MAGGI Case Study

Nestl India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestl 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 healthconscious 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.

Maggi takes the Health Route

In May 2006, Nestl India Ltd. (NIL), a major FMCG company in the country and a subsidiary of the Switzerland-based Nestl 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 Nestl 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 Nestl 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.

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 Relaunch

In July 2001, Maggi replaced Nescaf (NIL's coffee products brand) as the company's core brand. Nescaf 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 Nescaf, 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 Nestl 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 Nestl products to make them healthier, and to develop new health and wellness products. Since the early 2000s, the Nestl 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...

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...