Cooking up a storm: How the Maggi crisis made Nestlé grow up

NEW DELHI: Last November, three months into his new role, Suresh Narayanan realised that for over three decades Maggi’s advertising and marketing campaigns had failed

NEW DELHI: Last November, three months into his new role, Suresh Narayanan realised that for over three decades Maggi’s advertising and marketing campaigns had failed to address India’s youth population, the world’s largest. There are 450 million Indians in the age group of 15-34, who consume “more than half of Maggi sold in India.”

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That’s when Narayanan decided to launch seven new variants of Maggi — six of them in spicy flavours under the Hot Heads brand, and one without garlic and onion.

“The idea came when Maggi was still off the shelves,” recalls Narayanan. It was, however, different earlier. Twenty five years ago when he made the first Maggi ad, the idea was to appeal to kids, says ad filmmaker Prahlad Kakkar. “The business needs have changed… Nestlé has realised that youth is driving consumption.”

The shift in focus is also due to the Maggi crisis last year, which resulted in Nestlé India losing $277 million in revenue. The food regulator’s ban on Maggi gave other brands, such as Ramdev’s Patanjali noodles, ITC’s YiPPee!, HUL’s Knorr noodles and Nissin’s Top Ramen, a chance to grow their presence in India.

In February, Maggi’s share was over 50%, a third lower than what it commanded before the ban.

Meanwhile, competitors had already entered the spicy noodles space. Knorr’s Soupy Noodles had launched two flavours — Shezwan and Hot and Spicy. Top Ramen had launched Fiery Chilli and Yippee! had launched its Chinese flavours.

Narayanan knew there was very little time — conceptualisation to marketing of the spicy variants took four-five months, compared to the usual product cycles of 18 months.

EYE ON THE YOUTH

Narayanan engaged McCann World Group for new brand campaigns that looked beyond kids. Advertisements featured college goers who consumed Maggi to satiate hunger pangs at odd hours – the latest ad shows two young adults craving for Maggi in the wee hours. Social media campaigns, including #WelcomeBack Maggi, targetted the youth.

But, it’s not only Maggi, Nestlé’s other businesses are also under siege. According to Motilal Oswal, the largest segment, milk and nutrition grew 2.1% in value last year; chocolate and confectionary declined 19.5%, and beverages fell 10.3%.

But, Narayanan is unnerved. Instead, he is looking at more than doubling Nestlé’s revenue to Rs 20,000 crore by 2020. “Simply because I have come second in a race doesn’t mean that I don’t have genetic make-up to be an Olympian,” he says.

NESTLÉ BEYOND MAGGI

So Narayanan decided to go for the biggest product launch in Nestlé’s history in India, all within one year, most of them targeted at the young adult. So, in the yogurt space, there was Grekyo, with 70% more protein, targeting fitness goers.

Then there were three variants of Nestea with 40 calories per glass, half of what is present in a glass of aerated drink. In India, 30 billion glasses of 150 ml each is consumed in a year.

It was followed by south Indian instant-filter coffee. “Everyone is fascinated by filter coffee in India, so we decided to offer that without the hassles of using a coffee filter.”

All these products will help Nestlé bring down its dependence on Maggi, according to Narayanan. He also wants Maggi’s revenue contribution to come down to 20-25% from over 30% in the coming years. “Other products will start taking up that space in total contribution to Nestlé’s pie.”

Before retiring from corporate life, transforming Nestlé India will be Narayanan’s last big assignment. “If I am able to do something for this company and for the people who are working here — yes — I hope this is my final hurrah, if there is a hurrah to it.”