The world’s largest food firm Nestle said it expected popular noodles brand Maggi to fully regain lost market share in India by the end of 2018.
The firm had more than 70% share of the noodles market before it faced allegations of high levels of lead content in the product in 2015, when it had to take all Maggi packs — or 35,000 tonnes — off the shelves of about four million retailers.
“Maggi has regained about 60%... share in India in the last two years; we are hopeful to have 70% by the end of this year,” Suresh Narayanan, CMD, Nestle India, told The Hindu . Mr. Narayanan was parachuted in to handle the 2015 crisis.
“The brand contributed to a fourth of the turnover of Nestle India. In the generation of social media that you have today, you can be brought down to your knees in minutes. In less than 10 days, the most trustworthy brand by far in the industry came down to this level,” he recalled. He was in Mumbai to talk on ‘Captain in crisis: lessons in leadership’ at the Young Indian summit organised recently by the Confederation of Indian Industry.
How it began
In the middle of 2015, a laboratory in Barabanki, a small town in Uttar Pradesh, declared that a sample of the brand had more than the acceptable level of lead.
“The sample was sent to Kolkata for a retest. A test that should take 48 hours takes four months. And you are suddenly declared that you have seven times the amount of lead that you should be having,” said Mr. Narayanan.
What was unfair, he said, were the comparisons of the development, by sections of the media, with catastrophies such as the Bhopal gas tragedy. “Only a heartless person can compare this with something as tragic as what happened in Bhopal in 1984. But that’s what happened and when that happens, a brand that is much loved suddenly starts melting down.”
Nestle’s response
On the response strategy, Mr. Narayanan said, “When the rhetoric becomes as bad as it did, then there is very little space left for a dialogue [and] ... the company decides to retreat, take a step back. There is no point in trying to push water [up] the hill if that is the kind of atmosphere that is being set.”
“We decided to go to the courts.” The Bombay High Court ruled in favour of Nestle, after which the brand was reintroduced in the market. Meanwhile, Mr. Narayanan said, he derived inspiration from the Taj Hotels’ management when it faced a terrorist attack in 2008 at its iconic hotel in Mumbai.
“The leadership of the Taj stood rock solid in the face of the attack. The general manager of the hotel standing there and attending to guests when he had lost his family was, for me, the lasting symbol of leadership,” he said.
The company started off on its communication outreach. “My communication to everyone was very clear: My factories are open, my processes are open; come and see exactly what you want to see. This a company for which food quality and safety are at the centre of our culture and [that] is non-negotiable.” he said.
“About 60% of my time was spent talking to [my] people and the stakeholders. The idea was to involve people around a purpose — [that] was to get Maggi and our heartbeat back.”
What changed in the company? “Ordinary people were doing extraordinary things. Packaging material that takes 42 days to arrive came in 9 days; our packaging managers travelled with trucks to the factories to ensure that materials were delivered in time. Our machinery that was idle for six months across eight factories was revived in a matter of hours by our technicians. Raw material that takes 21 days to come in, came in five days; our sales materials that takes 60 days, were out in 20 days. Did I pay them a lot of money and bonuses? No, they did it because they believed in the organisation and in the purpose,” he said.
A young assistant manager’s advice led to reintroduction of the product using e-commerce platform Snapdeal. The first 60,000 boxes were sold in less than five minutes.
New packets reached 350 towns. “[Workers] slept in the office during weekends. People came in at odd hours to get things done. We kept the 30-year brand the same... We used the same characters of the 1983 advertisement of two school-going kids with the mother; just that the kids [were in] college and the mother has grown old,” he said.
An analyst said the communication exercise worked. “Consumers just lapped up Maggi once they understood that it is healthy. You don’t go to the market to buy noodles; you... buy Maggi for its taste that no other noodle gives,” Harminder Sahni, founder and MD, Wazir Advisors, said. Nestle cited a study by research firm Kantar TNS that showed consumer trust for the brand fell from 98% to 3% when the bad news broke, before recovering to 90%.
“A crisis is an opportunity.... As a company, Nestle had 200 brands globally; India [arm] did not have more than a dozen. We launched 50 products in the last two years, that would have [normally] taken 10 years,” said Mr. Narayanan.
