Maggie Product Launch

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INTRODUCTION Maggi is a Nestle brand of instant soups, ketchups and instant noodlesFounded by Maggi family in Switzerland in the 19th century and merged with Nestle in 1947Maggi was introduced in India in 1982. With the launch of Maggi noodles, Nestle India Limited ( NIL) created an entirely new food category instant noodles- in the Indian packaged food marketBecause of its first mover advantage, NIL successful managed to retain its leadership in the instant noodles category even until the aerly 2000s Noodles are a commodity which is consumed by everyone, right from kids and teenagers to retirees. In fact, India consumes a little less than 90,000 tones of noodles every year. A decade ago the word noodles was synonymous with Nestls Maggi. Two-and-a-half decades since its launch, 2 minute Maggi Noodles is the numero uno brand in the Indian market. Overall, the instant noodle market in India is worth over INR 1,300crore (USD 260 million) and is growing at a phenomenal rate of over 1720% per year, according to Data monitor estimates. Inspired by the success of Maggi, a number of F&B manufacturers ventured into this market. Among the prominent names are Top Ramen Smoodles and Cup Noodles manufactured by Indo-Nissin Ltd, Ching's Instant Noodles, AA Nutritions Yummy, and Wai-Wai, owned by the Chaudhary Group from Nepal and India.

In the early 80s, the conservative and typical food consumption era, the concept of ready-to-cook food was alien to the Indian market. People were skeptical to experiment with food especially food meant for their children. Despite the unfavorable circumstances, Maggi took the challenge and launched itself in 1983. The brands appropriate realization of target segment, effective positioning and effective promotion and sales made Maggi the most-loved noodle brand in India. Maggi enjoys a market share of over 70% today, despite the presence of a number of other brands. In 2005, the Maggi brand was worth USD 3.7 billion in comparison to USD 1.7 billion recorded in 2003. In 2005, Maggi was the highest Indian spender in the Sales Promotion department in the Noodles Category.

For much time since its launch, Nestls Maggi Noodles was the only kingpin in the noodle market. However, in the recent past two well-known FMCG players in the country Hindustan Unilever (HUL) and GlaxoSmithKline (GSK) introduced their own brands of instant food noodles and have managed to put their foot into this segment. Today, Knorr from HUL and Foodles from GSK have become well identified noodle brands besides Maggi Noodles and Nissins Top Ramen. New investments by HUL and GSK are paying off now. Individually, they hold 5% and 2% respectively of the noodles market share. Interestingly, GSK plans to capture 10% of the organized noodles market within a year. The newest entrant in this sector, ITC, seems to be sending strong competitive vibes to HUL and GSK as well as Maggi. ITC plans to launch noodles under the Sunfeast brand name. GSK, HUL and ITCs entry into noodles will heat up the competition for Maggi, which is already facing traction from retailers private labels like Tasty Treat from Future Group and Feasters from Aditya Birla Retail. According to data provided by Nielson Co., Maggis share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December 09 (90.7%) and July 10 (86.5%).

STRATEGIESnew InvestmentsTo cope with the increasing competition from the new entrants, Nestle India is investing INR 950 crore (USD 210.9 million) to set up two units to manufacture instant noodles and infant foods in Karnataka and Haryana. The unit in Karnataka will be up and running in the first quarter of next calendar year, while the Haryana unit is expected to commence its commercial production by the end of the next calendar year. With three other units based in Punjab, Uttarakhand and Goa, a fifth facility is expected to be set up in a yet undisclosed location to manufacture instant noodles; this will be put up for approval in the next two months. Nestle also announced plans to set up its first Research and Development Centre in India which will primarily focus on developing products specifically aimed at the domestic market. This R&D centre is valued at INR 230 crore (USD 51 million) and will be based in Manesar, Haryana.

With increasing competition in the Indian noodles market, it is very difficult to say whether Maggi can sustain its popularity over the coming years. The new entrants have launched their own brands of noodles which have already started hampering Maggis hold on the Indian market. It will be interesting to see how Maggi combats the competition with the big Indian conglomerates/new entrants earmarking ambitious plans and high commitments.

About Nestle India & Maggi Noodles

Nestl India is a subsidiary of Nestl S.A. of Switzerland. With seven

factories and a large number of co-packers, Nestl India is a vibrant Company that provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction.

The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst India's 'Most Respected Companies' and amongst the 'Top Wealth Creators of India'.

Maggi Noodles is one of the largest & most loved snack food brands that define the Instant Noodles category in India. Maggi has recently launched two new flavors in the short space of two months Thrillin Curry & Tricky Tomato Noodles. Blending Emotions with ingredients, the two new flavors deliver strongly on Taste Bhi Health Bhi. It is now available in 5 delectable flavours: Masala, Chicken, Tricky Tomato, Thrillin Curryand Romantic Capsica.

Maggi noodles are a brand of instant noodles manufactured by Nestl. The brand is popular in Australia, India, South Africa, Brazil, Nepal, New Lanka,Bangladesh, Pakistan, and

Zealand, Brunei, Malaysia, Singapore, Sri

the Philippines. Maggi noodles are part of the Maggi family, a Nestl brand of instant soups, stocks, and noodles.

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.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."A ccording 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..

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 vegetablesAccording 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 th