over 15 percent overall. However, for us, Maggi has dene very well. [tis a business that we are very proud_ofand believe that we have done @ fairly decent job in.ORIGIN Nestlé unleashed Brand Maggi in India almost 25 years ago in 1983 with the launch of its traditional ‘2-minute noodles’ in Masala, Tomato and Chicken flavours, followed by Curry flavour some years down the line. ‘ Maggi was launched in India at a time when instant noodles were not that well known a category. AL first it started as a non-entity. Though the market in the 1980s was beginning to change. all that had caught the consumer's fancy in the noodles category was Chinese noodles What Nestlé did very well was in understanding what was happening with the consumer. There was a pressing need for a product that would provide good quality food and at the same time was convenient. Something that would allow mothers to add their own inputs like vegetables, but at the same time be easy to cook: When Nestlé India Limited (NIL) launched Maggi in the country, it used the tagline, “Fast to cook and good to eat’, not only te promote the product, but also to educate the ‘ever-growing number of aspi- rant consumers about the advantages of using it. NIL aggressively promoted the brand through several schemes like distributing free samples and giving gifis against empty wrappers. Its advertising too, played a critical role in communic: the benefits to the target customer. Through its advertisements, the company positioned itse “fun’ food for kids which mothers could prepare easily. The advertisements became so popular that the tagline ‘Bas 2 Minute’ immediately reminded the Indian consumer of Maggi Noodles several years afier the advertisement was pulled out. ing, THE GROWTH As time went by, Magai Noodles sales picked up and they began to gain acceptance in the Indian house- hold as an easy-to-cook snack, in addition to being a favourite with children. It was observed that people of all age groups started to like the product although it was predominately targeted at kids. Looking at the growth and the advantages that the brand commanded, Nestlé extended its product into the instant soup category with the launch of Maggi Soups in 1988. The company became pioneers in the Indian packaged soup market. Over the years, NIL launched several new products under the Maggi brand in an effort to leverage the popularity of the brand among consumers. By the early 1990s il launched noodles, sauces, ketchups. and soups under the same brand name, However, the noodles remained the most successful produet under the brand. BRAND EXTENSIONS OVER THE YEARS The brand’s extensions over the years are as follows: ‘4 Maggi 2-minute Noodles. 4 Maggi Sauces and Ketchups. a Maggi Soups @ Maggi Pickles. (@ Maggi Macaroni, 4 Magai Instant Mixes. 2 Maggi Tonight's Special.4 Maggi Coconut Milk. 4 Maggi Atta Noodles. (4 Maggi Cubes (Super Seasoning). PROBLEMS: UNSYSTEMATIC BRAND EXTENSIONS In the early 1990s, NIL introduced a new variant, Sweet Maggi, Maggi Noodles with a sweet taste. This product failed as the consumers could not get used to the sweet-tasting noodles, and the company was forced to withdraw it from the market. At that point in time, Nissin launched its noodles brand, Top Ramen. To counter this, NIL launched new economy packs and reduced the price of Maggi Noodles, but these efforts did not improve sales. At about the same time, in 1996, the organized soup market saw the entry of/a new player in the market, Knorr Soups. Knorr was extensively distributed and heavily marketed in the metros, and it was able to grab a substantial share in the packaged soup market within a very short span of time. The Maggi brand was further extended to pickles, instant cooking mixes, and cooking sauces, but none of these products was able to take off in the market. Maggi Noodles too, continued to fare badly, and in the meanwhile, Top Ramen garnered 25 per cent of the market share. To fight Top Ramen, NIL launched Maggi Macaroni in 1997, Some analysts thought that it was a mistake as this product was directly positioned against Maggi Noodles and would eat into its share. Unfortunately, Macaroni too, did not fare well, By this time, Knorr had replaced Maggi as leader in the organized soup market. Analysts say that the fall in the sales of their noodles was due to a manufacturing change in the product in a bid to reduce costs. This resulted in a change in the taste of the noodles which did not ap- peal to the consumer’s palate. NIL had to go back to the old system of manufacturing, and in 1999, relaunched the brand with the original Maggi taste, carrying a new tagline “4h sab kuch pehle jaisa’ Realizing that the new formulation was unlikely to replace the old one, the relaunch was done with much fanfare. The company spent Rs. 200 million on an advertising campaign to communicate to the consumers that it had launched the ‘old Maggi’ Experts believe that Nestlé lost out by failing to extend the Maggi brand systematically, It became an easy victim of success and took the brand too casually. In the process it was unable to sustain the popularity of its flagship product, Maggi Noodles, let alone achieve success with the other products, THE SURVIVOR Amidst all this turmoil, there was one exception to the failure of the Maggi brand extensions—its sauces and ketchups. By the mid-1990s, jt had become a leader in this segment. Its series of humorous adver- tisements featuring two well known Indian actors, Javed Jaffrey and Pankaj Kapoor, earried the catchy punchline, “15 Different!” This success, too started to face serious threats from brands like Kissan, launched by Hindustan Lever in the late 1990s. THE CORRECTIONS Afier the alterations had becn carried out, and the produet was relaunched, fortun ately for the company, by 2001, Maggi re-emerged as the leader in the Indian noodles market, and garnered $0 per cent marketshare. Nestlé’s entite culinary product range came under the Maggi brand. At the same time, the non- performing extensions were rolled back and the list pruned down. AFTER THE RELAUNCH In July 2001, Maggi replaced Nescafé (NIL’s coffee brand) as the company’s core brand, a position oc- cupied by Nescafé since 1998. Commenting on the shift, Carlo M. Donati, the then-Chairman and Man- aging Director, NIL. said, “The focussed approach on Neseafé, 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 impe- tuses for the culinary segment, as it had been lagging behind some of NIL’s, are other product segments like milk and milk produets and coffee products’. Donati announced that NIL would introduce new products and product variants under the Maggi brand over the next few years. In 2001. it introduced new variants in the noodles, sauces and ketchup segments. It alse launched new Tomato-and Curry-flavoured Maggi Noodles and a Tamarind-flavoured Maggi Imli Sauce. STRATEGIC BRILLIANCE (DISTRIBUTION ADVANTAGE) During 2001-02, the Fast Moving Consumer Goods (FMCG) sector in India was undergoing a reces- sion, and this had an adverse effect on companies like Nestlé. In order to fight the slump and give a boost to the sales of Maggi Noodles, in 2002, it introduced smaller, 50 gm packs of Maggi Noodles at a lower price point of Rs. 5. Further, it overhauled its distribution network with a view to increasing the availability of small packs and making the product more accessible to the consumers. NIL also aggressively distributed the product in various small towns all over India. This mave proved successful as the smaller packs of Maggi Noodles sold extremely well. Commenting on the smaller packs and the lower-price-point strategy, Donati said: This concept not only increases penetration bul also- drives volume, and since value for money is the main demand of the Indian consumer it has become a very successful strategy. Especially in a recessionary period, people prefer to buy small packs which they feel comfortable with and when the market gets better they can switch to the bigger packs, which are very effective for brand loyalty, accessibility, and penetration. 1¢ replicated it for other products like coffe and contection- This strategy proved so successful that N café sachets priced at Rs. 2, and smaller packs of chocolate products ery. In 2002. it began offeri like Kit Kat and Bar-One In the first quarter of 2002. NIL once again introduced a new product, Maggi Chinese Noodles. In June 2002, the Maggi brand was estimated to have grown by 25 per cent in volume as compared to the same period in June 2001, By this lime, Top Ramen had lost its initial cachet as many consumers preferred Maggi Noodles, which had a better market image. This further consolidated Maggi’s position as the leader in the instant noodles market In December 2002, NIL extended its Maggi Soups brand to Maggi Hot Cup, which was a single serving sachet of Maggi Soup priced affordably at Rs. 3 per sachet, and was available in two flavours— Tomato and Chicken. At this time, Maggi Soups were available in three different sizes—a four-servingpack priced at Rs. 20; a two-serving pack priced at Rs. 10; and a one-serving pack priced at Rs. 3. This was done in order to counter the competition from Knorr Soups (still the leader in the organized pack- aged soup segment), which offered its products in the same price range as Maggi’s One of the strategies that Nestlé undertook to imprave the sales of small packs was to improve their distribution in the markel. It sold soups under the Magei Hot Cup brand through vending ma- chines, which were placed at busy locations such as offices, and railway stations. Maggi Hot Cup was targeted at working people and consumers on the move. In 2002, NIL discontinued Maggi Pickles which had been giving an unsatisfactory performance since its inception. However, it was not just Maggi Pickles that had been performing badly in the mar- ket: other branded pickles such as Ruchi and Mother’s Recipe too, were unable to capture a significant market share. This was because the preference for pickles varied from region to region in the country, and the consumers were generally not loyal ta branded pickles. Industry observers have noted that NIL was one of the few companies in the FMCG sector that did noi lose significantly during the recession. This was mainly attributed to the pricing strategy that the company adopted. It was also observed that the strategy of sclling Maggi Nood! small packs had had a positive effect on the company’s financial performance. Apart from this, NIL also launched several new products during 2002 which improved its sales. In 2003, NIL test-marketed ready-to-cook recipe mixes called Maggi 2-Step in three variants. Paneer Tikka, Chicken Biryani, and Chicken Tikka. However, the market for this was already crowded as the year 2003 saw the entry of many established players like Hindustan Lever (now, Hindustan Unilever, HUL) and ITC Ltd in the ready-to-cook and ready-to-eat market. For instance, ITC, which already had a presence in this market through the Kitchens of India brand, launched the Ashirvaad brand of ready-to-cook products in 2003. While Kitchens of India was a premium brand, the Ashirvaad brand of spices and cooling pastes was in the economy range. MILESTONES By 2003, India had emerged as the largest consumer of Maggi Noodles across all Nestlé markets in the world. Maggi Noodles had, in fact, become synonymous with instant noodles in India. The Maggi brand had an estimated value of Rs. 1.7 billion and was contributing almost 9 per cent to NIL’s total revenues, In July 2003, Top Ramen introduced a new product called Cup Noodles which was positioned asa “between-meals’ snack. In October 2003, HUL launched Knorr Annapurna Soupy Snax 16, avail- able in four variants, at an affordable price of Rs. 5 per pack. Th pitted against NIL’s Maggi Noodles as.a *hetween-meals’ snack, and was tar age groups, particularly office-goers. Wai Wai, which had a major presence in the northeastern region of India, was yet another player in the instant noodles segment Despite the growing competition, Maggi Noodles managed to remain the leader in the instant noodles segment, In 2003, it led the instant noodles segment with a market share of 80 per cent while Top Ramen remained a distant second with a 19 per cent market share, During 2004, NIL continued to test-market Maggi 2-Step Mixes in some more regions in northern India. In the same year, it also launched Maggi Magic Cube, a cooking aid product, to fight competition from HUL and ITC in the cooking aids segment. In 2004, NIL roped in Preity Zinta, a popular Indian actress, to endorse Maggi Noodles in order to strengthen the brand's image. (Traditionally, Maggi did not opt for celebrities and its advertisements s product too, wausually featured mothers and kids,) The ads featuring Zinta mainly focussed on promoting the small packs of Maggi Noodles to the consumers rather than talk about the benefits of the produet. Said Donati: Maggi is a fun and convenience brand and is popular across different age groups. In recent ycars, we have introduced Maggi Noodles in smaller packs at the Rs. 5 price point to make it more eas- ily available and affordable. The objective is now to increase awareness about this Maggi Chota (small) pack, [ believe that this Preity Zinta commercial will succeed because it is vibrant and w ‘ill strike a chord with the consumer. INCREASING COMPETITION In 2004, Heinz (which had entered the sauces market in 2000) shed its premium tag by bringing down the price of its ketchup by as much as 30 per cent. This had an impact on Maggi Sauces as their market share came down to 39.7 per cent during the period of January to September 2004, from 41.9 per cent fot the same period in 2003. However, Kissan’s sauces managed to retain their market share despite the competition, At this time, Maggi Sauces were priced the highest as. compared to Kissan and Heinz, the other two major players in the sauces and ketchups segment. However, NIL did not resort to any price-cutting measures. Instead, it increased the advertising: for Maggi sauces and keichups. In 2004, NIL signed on Ranvir Shorey and Vinay Pathak, popular television per- sonalities in India, to promote Maggi sauces. The advertisements tried to re-create the magic of the old Maggi Sauce advertisements with the tagline ‘It's Different!" The theme was repeated, with the tagline changed to “Enjoy the difference!” These advertisements were not considered as humorous as the previous ones featur ing Jaffrey and Kapoor. Towards the end of 2004, NIL discontinued Maggi Chinese Noodles which had not received a good response from the market. While Maggi Noodles continued to rule the market, it was clear that NIL ‘was finding it inereasingly difficult to expand and bring in new consumers. The performance of Maggi Sauce too, was not satisfactory during 2004 because of the aggressive competition in the market THE HEALTH ANGLE Since the early 2000s, the Nestlé Group had been taking measures to transform itself into a “health and wellness’ company. The company had 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, It had been introducing ‘health and weliness’ products all over the world and, in 2004, NIL introduced new, ‘healthier’ weaning and milk products in India. In March 2005, the Maggi brand too, took the health route with the launch of Vegetable Atta Noodles. NIL made use of the group’s extensive research and development facilities to develop this new ‘healthy’ product. It claimed that Vegetable Atta Noodles were healthier as they were made of whole wheat flour instead of maida (refined wheat), and also because they actually contained vegetables. Foods made of whole wheat are known to have nutritional benefits, as they included phytochemi- cals—chemicals and nutrients derived from a plant souree, which have a beneficial effect on the human bedy—vitamins, minerals, and fibre. The company also claimed that a 100 gm. pack of Vegetable Atta Noodles provided the same nutritional values as three rors (Indian bread made of whole wheat flour).Said Martial Rolland, former Chairman and Managing Direetor, NIL: “Maggi Atta Noodles is a few concept for Indian consumers, who now want to include health and wellness in their foods in a convenient manner.” NIL launched a new advertising campaign to communicate the benefits of Vegetable Atta Noodles, The advertiesments showed a mother giving her delighted children the new Vegetable Atta Noodles instead of the regular, ‘boring’ roris and sahzi (vegetable curry). She then went on to explain that Vegetable Atta Noodles gave the same nutritional values.as ror/ and sabzi, and the advertisement ended with the tagline ‘Taste Bhi, Health Bhi!” (Tasty as well as healthy). NIL spent heavily on the advertising campaign for Vegetable Atta Noodles. In fact, Maggi’s Vee- stable Atta Noodles constituted the major part of the total advertising spend on noodles and pasta brands in India during the first half of 2003. PERCENTAGE AD SPEND OF TOP FIVE NOODLE AND PASTA BRANDS IN INDIA Brands advertiser Percentage spend @ Maggi Vegetable Atta Noodles (Nestlé India Limited) 50 Sunfeast Pasta Treat (ITC Limited) 26 & Maggi Noodles (Nesilé India Limited) 2 3 Maggi Masala (Nestlé India Limited) O.1 = The top four brands contribute to almost the entire advertising share of 100 per cent. http:i/www.tamindia.com Once again, NIL resorted to a two-pronged strategy to promote Vegetable Atta Noodles. This time, the company tried to attract mothers on the health plank that it was an easy-to-cook ‘health’ food: and kids on the fun plank—that it was good to eat. It was interesting to note that the new advertisements targeted the entire family, not just the kids as had originally been the case with Maggi Noodles. This ould have been motivated by the fact that Maggi Noodles were no longer consumed only by children, but by consumers belonging to all age groups. NIL’s Vegetable Atta Noodles proved to be a hit with consumers, According to a research conducted by the Confederation of Indian Industry (Cll) and by ACNielsen ORG-MARG Pvt. Lid., Vegetable Atta Noodles contributed to 11 per cent in value t0 the instant noodle category within seven months after its launch. Analysts said that the changing preferences of Indian consumers, too, added to the success of Maggi's new health product. Indian consumers were not as conserva. live as they had been in the 1980s, and were increasingly accepting instant food products as part of their diet. However, the consumers were still worried about the hi lth aspect of these food prod- ucts. Hence, NIL had struek the right chord with the consumers by offering them a ready-to-cook healthy’ product, In December 2004, Rolland replaced Donati as Chairman and Managing Director, NIL. In 2005, NEL also *improved’ the regular Maggi Noodles although with no significant difference in taste. Accor ding to the company, the new Maggi Noodles were healthier because they were fortified with protein and caleium, NIL claimed that the new Maggi Noodles provided *20 per cent of the RDA of calcium and protein’ to children aged between seven and nine. Maggi Noodles were made available in four variants——M. Tomato, Curry, and ChickenIn November 2005, NIL repositioned the soup range as Maggi Healthy Soups. They were low in fat, low in cholesterol, and contained real vegetables, Further, they did not contain any added preservatives, artificial colours, or MSG. The soups were available in scven flavours—Mixed Vegetable, Tomato, Hot and Sour, Chicken, Tomato Vegetable, Mushroom and Sweet Corn chicken—and were priced at an af- fordable Rs. 25 for a 75 gm pack, which provided four servings. According to NIL, the Healthy Soups were launched based on consumer preferences for soups as healthy evening meals. The advertisements for Healthy Soups, too, featured the entire family and ended with the tagline ‘Taste Bhi, Health Bhi’ Dabur India Ltd had earlier launched its own range of health soups in December 2004. Dabur’s soups—unlike the powdered soups offered by NIL and HUL—were in liquid form. The company too, claimed that these soups contained no MSG or preservatives, and therefore, were healthy. By 2005, the competition in the sauce and ketchup market had intensified. The retail market size— the other segment was the institutional market consisting of hotels and restaurants—was estimated at between Rs. 1.5 billion and Rs. 1.8 billion in 2005. Furthermore, Heinz too, was taking steps to improve its market share, and had launched Heinz Champ Ketchup, that contained vitamins and proteins, to attract health-conscious consumers. Major companies like HUL had been trying to attract consumers by offering new flavours to suit the taste of the Indian consumer. HUL’s Kissan sauces were available in flavours such as Tomato, Tomato and Chilli, and one with ‘no onion and no garlic’. However, compared to its competitors, Maggi offered much more variety in sauees and ketchup. In 2005, NIL launched Tomato Chatpat and Tomato Pudina sauces, which had a unique Indianized taste. As of 2005, Maggi’s sauces were also available in a variety of other Indianized flavours such as Imli, Masala Chilli, and Chilli Garlic. The sauce and ketchup range included Tomate Sauce, Tomato Ketchup, and Hot and Sweet Sauce. NIL had always advertised aggressively for Maggi sauces and ketchups and, during 2005, it introduced a series of advertisements that communicated the different Indian flavours of Maggi Sauce. Characters in these advertisements debateon whether the product is a sauce or a chutney. Finally, the protagonist tastes the product and exclaims, */ts Different! The advertisements ended with the tagline “Enjoy the Difference! In 2005, despite the increasing competition, Maggi was still the leader with 37 per cent of the sauce and ketchup market. However, Kissan sauces were close behind with a 29 per cent market share. In 2005, NIL decided not to launch the Maggi 2-Step Mixes, even though it had been test-marketing the product throughout 2004. This was done keeping in mind the company’s overall product rationalization process. In the same year, the company scrapped some underperforming products like Milkmaid Squeezy, Nestlé Choco Stick and Milkmaid ultra heat treated (UHT) liquid milk. Rolland Said: Ever since | have made it clear that, those products which are very small (in volume) or those which the consumcr has not accepted well should be done away with. Our emphasis is on main- taining both, a healthy top line as well as a good bottom line. In 2005, the Maggi brand was valued at Rs. 3.7 billion. NIL set up a manufacturing facility at Uttaranchal, in northern India in July 2005 with an investment of Rs. | billion. The manufacturing facility was set up exclusively for the production of NIL’s culinary products. The facility became functional in early 2006, and the company dispatched its first bateh of Maggi Noodles from this unit in mid-2006. In May 2006, inspired by the success of Vegetable Atta Noodles, NIL launched yet another variant, Dal Atta Noodles. NIL claimed that the Dal Atta Noodles —along with the nutritional values of whole wheat--additionally provided protein that comes with the unique combination of whole wheat and dal (pulses).OUTLOOK According to the Federation of Indian Chambers of Commerce and industry (FICCI) ‘Food and Beverage Survey” published in February 2006, health foods, health food supplements, convenience foods and branded foods were the ‘rapidly rising” seements of the food and beverage industry. ‘The survey also revealed that the market for branded food produets had grown at a healthy rate of around 15 per cent in the early 2000s, ‘The changing lifestyles and eating habits of Indian consumers, and the inereasing purchasing power of the growing middle-income group were thought to be the reasons for this growth. Even though the demand for convenience food had increased in India in the early 2000s, analysts said that most Indian consumers were still conservative in their foad habits, and placed more importance ‘on 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. For instance, Heinz was taking various initiatives to increase its presence in the sauce and ketchup market. In March 2006, Heinz india launched two new Indianized flavours—Chatakdar Mint Chutney and Chatpata Tomato Chutney. The company already had a vitamin-enriched ketchup, Heinz Champ, for health-conscious consumers. In the noodles segment, Maggi faced competition from ITC which launched Sunfeast Pasta ‘Treat—a whole-wheat, ready-to-eat pasta—in March 2005. This product, which was to be cooked in more or less the same way as Maggi Noodles, was positioned against Maggi in the snack foods seg- ment. ITC claimed that the pasta was “healthy” as it did not contain refined flour and was not fried, The novelty aspect of instant pasta was also expected to benefit this product. Sunfeast Pasta Treat garnered a market share of around 6 per cent in the instant noodles and pasta segment in the second half of 2005. According to industry observers, this product would prove to be a major potential competitor for Maggi in the long run THE FUTURE On future plans for Maggi, Rolland was quick to s: As we have earlier, we will even now try to remain very close to the consumer and see what his or her wants are. Also, our foctis will be on launching products that have good potential for growth. We will also keep up our level of activity for the different categories of the brand, as well as leverage the parent company’s expertise for innovative insights into further developing the brand. Nestlé worldwide spends a lot of money on research and development to give consumers what they want in terms of taste, health and convenience. At the end of the day consumers don’t buy strategy but good products. Analysts agree that Nestlé is getting it right. IDFC-SSKI Research, in a report, expects the ready-to-eat segment {o remain the biggest opportunity for Nestlé India in the years to come, “This Strategic Business Unit (SBU) (contributing 21.4 per cent to revenues) has. reported revenue growth of 33 per cent in January-September 2008. Growth in the business has been driven by a series of new product and variant launches under the Maggi brand”. There is a growth momentum accelerating from here as Nestlé extends the brand equity of Maggi to newer segments and widens its distribution reach. Nestle is the best bet on the India consumerizationstory as the product categories in which it operates—milk products, ready-made dishes, chocolates and coffee—are expected to be the fastest-growing segments in the coming years IMAGE OF BRAND MAGGI ‘To sustain the image of Maggi, Nestlé has adopted 2 360° marketing strategy: Promoting its *health’ products. Promoting products with which customers can experiment according to taste. Giving women the opportunity of getting recipes. Regularly organizing events for kids. Spending lavishly on electronic and print advertising. Gcog NESTLE’S STRATEGIES FOR FORMING A NEW PRODUCT CATEGORY The strategies adopted by Nestlé for forming a new product category are as follows: G@ Wanting to be associated with ‘health’ products in the customer's mind 4 Adopting the strategy during the launch of Vegetable Atta Noodles. Trying to establish new product categories to have the first-mover advantage. a Trying to capture untapped market. Should Maggi attempt a brand extension? Would brand extension require a repositioning? | What are the risks which Nestle would be taking in extending the Maggi brand to other product categories? Maggi’s product portfolio, mid-2006: Product brand variants ere a Instant noodles: 2-minute Noodles—Masala: Chicken; Tomato; Curry. U Instant noodles: Vegetable Atta Noodles; Dal Atta Noodles (available with samber flavour}. Maggi sauces and ketchups: Tomato Pudina (mint) Sauce; Tamarina—Tamarind Sauce; Tomato Chatpat Sauce: Hot & Sweet Tomato Chilli Sauce; Chilli Garlic Sauce; Masala Chilli Sauce; Hot and Sweet Sauce: Rich Tomato Sauce (ne onion, no garlic); Rich Tomato Ketchup. @ Maggi healthy soups: Rich Tomato; Tangy Tomato Vegetable; Mixed Vegetable; Creamy Chicken; (Cream Mushroom: Chinese Sweet Com Chicken; Chinese Hot & Sour Vegetable; Chinese Sweet Corn Vegetabl sweet and Sour Tomato Noodles. a Cooking aids: Maggi Magic Cubes Vegetarian; Masala; Chicken. oNIL’s competitors in prepared dishes and cooking -aids segment, mid-2006 Indo Nissin Foods Ltd It manufactures noodles and a variety of home foods. Top Ramen is the major brand of the company in India with approximately 20 per cent market share in the instant noodle market. @ Mug Smoodles. Curried noodles: Spicy Vegetable; Mast Masala: Tangy Chicken. @ Cup noodles Company product brand variants Instant noodles: Top Ramen Macho Masala (vegetarian): Oye Tomato (vegetarian); Funky Chicken (non-vegetarian); Powa Kid (vegetarian). Soup noodles: Curry Smoodles (vegetarian); Ready-to-eat Noodles; Cup Noodles: Spicy Vegetable (vegetarian); Mast Masala (vegetarian); Chicken (non-vegetarian) . ITC Limited Itis a listed company with British American Tobacco (BAT), with a 33 per cent stake and other inves- tors holding a 50 per cent stake. ITC made its entry into the branded and packaged foods business in August 2001 with the launch of the Kitchens of India brand. A more broad-based entry was made in mid-2002, and the company currently has a wider portfolio in the confectionery, staples, and snack- foods segments. (4 Sunfeast Pasta Treat: Tomato Cheese; Masala; Cheese: Sour Cream Onion; Pizza Style; Chicken, Q Kissan. Q Sauces and ketchups: Tomato; Tomato and Chilli Hindustan Unilever Ltd A SI per cent-owned subsidiary of Unilever, the Anglo-Dutch giant, its product portfolio includes household and personal care products like soaps, detergents, shampoos, skin care products, colour cos- metics, deodorants and fragrances. 2 Soups: Knorr ina variety of flavours. @ Annapurna: 14 flavours. Heinz India Ltd A part of HJ Heinz, the US-based food company, HIL has interests in beverages, foods and personal care G Sauces and ketchups: Heinz Tomato Ketchup; Tomato Chilli Sauce; Coriander Mint Chutney: Home Style Indian Chutney, Q Champ soups: Home-made Tomato; Sweet Com and Mushroom. 4 Sauces: Red Capsico Sauce: Capsico Red Pepper Sauce.Dabur lidia Ltd One of the largest FMCG companies in India, it has interests in health care, hair care, oral care, baby care, foods, and digestives Cooking aids: Homemade Ginger Paste; Garlic Paste; Ginger-Garlic Paste; Tamarind Paste; Tomato Purée. 1. ‘After Nescafé, Nestlé to taste Maggi magic’, http://www.magindia.com, 3 July 2001. 2, Sharma, $. and P, Bhattacharya, “Nestlé to launch 20 products this year’, http://economictimes. indiatimes.com, 15 March 2002 3. Pandey P. and C. Chakravarty, “Indians eat most Mag http;/‘cconomictimes.indiatimes.com, 21 May 2003. 4. ‘Nestlé signs Preity Zinta for Maggi’, ht Noodles in the world’, www.thehindubusinessline.com, 13 May 2004. . Bhattacharya S. J, Maggi cooking pastes, cubes soon’, htips/‘www.thchindubusinessline.com, 20 May 2004, . “Price war brewing in ketchup segment”, httpy//www.magindia.com, 16 June 2004. . “Heinz eats into Nestlé's volumes’, http://wwwmagindia.com, 10 December 2004 “Maggi five’, hitp://www.india-today.com, 2004. ewan e ). Sindhu J. 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