Maggi Case: Leading Its Way out of Trouble

Maggi Case: ‘Lead’ing its way out of trouble

Summary

The case is about Maggi – how it faced all the problems of safety concerns, its impact on the brand equity and consumer preferences, sales and profit of parent company Nestle and the measures that can be undertaken to revive the brand. This has been supported through various facts and data obtained from Nestle statistics. Future action items have been proposed with an expectation of a successful and strong comeback by Maggi.

Introduction

Maggi, a flagship product of Nestle, is a brand synonymous with instant noodles. Just a 2-minute wait and a tasty meal was in front of all. Till 2014, it was enjoying its market share of 70% in the India Noodles Market with healthy annual sales of over Rs 10,000 crores. According to 2014 Brand Equity Survey, it was ranked among top 5 most trust-worthy brands. Of late though, owing to the controversies discussed in this case, it has become a case of crisis management.

Turbulent times of the past

A chronological sequence of how and when the Maggi crisis surfaced is detailed below.

March 2014: VK Pandey, a UP FDA (Food Safety and Drug Administration) officer from Barabanki, did some routine checks on samples of Maggi and found lead and MSG (Monosodium Glutamate) in those. They were manufactured a month ago and tested in FDA’s Gorakhpur lab. Nestle was thus, served a notice regarding this.

July 2014: The lab findings were challenged by Nestle and the samples were sent to FCL, Kolkata.

April 2015: After a gap of more than a year, the lab found unacceptable levels of lead and MSG in Maggi samples.

May 2015: This led to UP banning Maggi sales and central govt. demanding evaluation of reports. Amidst all this, cases were filed against a few Maggi brand endorsers. Nestle, however, was adamant on its stand and expressed views against the findings.

June 2, 2015: Other states followed suit, withdrawing Maggi from their retain chains and stores, with Bihar filing an FIR against actors endorsing Maggi. A few states carried out their own testing and were divided on opinions surrounding the safety level of Maggi. While Delhi found Maggi unsafe for consumption, Goa and Maharashtra lab reports claimed no issues with its quality.  

June 3, 2015: Nestle shares dipped by 9% due to banning of Maggi in many states who were waiting for an official confirmation of its quality. Central Govt. pitched in, requesting consumer panel to probe the case.

June 4-11 2015: Nestle took Maggi off the shelves. The manufacturing and sale of Maggi and its nine variants were banned by FSSAI (Food Safety and Standards Authority of India). Nestle approached Bombay High Court appealing against the ban imposed.

June 16, 2015: Nestle destroyed $50 million worth of Maggi noodles after regulator findings.